Right now, about 100% of people in my city drive everywhere. If 10% of people decided to start riding bikes, I guarantee there would be multitudes of bike fatalities. Biking in American cities is not only impractical most of the time due to suburban sprawl, but also very dangerous because biking never enters into the equation of designing the roads...
mykillk writes:
Right now, about 100% of people in my city drive everywhere. If 10% of people decided to start riding bikes, I guarantee there would be multitudes of bike fatalities. Biking in American cities is not only impractical most of the time due to suburban sprawl, but also very dangerous because biking never enters into the equation of designing the roads...
I'm sure their presentation contains some detail about plans going forward, but the substance seems to be exactly as it was before they were sent home last month.
WSJ and Bloomberg both report only that they need money. Well, they said that weeks ago. Is the only change since November that they now have a clearer idea how much money?
To do that would there not be a huge disruption to their supply chain? At very least do they even get paid? GM is big. Their suppliers to me are the bigger deal.
What's the argument against prepackaged bankruptcy? Stakeholders sure can't say they got no warning.
I doubt that the surviving entity is viable without MAJOR changes to the biz structure. And the current management is most likely not capable of those changes.
This is so horrible that I find myself laughing. How did we ever get into this position? Our entire banking system is insolvent. Our auto manufacturers are bankrupt. Our housing market is DOA. Insurers are toast. Consumers are up to (or past) their eyeballs in debt. The Fed/Treasury are aggressively pushing one ponzi scheme after another. Our political system is a joke. States and local governments are broke. Pension funds are playing hide the salami.
Bwahahaha
So this is what a dying empire looks like. Sorry folks. Not to be pessimistic, but this really is the end.
How big a deal do you thing GM going away would really be?
nova: CHinese Ponies | 12.02.08 - 4:29 pm | #
Huge - massive.
GM alone if it went away would suck something like a million high paying jobs down the tube within a couple months. More would follow through the year.
Realize the multiplier is something like 5:1 for auto mfg & related 'suppliers & services & white collar'.
Congress w/ treasury should broker a prepack BK this afternoon - seriously. Screw the measly $4B - make them file. Maybe see if they can get a two for one w/ Cerberus-Chrysler.
There are multitudes of auto fatalities. You'd be surprised how easy it is to set up safe bike routes with a little paint and a few inexpensive signs or plastic cones.
The argument that is advanced against a prepackaged BK is who will buy their cars - given the long service life, etc. no one will buy cars from a BK company.
The less often voiced argument or issue is the amount of CDS written on their debt - notional outstanding is in the neighborhood of ~$1 T or something like that (anyone have a better number?).
"Right now, about 100% of people in my city drive everywhere. If 10% of people decided to start riding bikes, I guarantee there would be multitudes of bike fatalities. Biking in American cities is not only impractical most of the time due to suburban sprawl, but also very dangerous because biking never enters into the equation of designing the roads..."
Here in San Diego, if you don't work on the same mesa where you live, good luck on that whole biking thing. The freeways run through the valleys between the mesas, and only main arterials run between them. When I worked in University City and lived in Mission Valley, it would have been a ~10 mile ride to get to work. No problem with what would have been about a 35-40 minute ride most days, except that more than half of the route was via Genesee Ave., which might as well be a freeway. My desire for self-preservation told me to stay in my car.
dryfly is exactly right. But nobody ever asks me, either
Nemo | Homepage | 12.02.08 - 4:31 pm | #
It's scary when a liberal like me & a conservative like Nemo get to the same place fast. It's disappointing when the congress critters with all their staff and researchers can't see the obvious. It's days like this when I feel we're really screwed... it's the obvious solution and it won't even be considered until all else is tried first and a lot more money is vaporized. Damn.
1 currency soon [yogi] writes:
There are multitudes of auto fatalities. You'd be surprised how easy it is to set up safe bike routes with a little paint and a few inexpensive signs or plastic cones.
We have thread bleed here, but paint and plastic cones don't make the road wider for a dedicated bike lane. Nor do they make drivers pay more attention.
If they can last till the UAW takes over the health care side of things they'll be walking into a sweet spot if it wasn't for the fact that most of these kids are conditioned to buy jap iron( no offense meant).
It's almost like opening a brewery in Mecca and hoping the muslims get over their alcohol issues.
What's the argument against prepackaged bankruptcy?
If GM/F/3Dog can get DIP financing from the government, it would probably work wrt. the businesses themselves. Whether or not customers would bail at a faster rate is hotly debated.
But there are some X factors consider - the effects of downgrades of Detroit 3 debt, what the effect of the 2005 bankruptcy act might be, and how big the related CDS "event" might be.
To do that would there not be a huge disruption to their supply chain?
Not immediately; in Chapter 11, the company continues to operate. Just like the airlines have done over and over again.
But everything would be up for renegotiation in court, from the principal on the bonds to the contracts with the unions and suppliers.
All this bail-out talk is a political attempt to avoid the shared pain of restructuring. The U.S. has a mature and effective BK process; now is the time to use it.
"We have thread bleed here, but paint and plastic cones don't make the road wider for a dedicated bike lane. Nor do they make drivers pay more attention."
Nor do they fix the problem of slower-moving bikes needing to traverse arterial/freeway interchanges that, at least here in southern CA, are cyclist deathtraps thanks to the multitude of lanes to be crossed even without turning, and the high speed dance macabre of merging obliviots yakking on cell phones and sucking down a frappuccino from behind the wheel of a 4-ton metal beast.
This is so horrible that I find myself laughing. How did we ever get into this position?
Partly NAFTA and outsourcing, although that gets little mention now. But that's the nature of the credit cycle.
Globalization hasn't been about comparative advantage as most of these economists like to believe. It's been about currency manipulations, temporary differentials and different points along the credit cycle.
I thought skill would matter so I focused on that to survive The Crash but what I didn't understand is that it's really about building your conspiracy network and getting your cut of the scam.
Sad.
Off to my single's meeting where most of the women will be drenched in like-minded delusional thinking, ergo fun sex will be but a dream but my earning ability & motivation will be all-important.
To do that would there not be a huge disruption to their supply chain? At very least do they even get paid? GM is big. Their suppliers to me are the bigger deal.
nova: CHinese Ponies | 12.02.08 - 4:33 pm | #
Look at their suppliers - half of them are now in or are near BK themselves... Delphi, Tower, Arvin, Eaton - etc.
They will all be wrapped up or rolled in later - one by one.
Equity wiped out, union contracts rewritten, bond holders & suppliers get clipped... all lose, all start over... but at a much better cost structure.
It will happen - just a matter of how & when. Surgery or chainsaw massacre.
The less often voiced argument or issue is the amount of CDS written on their debt - notional outstanding is in the neighborhood of ~$1 T or something like that (anyone have a better number?).
I am not sure the information is available. GM has nothing to do with the CDS on their own debt, so their own filings would not mention it...
So now we are going to bail out every company any company for which enough hedge funds have made bets on their default? Great; let's do it!
With today's sales numbers, it's really pointless to dump a lot of money into any car-maker without also putting tax money into some kind of consumer incentive to buy cars.
If they created a tax credit equal to 10% of the purchase price of a car, let you use that tax credit as your downpayment, and then let you borrow the rest at, say, 5% or less...cars would start to move again, a bit.
Of course, they'd also have to set up a TARP to backstop part of the car loan defaults banks or dealers will have.
You know, that's exactly what they're gonna do. All that.
But can they do it fast enough?
Buy gold and silver. There's not enough TARP to cover all the crap.
All this bail-out talk is a political attempt to avoid the shared pain of restructuring. The U.S. has a mature and effective BK process; now is the time to use it.
Nemo | Homepage | 12.02.08 - 4:42 pm | #
Am I the only one thinking of Blazing Saddles, and Cleavon Little holding himself hostage with a gun to his own head? Tried to find an online clip of that but could not do it in the time I feel justified in borrowing from my real job.
The percentage of redundant employees in large companies in this country is probably at least 20. And they're mostly not trained to do anything other than what they're (not) doing now.
We went through the 'right-sizing' rituals in the early 90's, and have been bulking up ever since.
Without new (productive) job creation, it's gonna get ugly.
Well, here in NYC, they haven't widened the roads lately, and population has not decreased. But riding a bike has actually become safer, thanks to old fashioned grass roots work from groups like this one: homepage | Transportation Alternatives
Yeah, we know, trucks have to bring in our food, yada, yada.
I assume that $4B is the amount they need after they fail to sell cars, fire the board and CEO, close down plants and fire unproductive staff, like engineers that were pushing for bigger gas guzzlers. What is it they ill give in return for this $4B windfall?
