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Old 03-09-2009, 04:40 AM   #1
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Congress Should Stop Giving GM Funds

http://www.bloomberg.com/apps/news?p...efer=worldwide

Congress Should Stop Giving GM Funds, Republican Lawmakers Say


By Nadine Elsibai

March 8 (Bloomberg) -- Republican lawmakers said Congress should stop providing General Motors Corp. with federal aid and let the company file for bankruptcy if necessary.

“The best thing that could probably happen to General Motors, in my view, is they go into Chapter 11,” Senator John McCain said on the “Fox News Sunday” program today.

The automaker could reorganize and renegotiate its labor contracts to come out “stronger, better, leaner,” McCain, from Arizona, said.

GM is cutting executive pay and will eliminate 47,000 jobs this year as part of a restructuring required to keep $13.4 billion in U.S. loans. GM’s Chief Executive Officer Rick Wagoner is seeking to persuade the U.S. Treasury to lend the carmaker as much as $16.6 billion more to survive.

The largest U.S. automaker has lost $82 billion since its last annual profit in 2004 and has been fending off speculation about bankruptcy for more than two years.

U.S. auto sales plunged 18 percent to a 16-year low in 2008, affecting GM, Ford Motor Co. and Chrysler LLC.

Senator Richard Shelby, the top ranking Republican on the Banking Committee, said on ABC’s “This Week” program that “subsidization of anything for very long never works.”

“The automobile business -- those companies, Chrysler, Ford and General Motors -- they’re in deep trouble,” Shelby, of Alabama, said. “I’ve suggested they go into Chapter 11. That’s where they belong. And they could reorganize.”

A Viable Company

House Minority Leader John Boehner said the government shouldn’t give GM any more money “until General Motors shows that they can be a viable company for the long term.”

“Anything short of that is just throwing good money after bad,” Boehner said on CBS’s “Face the Nation” program today.

A voicemail left seeking comment from GM today wasn’t immediately returned.

The Federal Reserve’s Term Asset-Backed Securities Loan Facility program, or TALF, may help struggling automakers raise cash to make loans to consumers.

TALF’s aim is to bring investors back to the market for bonds backed by auto loans, credit cards, student loans and small businesses.

The Fed will start disbursing TALF funds March 25 to prop up the market for consumer and small business loans, the central bank said on March 3. The program was originally set to start in February.

‘Not Life Support’

“Any money we give to the auto industry must be a lifeline, not life support,” House Speaker Nancy Pelosi told reporters at a weekly press briefing March 5, saying the ultimate decision remains with the administration. “This isn’t endless. But there has to be a sign of viability. And this needs to happen, and it needs to happen soon.”

In a statement released two days ago responding to a Wall Street Journal report, the automaker said that “GM has not changed its position on bankruptcy.”

“As we’ve demonstrated through a series of actions, GM is moving quickly and aggressively to restructure the business, and achieving that outside of court remains the best solution for GM and its constituents,”
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Old 03-09-2009, 10:00 AM   #2
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That title isn't the most biased representation possible. I would expect nothing less of an article about GM. The Malibu, CTS, Cobalt, and G8 show no signs of competing with the market. Their unimpressive ratings and reviews reflect no interest in competing with the market in areas of performance, fuel efficiency, comfort, and luxury. This complete lack of competitive will is most evident in platforms that do show up at the track, only to score 7:22.6 at the Nurburgring. GM doesn't have the most cars producing over 30 mpg on the highway, and all of those E85 cars are a hoax.

Seriously, Congress wants GM to produce impotent cars to kill it. It's amazing. They want fuel efficient city cars, no trucks, and no performance vehicles. Let's not forget that the competitive imports are loving the possibility that American sports cars would no longer be competing with their products. It would be great if the Republican side of Congress looked outside and saw all of the GM cars on the street that show that people buy their products or that GM was a victim of a credit crunch.

Call your elected officials.
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Old 03-09-2009, 10:06 AM   #3
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GM has evaluated multiple bankruptcy senarios as congress asked them too. These are outlined IN DETAIL in their viability plan submitted last month. ALL of them are bad news. That should be the end of discussion on this...but everyone's an expert.

And imo -- a bunch of senators' opinions on this is absolutely worthless, as they're all idiots and forever will be. They never make a good decision, never succeed in running anything smoothly or even correctly, but on this subject...well, on this they're suddenly enlightened heroes! The hypocracy of it all stuns me. :(

An open question to anyone who watched the first hearing: How many of those senators live under false assumptions about the Big Three's product lineup? How many of them believe that is the reason they're failing? How many of them believe the big three "don't make products people want to buy"? And how many of them drive Domestic automobiles? A minority. The vast majority got elected on a foundation of lies and money. We should let these people make a decision about one of the single largest industries in the country?!?!

Let me echo The_Blur's statement:
Call your elected officials.
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Old 03-09-2009, 10:54 AM   #4
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GM has evaluated multiple bankruptcy senarios as congress asked them too. These are outlined IN DETAIL in their viability plan submitted last month. ALL of them are bad news. That should be the end of discussion on this...but everyone's an expert.

And imo -- a bunch of senators' opinions on this is absolutely worthless, as they're all idiots and forever will be. They never make a good decision, never succeed in running anything smoothly or even correctly, but on this subject...well, on this they're suddenly enlightened heroes! The hypocracy of it all stuns me. :(

An open question to anyone who watched the first hearing: How many of those senators live under false assumptions about the Big Three's product lineup? How many of them believe that is the reason they're failing? How many of them believe the big three "don't make products people want to buy"? And how many of them drive Domestic automobiles? A minority. The vast majority got elected on a foundation of lies and money. We should let these people make a decision about one of the single largest industries in the country?!?!

Let me echo The_Blur's statement:
Call your elected officials.
I don't think you would be any happier if you did let the people decide. I think you would find that GM and Chrysler would have not gotten the loans they did back in December had the wishes of the American people not been ignored. A majority of people in this country, me included, do not want my tax dollars going to prop up companies that would be doomed to failure eventually without them.
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Old 03-09-2009, 11:02 AM   #5
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I don't think you would be any happier if you did let the people decide. I think you would find that GM and Chrysler would have not gotten the loans they did back in December had the wishes of the American people not been ignored. A majority of people in this country, me included, do not want my tax dollars going to prop up companies that would be doomed to failure eventually without them.
I agree with you. They probably wouldn't have gotten the loans. And our economy right now might look like a picnic compared to what we'd be going through.

Thankfully, it was up to the president to decide. One relatively intellegent person complimented by a cadre of economic and financial professionals can make smarter, faster decisions than a room full of blithering idiots spouting their false presumptions, and groundless opinions.

Hopefully -- only the people who see and understand the importance of their survival will have enough drive to look up that phone number of their senators, and everyone else will sit at home and b***h at their TV. I can live with that.
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Old 03-09-2009, 12:35 PM   #6
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IMO We should stop giving funds to Congress.
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Old 03-09-2009, 12:43 PM   #7
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IMO We should stop giving funds to Congress.
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Old 03-09-2009, 12:56 PM   #8
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Congress is a joke, give AIG 115 Billion and they lose 65 Billion in a quarter. But no we can't save our last piece of American manufacturing.

Jerks.
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Old 03-09-2009, 01:48 PM   #9
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I agree with you. They probably wouldn't have gotten the loans. And our economy right now might look like a picnic compared to what we'd be going through.

Thankfully, it was up to the president to decide. One relatively intellegent person complimented by a cadre of economic and financial professionals can make smarter, faster decisions than a room full of blithering idiots spouting their false presumptions, and groundless opinions.

Hopefully -- only the people who see and understand the importance of their survival will have enough drive to look up that phone number of their senators, and everyone else will sit at home and b***h at their TV. I can live with that.
I know there are scores of studies that warn of the "catastrophic" effects of having any or all of the big three go down, but I'm of the opinion that, while it would definitely have a significant negative effect on the economy, the nuclear option of bankruptcy is the best long-term solution.