I'm all for electric cars, but any realistic move to electric cars is going to require a complete overhaul of the electrical transmission grid. It won't be able to handle all the extra demand. Also, where will the additional electricity come from?
GM should be given to Toyota, period. Let Toyota right off the merger as goodwill and then let Toyota fire everyone that has no value! Huh, what about that?
Gavshire Hathaway writes:
This is so horrible that I find myself laughing. How did we ever get into this position? Our entire banking system is insolvent. Our auto manufacturers are bankrupt. Our housing market is DOA. Insurers are toast. Consumers are up to (or past) their eyeballs in debt. The Fed/Treasury are aggressively pushing one ponzi scheme after another. Our political system is a joke. States and local governments are broke. Pension funds are playing hide the salami.
Bwahahaha
So this is what a dying empire looks like. Sorry folks. Not to be pessimistic, but this really is the end.
Gavshire Hathaway | 12.02.08 - 4:33 pm | #
Preach it, brother!
This is what happens when you take a manufacturing economy and do the following:
Outsource much of the work.
Pay CEOs ridiculous salaries.
Allow wages to stagnante for 30+ years vs. cost of living/inflation.
Allow the economy to run on 70% consumption OF GOOD FROM OVERSEAS, NO LESS!
Run up debts at every level and by everyone, their brother, and their sister. Expecially in light of #'s 1 and 3 above.
I'm all for electric cars, but any realistic move to electric cars is going to require a complete overhaul of the electrical transmission grid. It won't be able to handle all the extra demand. Also, where will the additional electricity come from?
~~~~
Charging at night is no problem. The grid can be upgraded as the transition is made. The big change will be lowering all posted speed limits by 20%.
So now we are going to bail out every company any company for which enough hedge funds have made bets on their default? Great; let's do it!
Nemo | Homepage | 12.02.08 - 4:46 pm | #
A CDS event would take more than a few of these hedgies to the canvas too... well make my day.
BTW congress could authorize commerce or treasury to take an active roll in the fight & stand off the hedgies in BK court. Especially if congress stood up and decided to be the one providing the DIP financing. That should send a chill down the spines of the CDS vultures.
Chapter 11 even under the new rules doesn't mean the 'creditors' have all the rights - the judge has a lot of leeway to work out deals that works best for ALL creditors. It doesn't 'close' until the majority of interests sign off.
Meanwhile who would have the deeper pockets to fight - congress with a printing press attached or some hedgies?
Might be time to reintroduce the market to Mr M Hazard. He's a bitch.
Bankruptcy was made for situations like this. Debt holders need to lose. Equity holders need to lose. Feds pick up the unfunded pension liabilities. Then start fresh with a company that has the potential to turn a profit.
There are significant merits to your position, however NYC is not the USA, and there are locales that will require materially more than a stripe of white paint and few orange cones to migrate to a bicycle friendly transit model...
Partly NAFTA and outsourcing, although that gets little mention now. But that's the nature of the credit cycle.
While I think the global rebalancing of labor power was inevitable, I think the way we've approached it is foolish.
We've rapidly transferred access to real wealth from people who expected to have it and made obligations based on that expectation, to those who had no such expectations or obligations.
In the short-term it's basically a recipe for social catastrophe even if in the long-term it's a defensible outcome.
Fundamental change has to be carefully managed.
In this case it has been completely haphazard and ad hoc justified by economic fundamentalists preaching against any sort of "protectionism" or attempts to resist globalization.
"I'm all for electric cars, but any realistic move to electric cars is going to require a complete overhaul of the electrical transmission grid. It won't be able to handle all the extra demand. Also, where will the additional electricity come from?"
That's not entirely true. The grid's current problem is peak load. If charging occurs at night when the loads are generally smaller (less A/C, less industrial use, fewer big screen TVs drawing juice), much of the load could be absorbed by our current grid. Many large electrical utility companies are transitioning to smart meters that facilitate time-sensitive electricity pricing to address this very issue. Rates are cheaper overnight.
I am not sure the information is available.
Nemo | Homepage | 12.02.08 - 4:46 pm |
A colleague wrote a white paper back in early '06 explaining that all that was being tracked on various spreadsheets at different institutions and that the transactions were done via email and other spreadsheets. He was trying to sell the idea of a regulated exchange. No one cared.
This just doesn't seem like its about cars and trucks...
Straight from GMAC's website:
"GMAC Financial Services is a global finance company operating in and servicing North America, South America, Europe and Asia-Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of Dec. 31, 2007, the organization had $249 billion in assets and serviced 15 million customers.
Founded in 1919 as a wholly owned subsidiary of General Motors Corp., GMAC was established to provide GM dealers with the financing necessary to acquire and maintain vehicle inventories and to provide customers a means by which to finance vehicle purchases. The company's products and services have since been expanded and now include three primary lines of business: automotive financing, real estate financing and insurance.
On Nov. 30, 2006, GM sold a 51 percent controlling interest in GMAC to a consortium of investors led by Cerberus Capital Management, L.P., a private investment firm, and included Citigroup Inc., Aozora Bank Ltd. and a subsidiary of The PNC Financial Services Group, Inc."
NYC isn't representative of the layout of most American cities. That isn't going to change any time soon. Commutes are measured in miles in most of the US, not blocks.
I've heard of very few people commuting by bike in NYC in any case. Bus, subway, train, foot.
What are the mortality statistics for bike messengers in NYC? I suspect they're ugly.
How much did the CEO make for contributing to this request for $4B?
FYI: Ford Chairman Bill Ford told National Public Radio that the company is negotiating with CEO Alan Mulally on a cut in pay and perks. In two years, Ford has paid CEO Alan Mulally nearly $50 million and allowed $752,000 worth of personal and family use of company planes. "We're talking to Alan about it," said Ford, who's taken no salary for four years. "We are very sensitive to public opinion."
"We're talking to Alan about it," said Ford, who's taken no salary for four years. "We are very sensitive to public opinion."
Black Cloud 1 | 12.02.08 - 5:01 pm | #
There you are!
I hate to say, but "You done closed the barn door after all the horses got out!"
People really never learn. Why did this even get to go on for as long as it did?
I can't believe he did anything to improve Ford so much he deserved it. Did he?
Jett Rink(Unrated) writes:
How much would the hit to the Pension Guarantee Trust be if GM and Chrysler were gone?
Jett Rink | 12.02.08 - 4:56 pm | #
With all the supplier companies also represented by UAW - a lot. Well it's gonna happen anyway so why not today?
Also maybe the answer is for the BK judge on behalf of the PBTC or whatever it's called to include UAW as part owners in the new GM - ESOP like. Tie some of their future pensions to market cap growth of the new company. if the company does well - their pension loses will be less. If it all fails PBTC does its thing anyway (pensioners take a hit then too so would have incentive to find a better route out).
Best case would still probably cause the fund to take a hit but might mitigate some or a lot of it.
If Obama is serious about infrastructure, what we really should do is tear down all the suburban sprawl and recycle the building material into making walkable/bike-able communities that build UP and not OUT
Now is a GREAT time to.... writes: So they need 4 billion just for this month and it just occurred to them that they need to cut expensive corp jets?
Can't risk losing the top "talent". Har har har.
(Heard one interview where the use of corporate jets were justified by "terrorism"... that these CEOs might be kidnapped if they flew commercial. The interviewer, to their credit, was not impressed.)
Look on the bright side, with cheap metals, the cost per unit will decrease. That should more than offset the interest on the infusion of cash at a rate of 4b a month for the next twenty years!
HUMMER 02 Concept with phototropic body shell HUMMER 02 Concept with phototropic body shell
December 3, 2006 GM Advanced Design has won the Los Angeles Auto Shows Design Challenge for the second year in a row. This years winning entry is a two-dimensional rendering of a 2015 Blue Sky Concept that addresses environmental sustainability. Called the HUMMER 02, the design was created to demonstrate that daily use of a vehicle could result in a net gain for the environment. The HUMMER 02 Concept features a phototropic body shell that produces pure oxygen throughout the life of the vehicle. Algae-filled body panels transform carbon dioxide into pure oxygen that is subsequently released back into the environment and inside the vehicle.
Nice science fiction, but what about reality for next month and a real plan to produce real cars versus engineering masturbation!
(Heard one interview where the use of corporate jets were justified by "terrorism"... that these CEOs might be kidnapped if they flew commercial. The interviewer, to their credit, was not impressed.)
DCRogers | 12.02.08 - 5:04 pm | #
Read up on the crook Walsh of GE. He got around the whole commercial thing by saying he was a prime candidate for terrorism or some such nonsense. Allowed him and the family to fly corporate/privately all the time and tax free.
Ah. So if we the taxpayers would rather not cough up $16 billion to prop up these sclerotic, uncompetitive monstrosities, that is a "union busting ploy"?