It's pretty clear what position you take based on your posts and comments, and I believe it to be that GM is too big and too important to let it fail. That's fine, but firing off backhanded insults at people whose opinions differ from your own is not going to help the problem at all.
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Old 03-09-2009, 02:04 PM   #10
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Originally Posted by garagelogic View Post
I know there are scores of studies that warn of the "catastrophic" effects of having any or all of the big three go down, but I'm of the opinion that, while it would definitely have a significant negative effect on the economy, the nuclear option of bankruptcy is the best long-term solution.

It's pretty clear what position you take based on your posts and comments, and I believe it to be that GM is too big and too important to let it fail. That's fine, but firing off backhanded insults at people whose opinions differ from your own is not going to help the problem at all.
I didn't see an insult.

Someone refresh my memory. There was a congressman who admited that they were not financial experts but elected officials who needed to educate themselves and become more informed by the experts who know the business and the numbers. (Romney sure looks good right now) So I agree with Blur and Dragoneye.



Call your elected officials.
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Old 03-09-2009, 03:34 PM   #11
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And your remarks(garagelogic) are just so uplifting! OMG the irony of you saying that is too much to bare!
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Old 03-09-2009, 11:38 PM   #12
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I didn't see an insult.

Someone refresh my memory. There was a congressman who admited that they were not financial experts but elected officials who needed to educate themselves and become more informed by the experts who know the business and the numbers. (Romney sure looks good right now) So I agree with Blur and Dragoneye.



Call your elected officials.
You all know where I stand by now..And for those of you new to the forums, I do agree with Rowney's original assessment back before the first auto industry bailout..

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And your remarks(garagelogic) are just so uplifting! OMG the irony of you saying that is too much to bare!
Why do you want the cycle to continue..If another bailout is given, what makes you so sure this time around things will be any different?? Why are so against Chapter 11 and for another bailout?
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Old 03-09-2009, 11:56 PM   #13
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Stop the sufering file chapter 11 and get rid of the us unions if need increase the production in canada and mexico until the us unions are gone no over paid union worker and become competitine and stop whining by the unions be produvctive.
reduce pension plans and get to work.
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Old 03-10-2009, 12:18 AM   #14
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Why are so against Chapter 11 and for another bailout?
Although this wasn't specifically directed at me . . .

Ch 11 will cost significantly more, will take too long, will never be paid back, and will likely result in Ch 7 anyway.

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Stop the sufering file chapter 11 and get rid of the us unions if need increase the production in canada and mexico until the us unions are gone no over paid union worker and become competitine and stop whining by the unions be produvctive.
reduce pension plans and get to work.
Canada has unions too, and the productivity of GM's union plants are right in line with Japanese transplants, in many cases they are more productive. Oh, and they get paid the same amount too. Single biggest difference is the number of retired workers, practically 0 for transplants and thousands upon thousands for the UAW. I won't comment on reducing pension.
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Old 03-10-2009, 12:11 PM   #15
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The credit crisis and economy merely accelerated by a couple of years what would have eventually happened. GM hasn’t made money in over 4 years. This crash happened last year. GM has shed market share for years, abandoning tried and true segments like the small and mid size cars for high profit SUV’s and Trucks. This allowed the imports to slowly improve their products in these segments and gain market share. The glory days also lead to unsustainable contracts with labor and excess.

When the Japanese cars first came over they were crap, same to with Korean cars. But they kept at it and improved. The average car buyer wants an appliance that always starts, doesn’t cost them anything to run and gets them from point A to B as if they were in their living room on a comfy couch. It’s why a loathe the entire Toyota line-up except the FJ (which they are discontinuing).

Boards like this are for the niche car buyer, the enthusiast who cares about how a car drives and enjoys the part between the A and B.

We may see more loans to GM (remember they ran through their worst case scenario for all of 2009 in 3 months) but if they come back a 3rd time they’ll be forced into chap.11.

They should have voluntarily done it back in 2006 when they still had the cash reserves to restructure. But then we don’t do anything until it’s a crisis, from one crisis to the next and we forget about it all when times are good. We learned nothing during the oil embargo and already people are forgetting $4/gal gas of just 8 months ago.

If you are buying a GM or especially a Chrysler product I’d just make sure you put away a little extra to cover any repairs out of pocket.
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Old 03-10-2009, 12:22 PM   #16
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The gubment shud send us all a gift certifikate fer $25,000, good only for use towards purchase a GM, or Chrysler product (Ford would be inelligble because they did not take any bailout money). That way it is up to us if we use the money, or not. It is only good for this year. after that it is invalid.
One certificate per household. you must have a valid address per last years tax return to collect.
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Old 03-10-2009, 12:40 PM   #17
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Quote:
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They should have voluntarily done it back in 2006 when they still had the cash reserves to restructure.
Care to elaborate on this? Because if you're saying GM waited to restructure until after 2006...I think you're pretty wrong. The restructuring, albeit at a baby-step pace, started way back in 2000 when Wagoner was hired. It started with product. As it progressed, they were even able to sign an agreement in 2007 (the last good year before the recession) that reworked their entire labor relationship. Go figure, when they're about to overhaul the business side of things, the economy tanks.

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But then we don’t do anything until it’s a crisis, from one crisis to the next and we forget about it all when times are good. We learned nothing during the oil embargo and already people are forgetting $4/gal gas of just 8 months ago.
I was just disussing this with someone. It's the American way and it makes me sick to my stomach. Nothing's worth evaluating/repairing until it's a life-or-death crisis. And when the crisis is over...we do it all over again! What. The. Heck?!

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If you are buying a GM or especially a Chrysler product I’d just make sure you put away a little extra to cover any repairs out of pocket.
Why? You expecting them to go somewhere?
GM and Chrysler will be around for some decades to come. The difference is how they get over this rough spot. A successful, but insanely risky bankruptcy filing? Or self-help via loans.

A word on loans, and your first point about delaying the inevitable. I disagree completely -- I don't think they would have eventually failed. And here's why:

Underlining all of this is one single point: GM already was in the process of a ~decade-long restructuring effort. It was always due to be 'finished' by 2012-ish. Though they may not have announced it to the world. Now,

If it weren't for the credit crisis,
#1; people could buy cars, and with GM's current portfolio, they'd be selling like mad. This means they make money, which has everything to do with their restructuring costs and income. Lets face it, all the restructuring in the world won't help if they aren't selling cars. This is one of those things that's not in their control.

#2; Banks would still be loaning. Which they aren't right now.


----------------
Because of the above points, supposing a credit crisis never occured; it would still be evident that General Motors would STILL NEED further restructuring -- but they wouldn't be in their current state. That means they wouldn't need as much money to finalize the BULK of their restructuring already scheduled through 2010. Since they wouldn't have needed as much money (if at all), they could have gone to banks instead of the US treasury.

Therefore -- the government would have never gotten invovled, and this would be a non-issue. Yes, GM made mistakes. No, they weren't in ideal financial position before this happened. BUT, none of their mistakes were large enough to put them in their current position. The whole problem right now is due to the CREDIT market collapse.
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Old 03-10-2009, 02:33 PM   #18
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The gubment shud send us all a gift certifikate fer $25,000, good only for use towards purchase a GM, or Chrysler product (Ford would be inelligble because they did not take any bailout money). That way it is up to us if we use the money, or not. It is only good for this year. after that it is invalid.
One certificate per household. you must have a valid address per last years tax return to collect.
But i think alot of people would try to sell the cars back or trade them in on something cheaper to try to make some cash out of the transaction. In which case we'd have lots full of used cars with low mileage that no one wants. God forbid they take the cash and buy a two Kias.
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Old 03-10-2009, 03:31 PM   #19
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Where is this credit "crisis" we hear so much about? The only people I have seen turned down for a loan are those that are probably a risk to extend credit to. I guess it's a crisis to some because, unlike the decade leading up to this most recent recession, banks and institutions that loan money are subjecting the borrower to much greater scrutiny before extending credit and, as a result, fewer people are qualifying for loans.