Awesome.
Not that it matters; the Dems are in the pockets of big labor and the executives drove this time, so GM will get its bail-out.
GM has the same synthetic asset-backed nightmare as Ford and they both are going to burn cash until they die:
Given the nature of many of Ford Credit's asset-backed committed facilities, it has the ability to obtain term funding up to the time that the facilities mature. Any outstanding debt at the maturity of the facilities remains outstanding through the term of the underlying assets. Ford Credits ability to obtain funding under its committed asset-backed liquidity programs is subject to having a sufficient amount of assets eligible for these programs, as well as its ability to obtain derivatives to manage its interest rate risk.
Would CDS buyers/sellers even have a seat at the table in BK? They are not stakeholders; in fact, they have no relationship with the company at all.
I don't know - another commenter a few days ago said a lot of the participants (vendors, lendors, etc.) are active in the GM CDS trade on ALL sides. He said the economic interest from the CDS is far greater than from the BK itself. Highly magnified & leveraged. He said it was like having your surgeon & anesthetist take out multimillion dollar life insurance on you prior to bypass surgery - not necessarily interested in your best outcome.
In a similar way these CDS participants don't necessarily have the same interest as the US (jobs & prosperity for all).
This is like bailing out Krispy Kream Donuts at the height of the donut balloon and then telling taxpayers that Krispy is going to turn around and sell even more donuts -- this is also called fraud!
It's been just over a week since the Fed & Treasury bailed out Citi (for the second time in a month or so. Citi is not alone in their incompetence either.
I'm guessing we will see JPM being bailed out again. They are the worlds largest CDS holder if memory serves. Eventually, their armory will start exploding.
No way this financial crisis is over. If the public ever gets "FED" up, we'll see a nationalization of much of the banking system. If the public remains pliant, the giveaways will continue.
dryfly writes:
Would CDS buyers/sellers even have a seat at the table in BK? They are not stakeholders; in fact, they have no relationship with the company at all.
I don't know...
I don't either but, govt. injection of capital could be viewed the same as failure depending on the fine print
"David Nelms, Discover's chief executive, said charge-offs could be in the mid-5 percent range in the fourth quarter and near 6 percent in the first quarter of 2009."
Am I the only one thinking of Blazing Saddles, and Cleavon Little holding himself hostage with a gun to his own head? Tried to find an online clip of that but could not do it in the time I feel justified in borrowing from my real job.
John Stark
The sheriff is a ni......
Am I the only one thinking of Blazing Saddles, and Cleavon Little holding himself hostage with a gun to his own head? Tried to find an online clip of that but could not do it in the time I feel justified in borrowing from my real job.
John Stark
NYTimes wunderboi Andrew Ross Sorkin was on Charlie Rose back when the Three Wise Guys first approach Congress for a handout. He claims that a "prepackaged bankruptcy" is very much top of mind among the folks cooking up a solution for GM, with the gummint giving DIP financing.
He did want to screw the unions somewhat (and actually quoted that $70/hour bulls*t in his column), but more than that, he wants to screw the dealers. He says that if GM wants to close down certain models and streamline its offering--which it needs to do--then state laws require the company to pay billions to dealers to buy them out. That's the obligation he wants to hose most in bankruptcy.
He says that if GM wants to close down certain models and streamline its offering--which it needs to do--then state laws require the company to pay billions to dealers to buy them out.
Federal laws can over ride. Probably will be included
We can throw money at the big 3 until they choke on it - doesn't matter. Like the sign says "Liquidity does not equal solvency".
And besides, these Detroit ass clowns have murdered their respective brands. Trying to bring even one of them back to life much less all three of them would qualify as nothing less than a modern miracle.
Federal laws can over ride. Probably will be included
Anonymous | 12.02.08 - 5:15 pm | #
Not unless part of a BK 'cramdown' in which case the dealers are part of the unsecured creditor pool & get what they get - anything else would be a 'taking' and the current sentiment & make up of the court wouldn't like that too much.
I actually knew a couple of people who commuted by bicycle in Fairbanks, AK in the freaking winter - as the sea tale goes, now this is no sh!t - they had to use special synthetic chain oil to maintain viscosity at -40, use milspec cold weather gear and studded tires on the bike...but it can be done. For the masses? NFW.
Not unless part of a BK 'cramdown' in which case the dealers are part of the unsecured creditor pool & get what they get - anything else would be a 'taking' and the current sentiment & make up of the court wouldn't like that too much.
dryfly
Or 537 lying, crooked politicians change the rules
GM probably has some serious covenants on their existing debt that would prevent them from selling off assets. That and a trillion basis point spread would be the only things that would make me consider lending to them.
Given the Lehman experience with CDS settlement, I think it's possible that a GM event would be handled well. What would be all kinds of exciting though would be the market movements as the losers on the contracts liquidate assets in order to pay up.
BofA/Merril merger job cuts now estimated at 30,000:
"Bank of America CEO Kenneth Lewis wants to wring out $7 billion in savings from the merger over the next few years, so the total number of jobs lost could be closer to 30,000, they said."
Or 537 lying, crooked politicians change the rules
Anonymous | 12.02.08 - 5:22 pm | #
On a takings - they'd have to change the constitution - the supremes would kill them on something this straight forward unless the dealers were given due process & 'compensated' for contracts they already have in place.
The exception is BK - then the due process says F@&# YOU!
But what is the plan?
I thought they have to come up with ideas what they want to do in the future to get the money from congress.
Now they only come to DC with a car and beg for 4 bill?
This is NOT a business modell.
" Black Cloud 1 writes:
I assume that $4B is the amount they need after they fail to sell cars, fire the board and CEO, close down plants and fire unproductive staff, like engineers that were pushing for bigger gas guzzlers. What is it they ill give in return for this $4B windfall?
Black Cloud 1 | 12.02.08 - 4:52 pm | # "
What makes you think that engineers were pushing for bigger cars? GM is run by bean counters, and their business model was to make large vehicles with large profit margins rather than compete with imports where where the margin was so thin that the cost of UAW labor made them unable to compete. These crappy vehicles were requested by Marketing and Accounting, not Engineering.
xxxxx
I've read that auto production in the Great Depression was down about 75% from the 1929 peak.
That does not seem out of the range of possibility today, even though cars are far more essential today than then.
How can economists that claim to have the authority to rule the masses with their brilliant ideas have missed something so obvious as the biggest decline in metal prices ever?
Our new overloads were making eloquent enlightened economic arguments just a few months back as to why such things were driven by fundamentals, not the sort of monetary and credit issues shock deflation would seem to imply.
How can people who have been so wrong about something so dramatic now claim to have the knowledge to solve our current problems?
ac writes:
Metal prices fall further than during Great Depression
But we were reassured by high-profile economists now playing key roles in economic policy that these prices were driven by legitimate demand
Same story with oil. The stockpiles of commodities referenced by Dryfly as evidenced by large piles of corn under tarps are a reflection of no-bid....
The run-up in price was pure speculation (manipulation). I'm just shocked by the slow response of the hedge fund implosion. Someone went long and took it in the shorts. Where are the corpses?
I am with you on GM. And I am one of those dreaded latte liberals who drives a Honda CRV!
But I will take this one step further: Let them all fail. The Big Three had plenty of warning about the market, oil prices, etc...and did nothing, absolutely nothing to improve our economy and national security (get off our oil addiction) through their R&D and manufacturing capabilities. Should have hit the US for bucks after 9/11 with a patriotic push to get off petro. But instead rolled out the "Let's Roll" interest free SUV and Muscle-Car "Keep America Rolling" marketing bonanza. How crass was that and to what good of the economy?
So I fail to see how saving them is in our national interest and the Billons would be better spent reconstructing our economy and rebuilding our infrastructure capacity.
The Big Three have relied on credit to exist in the first place and with easy credit came monstrous oil burners and forays into real estate, etc.
Here in Oregon we are working our asses off to bring in electric and hybrid vehicles from China and Japan and looking at how to improve our infrastructure to handle the demand. Pacific Power has already invested a 10 percent in Chinese automaker BYD.
Bwahahaha
So this is what a dying empire looks like. Sorry folks. Not to be pessimistic, but this really is the end.
Gavshire Hathaway | 12.02.08 - 4:33 pm | #
Yup, it looks as if the Founding Fathers' efforts to found a stable, prosperous nation are proving to be no match for modern-day Americans' penchants for unsustainable behavior. Hope meets reality. Or is it simply human nature?
But instead rolled out the "Let's Roll" interest free SUV and Muscle-Car "Keep America Rolling" marketing bonanza. How crass was that and to what good of the economy?