IMHO, if the banks would have kept their standards high in the first place we would not have the economic situation we have to day, or at least it would not be as damaging or widespread. Unfortuately, that did not happen and now we all, those with good credit and bad credit, are paying the price for the lack of self-regulation.

If GM had a truly viable recovery/restructuring plan, then private lenders would be lining up to extend loans to them. Instead, since private lenders were unwilling to offer GM and Chrysler the loans it needed just to survive, they had to petition the government. Since the government has no money of it's own, you, I and our successive generations are stuck with the bill.

As for people buying cars, look around on this board, it seems to me the people that are willing/able to buy a new car are having little difficulty getting loans. The fact of the matter is, given the current economy, fewer people are choosing to make a major purchase such as an automobile or house. ALL auto manufacturers have felt this, not just the few that were in financial jeopardy prior to the recession. That a recession did happen just made transparent what GM/Chrysler and other already knew; they were in major trouble and without a complete restructure of their core business they were on the road to bankruptcy.

I agree, in order for the restructuring plan they had alreay embarked on to work, it would call for them to sell a certain amount of cars. When that did not happen, for whatever reason, their plan was no longer viable.
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Old 03-10-2009, 03:41 PM   #20
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Where is this credit "crisis" we hear so much about? The only people I have seen turned down for a loan are those that are probably a risk to extend credit to. I guess it's a crisis to some because, unlike the decade leading up to this most recent recession, banks and institutions that loan money are subjecting the borrower to much greater scrutiny before extending credit and, as a result, fewer people are qualifying for loans.

IMHO, if the banks would have kept their standards high in the first place we would not have the economic situation we have to day, or at least it would not be as damaging or widespread. Unfortuately, that did not happen and now we all, those with good credit and bad credit, are paying the price for the lack of self-regulation.

If GM had a truly viable recovery/restructuring plan, then private lenders would be lining up to extend loans to them. Instead, since private lenders were unwilling to offer GM and Chrysler the loans it needed just to survive, they had to petition the government. Since the government has no money of it's own, you, I and our successive generations are stuck with the bill.

As for people buying cars, look around on this board, it seems to me the people that are willing/able to buy a new car are having little difficulty getting loans. The fact of the matter is, given the current economy, fewer people are choosing to make a major purchase such as an automobile or house. ALL auto manufacturers have felt this, not just the few that were in financial jeopardy prior to the recession. That a recession did happen just made transparent what GM/Chrysler and other already knew; they were in major trouble and without a complete restructure of their core business they were on the road to bankruptcy.

I agree, in order for the restructuring plan they had alreay embarked on to work, it would call for them to sell a certain amount of cars. When that did not happen, for whatever reason, their plan was no longer viable.
Some people isn't worth the effort to win them as a customer IMO.
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Old 03-10-2009, 03:44 PM   #21
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To add to what Dragoneye said, the VEBA agreement in 2007 is estimated to save GM ~8 billion/yr starting in 2010, which in and of itself puts them back to profitability under a normal sales year. Then there is the continuing reduction in build/labour cost and increase in quality (more sales, less warranty replacement). Also, know what GM's best sales year was? 2007. In fact, 2005, 2006, and 2007 were 3/4 best sales years in GM's history. They've averaged ~200 billion in revenue each year durring that time. So while a loss of say 5 billion may seem like a lot, its not much relative to the size of the company. A loss of 30B like GM had for 2008 is impossible to ignore, but the difference between 2007 and 2008 for GM is roughly the same as Toyota's (down ~25B). In an odd twist, thats good news for GM since they lost more sales than Toyota did and most of those were on highly profitable trucks and SUV's.