Because Bush told them to via his tax cuts. Auto mfrs. are no different than any other consumer driven enterprise, you build what the customer wants.
"The stockpiles of commodities referenced by Dryfly as evidenced by large piles of corn under tarps.."
Not always under tarps. Some local co-ps have storage bins, others pile it on the ground, exposed. You can drive through Iowa, southern MN and see it in town after town. At first you think it is some kind of gravel or other aggregate, but it is shelled corn.
just like religion, ac. Same justification, too: voices tell them.
Sometimes I wonder how Keynes would react to what's being done in his name.
Even if his ideas are completely valid in the general case, that doesn't mean in the specific they cannot be abusive when applied without discrimination or morality.
Perhaps he would be disturbed by his name being invoked to justify the heaping of lies on top of lies.
I'm sorry, I'm just tired of these vague fantasies that seem to come from some idealized vision of "how they do it in Europe."
mal | 12.02.08 - 5:16 pm |
You mean those were real traffic jams I was stuck in commuting near Cologne?
1 currency soon [yogi] writes:
"There are multitudes of auto fatalities. You'd be surprised how easy it is to set up safe bike routes with a little paint and a few inexpensive signs or plastic cones."
Right. Like from Bismarck to Pierre. Piece o' cake.
"If they created a tax credit equal to 10% of the purchase price of a car, let you use that tax credit as your downpayment, and then let you borrow the rest at, say, 5% or less...cars would start to move again, a bit."
Down payment assistance for cars? My god we're fucked.
GM's getting worse, not better. No amount of loans will make them successful, ever. I'll bet anyone GM will never turn a net profit from today in 100 years, if they even live til next year.
I recall an 80% decline in 1929 alone. I could be wrong. Alternatively there could be some debate about the actual figures.
Home construction fell 90% during the (first) Great Depression IIRC.
What does auto production in the great depression have to do with auto production in the current credit crunch? The industry was much different then than it is today. This is not the first time the automotive industry has struggled since the Depression.
"Off to my single's meeting where most of the women will be drenched in like-minded delusional thinking, ergo fun sex will be but a dream but my earning ability & motivation will be all-important." Brownard Horne
This is so horrible that I find myself laughing. How did we ever get into this position?
Partly NAFTA and outsourcing, although that gets little mention now. But that's the nature of the credit cycle.
Globalization hasn't been about comparative advantage as most of these economists like to believe. It's been about currency manipulations, temporary differentials and different points along the credit cycle.
I thought skill would matter so I focused on that to survive The Crash but what I didn't understand is that it's really about building your conspiracy network and getting your cut of the scam.
Sad.
Yes, there is much truth in what you say, Mr. Horne.
Personally, I hide out as a public sector professional, with my excess income socked away in bonds . . . until today. It got me through 1998 through today, with modest positive returns. Now, I think it is CDs going forward, at least for 2-3 years.
Anyway, I think that us public sector folks will be among the last victims, at least those of us with seniority.
Fortunately, we have all those brilliant congresspeople who will be "analyzing" the car makers plans, down to the last nickel. Meanwhile, the Treasury and the Fed just keep shoveling the billions out to Wall Street. No "plan" necessary for those guys.
mykillk writes:
"I'm all for electric cars, but any realistic move to electric cars is going to require a complete overhaul of the electrical transmission grid. It won't be able to handle all the extra demand. Also, where will the additional electricity come from?"
mykillk | Homepage | 12.02.08 - 4:53 pm | #
Oh, come on. Stop asking pointed questions and get with the program. Alternative power promoters are betting on miracles (and Obama). If you join them, you will feel really good.
Oh, for the love of...I could go on a long rant here, but I'll just add my voice to the chorus in favor of a pre-packaged BK--for all 3 of 'em. And the Financials while we're at it. The economy is going TU sooner rather than later, so let's just rip off the bandaids and be done with it instead of standing in a big circle on the deck of the Titanic passing IOUs to each other. The sooner we crash, the sooner we can start rebuilding.
Oh yeah--any guesses on how many ticks this is worth on Conjure's clock?
Dave(Unrated) writes:
Fortunately, we have all those brilliant congresspeople who will be "analyzing" the car makers plans, down to the last nickel. Meanwhile, the Treasury and the Fed just keep shoveling the billions out to Wall Street. No "plan" necessary for those guys.
Dave | 12.02.08 - 5:50 pm | #
If I asked for an explanation why there was a light frost in DC this morning, and the answer was that it usually gets that cold in early December here, I would surmise that the person answering was no meteorologist. Look at the discussions at your local NOAA site.
If I ask why the market went up today and the answer is vague and general, I would conclude that nobody really knows.
Are there 'insiders' who can give better answers, or is everyone that way?
OT- Ben Stein maybe a bit of a born and bred Jas style, but, he makes a rather obvious point with a twist: In fact, if it had been possible for George W. Bush to run for and win a third term, wouldn't Mr. Geithner have been exactly whom he would have chosen to replace Henry Paulson if Mr. Paulson ever decided to leave the Treasury? But wait a second. Didn't Mr. Obama campaign against Bush policies? Is he now giving us a third Bush term? Geithner at Treasury, Gates at DOD, Mrs. Clinton at State? Sure looks a lot like what Bush would have chosen if he had been able to run and win.
1 currency soon [yogi] writes:
"Just came back from Minnesota. Saw a lot of people on bicycles. In November."
1 currency soon [yogi] | 12.02.08 - 5:56 pm | #
"The argument that is advanced against a prepackaged BK is who will buy their cars ... from a BK company."
People need to figure out that the last car they bought is the last car they will ever buy. If you really need a car, the one you have will have to last 20 or 30 years.
As for the Big 3 -- buy Chysler and nationalize it for military vehicles. Let the other two fend for themselves.
Worked for a an engineering company for many years. They designed, and built many electric trolleys for many U.S. cities; Boston, Houston, Tampa, SF are a few of the locations. Where did they all go? Think big car company! See link.
So that is $470 million loss and an additional $355 million contingent loss? All in another $825 million (potentially) hit? That sounds about right for a 14% pop in value...
Legg Mason Rises After Providing More Cash to Funds (Update1)
By Christopher Condon
Dec. 2 (Bloomberg) -- Legg Mason Inc. rose 14 percent in New York trading after the asset manager set aside an additional $470 million to cushion investors from losses in four money- market funds.
Legg Mason said yesterday that the fresh capital will be used to absorb losses on debt issued by structured investment vehicles. The Baltimore-based company also said it renewed a contract with banks designed to prop up $355 million of SIV securities, which tumbled in value earlier this year when credit markets froze and the investment funds couldnt refinance their borrowings. Legg Mason Rises After Providing More Cash to Funds (Update1) - Bloomberg.com
As for the Big 3 -- buy Chysler and nationalize it for military vehicles. Let the other two fend for themselves.
John S | 12.02.08 - 6:00 pm | #
Your view seems overly pessimistic. What sense does it make to allow Ford and GM fend for themselves. Would you really like to see two of the biggest companies in America die?
If I ask why the market went up today and the answer is vague and general, I would conclude that nobody really knows.
Are there 'insiders' who can give better answers, or is everyone that way?
It looks to me like it was pumped at the end of the day as we approached flat-line. But your frost analogy may be apt. A lot of market movements are probably chaotic in origin and their cause cannot be separated out of the noise floor.
The Supremes take a dim view of Congress or the Administration trying to derail or usurp what they see as the "normal" access people have to the courts or the route of issues through the courts. Typically just calling an action a different name or accomplishing it under a different law generally doesn't remove the Constitutional issue. This was one of the reasons that they've biffed the Bush administration and Congress on many of the issues with the prisoners held at Gitmo recently. Needless to say they also have a dim view of the Patriot act and declarations of Presidential power these days.
So this is what a dying empire looks like. Sorry folks. Not to be pessimistic, but this really is the end.
Gavshire Hathaway | 12.02.08 - 4:33 pm | #
Go read up on what Buckminster Fuller said in the 1970s about our world paradigm undergoing a major shift within 25-50 years. He predicted all of this and said very clearly why it would happen and where it will lead. That, my friends, is the best leading indicator you'll ever get.
In Grand Marais, I presume?
JohnR(VA) | 12.02.08 - 5:58 pm | #
I know folks in Grand Marais crazy enough to bike all winter... they would also go kayaking if they could find fissures in the pack ice to get out to open water... but that's Grand Marais for ya.
[Seriously one of these guys a few years ago drove their mountain bike out on the Mississippi hit a hidden fissure and went in - sent the bike to the bottom and his buddies had to fish him out - was about twenty below that day. Moron wasn't from the river valley & never considered the current under the ice might thin it enough to make it dangerous. Oh well - live and learn - if you live.]
Go read up on what Buckminster Fuller said in the 1970s about our world paradigm undergoing a major shift within 25-50 years. He predicted all of this and said very clearly why it would happen and where it will lead. That, my friends, is the best leading indicator you'll ever get.
Bucky balls are so awesome, how can you not believe what he says?
Nov. 7 (Bloomberg) -- General Motors Corp., the world's biggest carmaker, opened a $300 million factory in Russia as it looks to compensate for slumping sales in western Europe and North America.
The plant in the Shushary district on the outskirts of St. Petersburg will produce 70,000 Chevrolet Captiva sport-utility vehicles and the Opel Astra, with plans to manufacture the Chevrolet Cruze compact car next year
anybody remember the Lehman CDS settlement disaster- you don't because there wasn't one. If at this point there is anybody out there with GM CDS exposure who hasn't taken some kind of protective action with regard to their Counter party risk they deserve to get screwed.
I think the AIG CDS exposure has been blown way out of proportion. The reason that AIG caused so many problems is that they were probably the largest net writer of CDS essentially anchoring one side of the CDS market. Most of the other large players are much smaller net writers and all of them operate under netting agreements that cover not just CDS but all kinds of derivative transactions.
Looks like it's time for a prepackaged bankruptcy if you ask me.
Yep.
Backstop a re-org, let common stock and the bulk of bondholders feel a whole lot of pain, and then let the free market decide whether or not their go-forward plan is "viable".
Fidelity Reopens Funds to Offset Investor Withdrawals (Update2)
By Christopher Condon
Dec. 2 (Bloomberg) -- Fidelity Investments plans to let new investors buy Contrafund, its largest mutual fund, and Low- Priced Stock Fund in an effort to rebuild assets after investor defections and market losses.
Contrafund, which was closed in April 2006, has seen client assets fall 36 percent this year to $51.5 billion at Oct. 31. The $19.9 billion Low-Priced Stock Fund, closed in December 2003, has lost 43 percent of its assets. Both funds will start taking cash from new investors on Dec. 16, the Boston-based company said today in a statement. - Bloomberg.com
Company insiders today leaked information about GM's plans for the first $4 billion of its requested assistance. 'It's for a demolition derby Survivor-type theme show,' commented one highly placed insider, requesting anonymity. 'People bring in their GM cars and compete for fabulous prizes and vacations. We figure if we can smash up around 8 million cars, we'll be in business again.'"
I'm of two minds here. One says that Americans should get a true taste of what they say they want (unregulated free markets/weak gov't). The other wrestles with the fact that this might destroy the affluence of an entire generation.
--
"Didn't Mr. Obama campaign against Bush policies? Is he now giving us a third Bush term? Geithner at Treasury, Gates at DOD, Mrs. Clinton at State? Sure looks a lot like what Bush would have chosen if he had been able to run and win."
Anonymous,
Obama is an ideal leader for born-and-bred American dopes. McCain and Hillary were close seconds. Gangistan is full of, you guessed it, gangsters!
CDSs are used widely internationally. I don't think it would be perceived very nicely if CDS contracts on GM would be unilaterally invalidated by congress.
IMO, it can only happen within the framework of a new BW3.
The government will be quite helpless to stop them, and maybe should instead be contemplating putting a safety net under the populace instead of pumping money into black holes at the top.
After all, send money to people who will spend it instantly, the poor.
That is true stimulus.
After all, all of the money I pay on my debts every month doesn't seem to stimulate anything.
"A lot of market movements are probably chaotic in origin and their cause cannot be separated out of the noise floor."
Chaos I can understand, or at least I can contemplate it without being completely mystified. There are well-known equations that describe it. But the global economy must be at least as complex as climate, and perhaps much more complex, because human beings and their social systems are incorporated into it.
It makes me wonder if Dr. Bernanke and Mr. Paulson are really trying to start a stalled automobile by repeatedly lifting the hood and slamming it down again. Did such an operation work before? Who can say for sure?
"If they created a tax credit equal to 10% of the purchase price of a car, let you use that tax credit as your downpayment, and then let you borrow the rest at, say, 5% or less...cars would start to move again, a bit."
Then they go and buy Honda's and Toyota's.
Only people that still buy domestics are those with bad credit or no down payment, and it isn't by choice.
Point 1- The airlines aren't the automotive industry. If the automotive industry collapses, the job losses would be absolutely enormous.
Point 2- The financial sector wasn't on the rocks when the airlines went under. They were refinanced. That won't happen this time around.
I don't think you folks realize how desperate the situation has become. Conjure said it a few weeks ago. We are a hair's breadth from collapsing into a full-blown depression, something that would make Japan look like a walk in the park. It's that bad.
This isn't "maybe," "might," or "could" any longer.
IT WILL HAPPEN UNLESS DECISIVE ACTION IS TAKEN. IMMEDIATELY.
Well, if they "have" to do something how about giving the money to decent poor people that fulfill their obligations, rather then to the crooked speculators that default on their obligations or shoddily assemble products that are not competitive?
Tipping point time...ever been in a boat that is about to heel over? Often, there is a moment when not much more than a featherweight will determine if it rights or rolls.
Not sure, but thinking the feather has already landed on the wrong side...
"Once the market is going down it is rational behavior to short the sh#4 out of it."
What is rational at one level of discourse can be catastrophic on another. The Invisible Hand can rummage through other people's pockets.
That's why there are laws, and that's why anarchy is the worst of all possible outcomes. We are suffering from, among other things, an outbreak of anarchy.
"any suggestions as to what decisive action to take, mp?"
Canada, I have all kinds of suggestions. They can begin by having a meeting at the White House of all the bankers. The President's speech has one line:
"If someone walks into your bank tomorrow and asks for a loan, give it to them."
It makes me wonder if Dr. Bernanke and Mr. Paulson are really trying to start a stalled automobile by repeatedly lifting the hood and slamming it down again. Did such an operation work before? Who can say for sure?
Wow. That image strikes.
Now when a bicycle breaks down, the solution is always perfectly visible, and inexpensive.
...According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012..." (bold mine)
Pavel Chichikov asked: "Why did the market rise today?"
Speaking as a born-again bear, I think it had something to do with the fact that yesterday (Monday) 98% of the NYSE volume was to the downside, along with 97% of the Nasdaq volume. The market bounced today because it was so oversold on a short-term basis that it almost had to.
It's too late. The time to act was in 2003/4. No need to pre-emptively nationalize everything in this country. Pick some winners after the field has been narrowed substantially. I think it was a mistake to saddle the marginally solvent financials with the losers. Now the entire financial sector is BK...
Bankruptcy reform of 2005 contains a provision that severely limits executive retention bonuses and pay.
I think GM needs to go BK, and as they walk out the door from filing, Congress can swoop in with some flow cash. Then as the court performs its work, the real negotiating can begin. The nice thing is that the co will be legally liable for all the statements in files in court.
I'd much, much rather have this all court-supervised.
MP, BK but operating means we keep a lot of jobs, jobs.
"I think GM needs to go BK, and as they walk out the door from filing, Congress can swoop in with some flow cash. Then as the court performs its work, the real negotiating can begin. The nice thing is that the co will be legally liable for all the statements in files in court."
MOM, I have absolutely no problem with your idea, but they need a plan to screw the industry's top brass and that plan needs to be publicized so well that it is known by every fourth grader in this nation.
I wonder why anyone is buying a new car in this environment. Not easy to get financiang and if you have the free cash to buy without one, arent there better uses for the money? Wonder how many of the sales today were fleet sales vs. to individuals. As to GM needing more cash so quickly, at least we arent in the AIG situation where they went from needing $20B to $40B to $85B in the course of a weekend.
Fed extends its emergency lendinghttp://www.ft.com/cms/s/0/95b3761a-c0a4-11dd-b0a8-000077b07658.html
The lending facilities provide loans to bond dealers, lend to banks buying asset-backed commercial paper from mutual funds, and auction loans of Treasury securities. They will now last a further three months until the end of April.
"Can you think of anybody who really cares? Think about it."
I do. While it would suck for GM to go into BK, it would suck even more if that set off a chain reaction that systematically crashed the financial system.
I heard on the radio yesterday (some talk show) that only 1% of Americans (presumptively individual Americans rather than corporations) plan to buy a car - any car - in the next year. If true, the auto makers will be back for more, much much more.
mp writes:
"any suggestions as to what decisive action to take, mp?"
Canada, I have all kinds of suggestions. They can begin by having a meeting at the White House of all the bankers. The President's speech has one line:
"If someone walks into your bank tomorrow and asks for a loan, give it to them."
"Meeting over."
"Have a nice day."
mp | 12.02.08 - 6:43 pm | #
For a second there I thought you were going to suggest the Borgia solution, invite them all to a meeting, walk out, lock the doors behind you and set the building on fire.