Ford started all this earlier than GM did and they are in a reasonably safe position. Chrysler started later but are much smaller so the turnaround can happen quicker and so they are in roughly the same financial position as GM is.
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WE DO NOT TALK ABOUT FUTURE PRODUCT PLANS PERIOD FbodFather
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Old 03-10-2009, 03:47 PM   #22
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I'll have some of what Dragon and DG are serving up!

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Old 03-10-2009, 03:52 PM   #23
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I'll have some of what Dragon and DG are serving up!

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Old 03-10-2009, 04:03 PM   #24
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Where is this credit "crisis" we hear so much about? The only people I have seen turned down for a loan are those that are probably a risk to extend credit to. I guess it's a crisis to some because, unlike the decade leading up to this most recent recession, banks and institutions that loan money are subjecting the borrower to much greater scrutiny before extending credit and, as a result, fewer people are qualifying for loans.

IMHO, if the banks would have kept their standards high in the first place we would not have the economic situation we have to day, or at least it would not be as damaging or widespread. Unfortuately, that did not happen and now we all, those with good credit and bad credit, are paying the price for the lack of self-regulation.

If GM had a truly viable recovery/restructuring plan, then private lenders would be lining up to extend loans to them. Instead, since private lenders were unwilling to offer GM and Chrysler the loans it needed just to survive, they had to petition the government. Since the government has no money of it's own, you, I and our successive generations are stuck with the bill.

As for people buying cars, look around on this board, it seems to me the people that are willing/able to buy a new car are having little difficulty getting loans. The fact of the matter is, given the current economy, fewer people are choosing to make a major purchase such as an automobile or house. ALL auto manufacturers have felt this, not just the few that were in financial jeopardy prior to the recession. That a recession did happen just made transparent what GM/Chrysler and other already knew; they were in major trouble and without a complete restructure of their core business they were on the road to bankruptcy.

I agree, in order for the restructuring plan they had alreay embarked on to work, it would call for them to sell a certain amount of cars. When that did not happen, for whatever reason, their plan was no longer viable.
The credit crisis isn't about quailified buyers. The problem is between financial institutions, and is more accurately described as a liquidity crisis (money has to move thru the economy just like blood has to move thru the body). Many of the institutions are sitting on mountains of bad debt, this has resulted in a fear of lending between institutions ( you wouldn't lend money to someone if you weren't sure they could pay you back.) which has resulted in the current crisis, Think of it as a blocked artery and a resulting Heart attack. Many Banks and Businesses depend on overnight loans to conduct business but because of the lack of transparency amongst the many businesses the loans aren't being made (the blockage). That has now morphed into a crisis for the real economy (the heart attack), better known as a negative feedback loop. Businesses are laying off employees because they can't make payroll/buy supplies without the overnight loans, consumers have reduced spending because they are afraid of being laid off, ect... GM is getting a double whammy because their suppliers want to be paid before delivering nessesary parts and their customers are afraid to buy big ticket items because their afraid they're going to get laid off. I hope that makes sense, it does in my head.
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Old 03-10-2009, 04:28 PM   #25
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Originally Posted by dbotsfordtat View Post
The credit crisis isn't about quailified buyers. The problem is between financial institutions, and is more accurately described as a liquidity crisis (money has to move thru the economy just like blood has to move thru the body). Many of the institutions are sitting on mountains of bad debt, this has resulted in a fear of lending between institutions ( you wouldn't lend money to someone if you weren't sure they could pay you back.) which has resulted in the current crisis, Think of it as a blocked artery and a resulting Heart attack. Many Banks and Businesses depend on overnight loans to conduct business but because of the lack of transparency amongst the many businesses the loans aren't being made (the blockage). That has now morphed into a crisis for the real economy (the heart attack), better known as a negative feedback loop. Businesses are laying off employees because they can't make payroll/buy supplies without the overnight loans, consumers have reduced spending because they are afraid of being laid off, ect... GM is getting a double whammy because their suppliers want to be paid before delivering nessesary parts and their customers are afraid to buy big ticket items because their afraid they're going to get laid off. I hope that makes sense, it does in my head.
Well said. Now you should go to congress and explain that to them, because I don't think they have a clue yet!

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