On the GM-Brazil thing, GM has operations down there that produce Opels for the local market. Very few bits come north - at least from Brazil. Investment there makes sense; saying that the funding will come from a Congressional bailout was moronic.
I think people forget that both F and GM are global companies with overseas operations that are mostly independent of their North American clusterf***s. (Chrysler is almost exclusively a NA outfit.)
The backers of the electric car remind me of the same pack of shills and idiots who lied us into ethanol mandates. Bad for the economy, bad for the environment.
if you really needed wheels, like if your lease is up or your car got smashed or stolen, why would you think only about new cars? Go on to Ebay or Craigslist and you can find individuals and dealers letting hardly used cars go for astonishing discounts. You can research the VIN, even check the car out locally. These are likely cars that were 'owned' by people who got in trouble.
This channel is terrible for new car makers, but its rational.
"I think that with demand destruction in the order of 30-40% job losses are inevitable"
Fine, but we're not playing office here, we're playing with people's lives. Take the damned thing over and wind it down, employment programs taking up the slack.
Well why didn't they just say so? No problem!
4 billion for 29 days? I can live with that.
If their burn is 4B/month then why don't they need 48 billion next year?
That's me at 4:25
Sounds like they're using Hank Paulson's playbook.
Dope certification price increase: $4 billio
Looks like it's time for a prepackaged bankruptcy if you ask me.
Of course no one asks me.
They need $4B within days to survive.
Yep, that sure makes me want to buy a vehicle from that company. GM always had the bean counters, as opposed to the marketers.
But they drove down to D.C. this time, so I say give it to them.
Dope Certification LLC(Unrated) writes:
Dope certification price increase: $4 billion
Dope Certification LLC | 12.02.08 - 4:27 pm | #
Do I get a sign?
Dryfly,
How big a deal do you thing GM going away would really be?
OMFG GM F!
Every business in America should be up in arms.......or asking for a bailout too.....
Right now, about 100% of people in my city drive everywhere. If 10% of people decided to start riding bikes, I guarantee there would be multitudes of bike fatalities. Biking in American cities is not only impractical most of the time due to suburban sprawl, but also very dangerous because biking never enters into the equation of designing the roads...
...can we bail out Ford and not GM?
GM = Broke, Wow!
So at 4 billion for what's left of 2008...
2009...2010...
GM = a really stupid statement
Just say no!
PUT IT ON THE TAB.
ova --
"Prepackaged bankruptcy" means Chapter 11 but with a government backstop (to avoid Chapter 7).
Companies do not "go away" in Chapter 11; they get forcibly restructured into something that actually has a prayer of being a going concern.
dryfly is exactly right. But nobody ever asks me, either
Anyone remember Osborne computers? That is what GM reminds me of
I guess Waggoner's business plan of going to vegas with $2bn and putting it all on black didn't work out.
mykillk writes:
Right now, about 100% of people in my city drive everywhere. If 10% of people decided to start riding bikes, I guarantee there would be multitudes of bike fatalities. Biking in American cities is not only impractical most of the time due to suburban sprawl, but also very dangerous because biking never enters into the equation of designing the roads...
I've got the scars to prove your point.
What's the argument against prepackaged bankruptcy? Stakeholders sure can't say they got no warning.
CAM,
That is why he needs $4 B - going to double down - baby needs new shoes!
I'm sure their presentation contains some detail about plans going forward, but the substance seems to be exactly as it was before they were sent home last month.
WSJ and Bloomberg both report only that they need money. Well, they said that weeks ago. Is the only change since November that they now have a clearer idea how much money?
Nemo
To do that would there not be a huge disruption to their supply chain? At very least do they even get paid? GM is big. Their suppliers to me are the bigger deal.
What's the argument against prepackaged bankruptcy? Stakeholders sure can't say they got no warning.
I doubt that the surviving entity is viable without MAJOR changes to the biz structure. And the current management is most likely not capable of those changes.
Let them eat Cake and drive Toyotas!
This is so horrible that I find myself laughing. How did we ever get into this position? Our entire banking system is insolvent. Our auto manufacturers are bankrupt. Our housing market is DOA. Insurers are toast. Consumers are up to (or past) their eyeballs in debt. The Fed/Treasury are aggressively pushing one ponzi scheme after another. Our political system is a joke. States and local governments are broke. Pension funds are playing hide the salami.
Bwahahaha
So this is what a dying empire looks like. Sorry folks. Not to be pessimistic, but this really is the end.
Here's our new model, the "Blowhard V8".
Now give us the money.
How big a deal do you thing GM going away would really be?
nova: CHinese Ponies | 12.02.08 - 4:29 pm | #
Huge - massive.
GM alone if it went away would suck something like a million high paying jobs down the tube within a couple months. More would follow through the year.
Realize the multiplier is something like 5:1 for auto mfg & related 'suppliers & services & white collar'.
Congress w/ treasury should broker a prepack BK this afternoon - seriously. Screw the measly $4B - make them file. Maybe see if they can get a two for one w/ Cerberus-Chrysler.
JMHO.
There are multitudes of auto fatalities. You'd be surprised how easy it is to set up safe bike routes with a little paint and a few inexpensive signs or plastic cones.
You're starting to sound like a big oil shill.
So they need 4 billion just for this month and it just occurred to them that they need to cut expensive corp jets?
They truly are idiots
just a drop in the bucket I guess, but c'mon guys. A little effort would be appreciated.
How will giving (oh,I mean "loaning" )the big 3 increase sales and make them profitable ? More like throwing money down a hole .
dryfly | 12.02.08 - 4:34 pm
Thank you.
Emma Anne,
The argument that is advanced against a prepackaged BK is who will buy their cars - given the long service life, etc. no one will buy cars from a BK company.
The less often voiced argument or issue is the amount of CDS written on their debt - notional outstanding is in the neighborhood of ~$1 T or something like that (anyone have a better number?).
Can they get 4B by end of this year?
Hank is the only one who can help them. So i guess Hank will flip again and bail them out.
Boeing is going to need a bailout soon...
This is actually just what the SNL skit predicted.
"That's not a plan. It's just a series of dates and demands for how much money you'll need."
So this is what a dying empire looks like.
~~~~
Yep, Chalmers Johnson wrote a whole book about it : Nemesis
We didn't win the Cold War, Russia just went BK first ... now's our turn ...
"Right now, about 100% of people in my city drive everywhere. If 10% of people decided to start riding bikes, I guarantee there would be multitudes of bike fatalities. Biking in American cities is not only impractical most of the time due to suburban sprawl, but also very dangerous because biking never enters into the equation of designing the roads..."
Here in San Diego, if you don't work on the same mesa where you live, good luck on that whole biking thing. The freeways run through the valleys between the mesas, and only main arterials run between them. When I worked in University City and lived in Mission Valley, it would have been a ~10 mile ride to get to work. No problem with what would have been about a 35-40 minute ride most days, except that more than half of the route was via Genesee Ave., which might as well be a freeway. My desire for self-preservation told me to stay in my car.
dryfly is exactly right. But nobody ever asks me, either
Nemo | Homepage | 12.02.08 - 4:31 pm | #
It's scary when a liberal like me & a conservative like Nemo get to the same place fast. It's disappointing when the congress critters with all their staff and researchers can't see the obvious. It's days like this when I feel we're really screwed... it's the obvious solution and it won't even be considered until all else is tried first and a lot more money is vaporized. Damn.
I need 8 billion to survive 2006.
Why did the market rise today?
1 currency soon [yogi] writes:
There are multitudes of auto fatalities. You'd be surprised how easy it is to set up safe bike routes with a little paint and a few inexpensive signs or plastic cones.
We have thread bleed here, but paint and plastic cones don't make the road wider for a dedicated bike lane. Nor do they make drivers pay more attention.
Pavel Chichikov writes:
Why did the market rise today?
Improved sentiment?
Bwahahahaha
Here's a tip for Congress:
"Once on the tigers back, we cannot be sure of picking the place to dismount."
I need to go find some booze.
Boeing is going to need a bailout soon...
We can walk & chew gum at the same time - prepack BK them too.
GM is up after hours, WTF?
If they can last till the UAW takes over the health care side of things they'll be walking into a sweet spot if it wasn't for the fact that most of these kids are conditioned to buy jap iron( no offense meant).
It's almost like opening a brewery in Mecca and hoping the muslims get over their alcohol issues.
What's the argument against prepackaged bankruptcy?
If GM/F/3Dog can get DIP financing from the government, it would probably work wrt. the businesses themselves. Whether or not customers would bail at a faster rate is hotly debated.
But there are some X factors consider - the effects of downgrades of Detroit 3 debt, what the effect of the 2005 bankruptcy act might be, and how big the related CDS "event" might be.
This is so horrible that I find myself laughing.
Yeah, you can't survive if you react in the emotionally appropriate manner.
You either collapse in horror or laugh.
I choose the latter.
ova --
To do that would there not be a huge disruption to their supply chain?
Not immediately; in Chapter 11, the company continues to operate. Just like the airlines have done over and over again.
But everything would be up for renegotiation in court, from the principal on the bonds to the contracts with the unions and suppliers.
All this bail-out talk is a political attempt to avoid the shared pain of restructuring. The U.S. has a mature and effective BK process; now is the time to use it.
Sooner or later we'll have to let the 'CDS event' happen. If it takes a few of the playas out, it's probably for the best.
So, might as well be sooner.
"We have thread bleed here, but paint and plastic cones don't make the road wider for a dedicated bike lane. Nor do they make drivers pay more attention."
Nor do they fix the problem of slower-moving bikes needing to traverse arterial/freeway interchanges that, at least here in southern CA, are cyclist deathtraps thanks to the multitude of lanes to be crossed even without turning, and the high speed dance macabre of merging obliviots yakking on cell phones and sucking down a frappuccino from behind the wheel of a 4-ton metal beast.
Why did the market rise today?
Pavel Chichikov
The whole underlying cause of the problems we have today is the disconnect between the markets and reality.
We engineered this disconnect in the name of saving the economy.
Now we have an economy where capital is funneled away from responsible enterprise to crime rings and asylums masquerading as financial institutions.
This is so horrible that I find myself laughing. How did we ever get into this position?
Partly NAFTA and outsourcing, although that gets little mention now. But that's the nature of the credit cycle.
Globalization hasn't been about comparative advantage as most of these economists like to believe. It's been about currency manipulations, temporary differentials and different points along the credit cycle.
I thought skill would matter so I focused on that to survive The Crash but what I didn't understand is that it's really about building your conspiracy network and getting your cut of the scam.
Sad.
Off to my single's meeting where most of the women will be drenched in like-minded delusional thinking, ergo fun sex will be but a dream but my earning ability & motivation will be all-important.
But at least I can play some pool after that.
To do that would there not be a huge disruption to their supply chain? At very least do they even get paid? GM is big. Their suppliers to me are the bigger deal.
nova: CHinese Ponies | 12.02.08 - 4:33 pm | #
Look at their suppliers - half of them are now in or are near BK themselves... Delphi, Tower, Arvin, Eaton - etc.
They will all be wrapped up or rolled in later - one by one.
Equity wiped out, union contracts rewritten, bond holders & suppliers get clipped... all lose, all start over... but at a much better cost structure.
It will happen - just a matter of how & when. Surgery or chainsaw massacre.
If the Fannie, Freddie, Lehman, Bear, and AIG takeovers and insolvencies didn't cause massive disruption because of CDS, I don't think GM will.
Do the prepackaged bankruptcy. Fire management. Cramdown new terms on workers, management, suppliers, etc.
I wonder sometimes how many workers (at all pay grades) are redundant in this country.
That's the only question I keep asking myself.
If I had to guess, I'd say 25-30% at current wages. Which is really scary, b/c real wages suck for most people.
citizen energyecon --
The less often voiced argument or issue is the amount of CDS written on their debt - notional outstanding is in the neighborhood of ~$1 T or something like that (anyone have a better number?).
I am not sure the information is available. GM has nothing to do with the CDS on their own debt, so their own filings would not mention it...
So now we are going to bail out every company any company for which enough hedge funds have made bets on their default? Great; let's do it!
Weren't they saying that a CH. 11 would make it so nobody would buy their cars?
Moot point. Nobody is buying their cars anyway.
Bwahahahaha
Why did the market rise today?
Pavel Chichikov
~~~
Quantitative easing ?
With today's sales numbers, it's really pointless to dump a lot of money into any car-maker without also putting tax money into some kind of consumer incentive to buy cars.
If they created a tax credit equal to 10% of the purchase price of a car, let you use that tax credit as your downpayment, and then let you borrow the rest at, say, 5% or less...cars would start to move again, a bit.
Of course, they'd also have to set up a TARP to backstop part of the car loan defaults banks or dealers will have.
You know, that's exactly what they're gonna do. All that.
But can they do it fast enough?
Buy gold and silver. There's not enough TARP to cover all the crap.
The world is starting to smell desperation here.
"GM is up after hours, WTF?"
Bad news has become good news.
Perverted little Mr. Market now expects that GM is in bad enough shape Congress must bail them out.
Conjure says, "Mr. Market is now in pure speculation mode."
All this bail-out talk is a political attempt to avoid the shared pain of restructuring. The U.S. has a mature and effective BK process; now is the time to use it.
Nemo | Homepage | 12.02.08 - 4:42 pm | #
Amen.
GM anticipates an initial draw of $4 billion this month
CAT sold $1.5 B in bonds at 510-525-535 bps over comparable Treasurys (three different maturities)...in September they sold bonds at 320-325 bps over comparable Treasurys.
UPDATE 2-Caterpillar sells $1.5 bln in 3 part sale-IFR
| Reuters
Here's a stupid question:
What percent of GM's total business is their consumer credit division and how much of their losses reside in "that part of the building?"
Am I the only one thinking of Blazing Saddles, and Cleavon Little holding himself hostage with a gun to his own head? Tried to find an online clip of that but could not do it in the time I feel justified in borrowing from my real job.
Quantitative easing?
This is my favorite euphemism for "more bad debt".
GM should just ask for $1.00 to start with. Like Black Cloud said, once the connection is made it can't be severed.
HK@4:45
The percentage of redundant employees in large companies in this country is probably at least 20. And they're mostly not trained to do anything other than what they're (not) doing now.
We went through the 'right-sizing' rituals in the early 90's, and have been bulking up ever since.
Without new (productive) job creation, it's gonna get ugly.
Well, here in NYC, they haven't widened the roads lately, and population has not decreased. But riding a bike has actually become safer, thanks to old fashioned grass roots work from groups like this one:
homepage | Transportation Alternatives
Yeah, we know, trucks have to bring in our food, yada, yada.
The next move is to electric cars ...
They can be made cheap, less than 10 grand. Cheaper to buy , cheaper to run, cheaper to maintain.
Lots more people will be able to afford them.
Sucks for the tax base though. Fewer jobs, no gas taxes, lower car insurance, fewer credit card charges.
I assume that $4B is the amount they need after they fail to sell cars, fire the board and CEO, close down plants and fire unproductive staff, like engineers that were pushing for bigger gas guzzlers. What is it they ill give in return for this $4B windfall?
They'll whine a little less the next time
I'm all for electric cars, but any realistic move to electric cars is going to require a complete overhaul of the electrical transmission grid. It won't be able to handle all the extra demand. Also, where will the additional electricity come from?
Nemo | Homepage | 12.02.08 - 4:46 pm | #
Nemo,
I swear some hedgies in CT have made a devastatingly large side bet on my continued ability to burn large amounts of cash - I can haz TARP now?
As I implied, the bicycle lobby doesn't fly executives to D.C. on private jets. We hurt GDP, and proudly.
This is my favorite euphemism for "more bad debt".
~~~~
That's all Bernanke and Paulson are doing, salvaging bad debt ...
50 trillion in aggregate U.S. debt is not serviceable even with a big bout of inflation.
Is this $4 Bill now, and that's it, or are they gunna pull the old empty-inverted-pockets stunt on the 1st of each month from here on out?
GM should be given to Toyota, period. Let Toyota right off the merger as goodwill and then let Toyota fire everyone that has no value! Huh, what about that?
Car companies need a boat division now just to stay afloat.
Doofus: No, they're actually asking for $16 Billion....$4B of which i just to survive through December...
How much would the hit to the Pension Guarantee Trust be if GM and Chrysler were gone?
Sure...they talk of "creative destruction"--until it applies to them. Stare into the abyss, hypocrites.
Gavshire Hathaway writes:
This is so horrible that I find myself laughing. How did we ever get into this position? Our entire banking system is insolvent. Our auto manufacturers are bankrupt. Our housing market is DOA. Insurers are toast. Consumers are up to (or past) their eyeballs in debt. The Fed/Treasury are aggressively pushing one ponzi scheme after another. Our political system is a joke. States and local governments are broke. Pension funds are playing hide the salami.
Bwahahaha
So this is what a dying empire looks like. Sorry folks. Not to be pessimistic, but this really is the end.
Gavshire Hathaway | 12.02.08 - 4:33 pm | #
Preach it, brother!
This is what happens when you take a manufacturing economy and do the following:
I could go on, but you all get the idea.
This model just isn't go to work in the long run.
Senate majority leader Reid says plans to have some form of automaker legislation on Senate floor by Monday
I'm all for electric cars, but any realistic move to electric cars is going to require a complete overhaul of the electrical transmission grid. It won't be able to handle all the extra demand. Also, where will the additional electricity come from?
~~~~
Charging at night is no problem. The grid can be upgraded as the transition is made. The big change will be lowering all posted speed limits by 20%.
So now we are going to bail out every company any company for which enough hedge funds have made bets on their default? Great; let's do it!
Nemo | Homepage | 12.02.08 - 4:46 pm | #
A CDS event would take more than a few of these hedgies to the canvas too... well make my day.
BTW congress could authorize commerce or treasury to take an active roll in the fight & stand off the hedgies in BK court. Especially if congress stood up and decided to be the one providing the DIP financing. That should send a chill down the spines of the CDS vultures.
Chapter 11 even under the new rules doesn't mean the 'creditors' have all the rights - the judge has a lot of leeway to work out deals that works best for ALL creditors. It doesn't 'close' until the majority of interests sign off.
Meanwhile who would have the deeper pockets to fight - congress with a printing press attached or some hedgies?
Might be time to reintroduce the market to Mr M Hazard. He's a bitch.
The CEO of GM seems like a con artist, I say fire him today, then re-write another plan with some honesty!
Bankruptcy was made for situations like this. Debt holders need to lose. Equity holders need to lose. Feds pick up the unfunded pension liabilities. Then start fresh with a company that has the potential to turn a profit.
1 note yogi,
There are significant merits to your position, however NYC is not the USA, and there are locales that will require materially more than a stripe of white paint and few orange cones to migrate to a bicycle friendly transit model...
Did they say how much they need to survive until the end of the week?
Partly NAFTA and outsourcing, although that gets little mention now. But that's the nature of the credit cycle.
While I think the global rebalancing of labor power was inevitable, I think the way we've approached it is foolish.
We've rapidly transferred access to real wealth from people who expected to have it and made obligations based on that expectation, to those who had no such expectations or obligations.
In the short-term it's basically a recipe for social catastrophe even if in the long-term it's a defensible outcome.
Fundamental change has to be carefully managed.
In this case it has been completely haphazard and ad hoc justified by economic fundamentalists preaching against any sort of "protectionism" or attempts to resist globalization.
Now we have a calamity of practicalities.
"I'm all for electric cars, but any realistic move to electric cars is going to require a complete overhaul of the electrical transmission grid. It won't be able to handle all the extra demand. Also, where will the additional electricity come from?"
That's not entirely true. The grid's current problem is peak load. If charging occurs at night when the loads are generally smaller (less A/C, less industrial use, fewer big screen TVs drawing juice), much of the load could be absorbed by our current grid. Many large electrical utility companies are transitioning to smart meters that facilitate time-sensitive electricity pricing to address this very issue. Rates are cheaper overnight.
I am not sure the information is available.
Nemo | Homepage | 12.02.08 - 4:46 pm |
A colleague wrote a white paper back in early '06 explaining that all that was being tracked on various spreadsheets at different institutions and that the transactions were done via email and other spreadsheets. He was trying to sell the idea of a regulated exchange. No one cared.
This just doesn't seem like its about cars and trucks...
Straight from GMAC's website:
"GMAC Financial Services is a global finance company operating in and servicing North America, South America, Europe and Asia-Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of Dec. 31, 2007, the organization had $249 billion in assets and serviced 15 million customers.
Founded in 1919 as a wholly owned subsidiary of General Motors Corp., GMAC was established to provide GM dealers with the financing necessary to acquire and maintain vehicle inventories and to provide customers a means by which to finance vehicle purchases. The company's products and services have since been expanded and now include three primary lines of business: automotive financing, real estate financing and insurance.
On Nov. 30, 2006, GM sold a 51 percent controlling interest in GMAC to a consortium of investors led by Cerberus Capital Management, L.P., a private investment firm, and included Citigroup Inc., Aozora Bank Ltd. and a subsidiary of The PNC Financial Services Group, Inc."
It really has been true since USA waited for Pearl Harbor: America will always do the right thing, after trying everything else.
Nemo writes:
nova --
"Prepackaged bankruptcy" means Chapter 11 but with a government backstop (to avoid Chapter 7).
Companies do not "go away" in Chapter 11; they get forcibly restructured into something that actually has a prayer of being a going concern.
Nothing but an union busting ploy. All you anti-labor types would be up in arms with all the GM retirees and employees on the public dole.
Sounds like a new car model:
"The Four Billion."
GM = G.enerous M.ortified
The END.
Cordially,
Kilgore Trout
1 currency soon [yogi] writes:
Well, here in NYC,
NYC isn't representative of the layout of most American cities. That isn't going to change any time soon. Commutes are measured in miles in most of the US, not blocks.
I've heard of very few people commuting by bike in NYC in any case. Bus, subway, train, foot.
What are the mortality statistics for bike messengers in NYC? I suspect they're ugly.
That's all Bernanke and Paulson are doing, salvaging bad debt ...
50 trillion in aggregate U.S. debt is not serviceable even with a big bout of inflation.
We'll they're not salvaging bad debt so much as recycling bad private debt into bad public debt.
Inflation is default.
It is simply default without accountability or book keeping.
dryfly --
Would CDS buyers/sellers even have a seat at the table in BK? They are not stakeholders; in fact, they have no relationship with the company at all.
This is one difference between a synthetic bond and the real thing, I would guess.
--
Wheeling and dealing is at fever pitch in Gangistan. Dopeland gets to watch the show. And pay for it!
What a system!!
Jas
How much did the CEO make for contributing to this request for $4B?
FYI: Ford Chairman Bill Ford told National Public Radio that the company is negotiating with CEO Alan Mulally on a cut in pay and perks. In two years, Ford has paid CEO Alan Mulally nearly $50 million and allowed $752,000 worth of personal and family use of company planes. "We're talking to Alan about it," said Ford, who's taken no salary for four years. "We are very sensitive to public opinion."
Wheeling and dealing is at fever pitch in Gangistan. Dopeland gets to watch the show. And pay for it!
I'm starting to feel like I'm paying to star in a freak show.
will the fed take hummers (the vehicle you pigs) as collateral?
if so, I say they can get $1000 per hummer
about the going rate (for spitzer that is)
"We're talking to Alan about it," said Ford, who's taken no salary for four years. "We are very sensitive to public opinion."
Black Cloud 1 | 12.02.08 - 5:01 pm | #
There you are!
I hate to say, but "You done closed the barn door after all the horses got out!"
People really never learn. Why did this even get to go on for as long as it did?
I can't believe he did anything to improve Ford so much he deserved it. Did he?
Jett Rink(Unrated) writes:
How much would the hit to the Pension Guarantee Trust be if GM and Chrysler were gone?
Jett Rink | 12.02.08 - 4:56 pm | #
With all the supplier companies also represented by UAW - a lot. Well it's gonna happen anyway so why not today?
Also maybe the answer is for the BK judge on behalf of the PBTC or whatever it's called to include UAW as part owners in the new GM - ESOP like. Tie some of their future pensions to market cap growth of the new company. if the company does well - their pension loses will be less. If it all fails PBTC does its thing anyway (pensioners take a hit then too so would have incentive to find a better route out).
Best case would still probably cause the fund to take a hit but might mitigate some or a lot of it.
It is simply default without accountability or book keeping.
ac
~~~~
They marking time until the new administration by saving their friends.
Look for GS to take a run at C now that it is a government ward.
If Obama is serious about infrastructure, what we really should do is tear down all the suburban sprawl and recycle the building material into making walkable/bike-able communities that build UP and not OUT
Now is a GREAT time to.... writes: So they need 4 billion just for this month and it just occurred to them that they need to cut expensive corp jets?
Can't risk losing the top "talent". Har har har.
(Heard one interview where the use of corporate jets were justified by "terrorism"... that these CEOs might be kidnapped if they flew commercial. The interviewer, to their credit, was not impressed.)
hmm, that wouldn't be terrorism
that would be patriotism
All you anti-labor types would be up in arms with all the GM retirees and employees on the public dole.
If this bailout proceeds they'll already be on the public dole. At least in a Ch. 11 they get a haircut.
Look on the bright side, with cheap metals, the cost per unit will decrease. That should more than offset the interest on the infusion of cash at a rate of 4b a month for the next twenty years!
So what are they doing now?
HUMMER 02 Concept with phototropic body shell
HUMMER 02 Concept with phototropic body shell
December 3, 2006 GM Advanced Design has won the Los Angeles Auto Shows Design Challenge for the second year in a row. This years winning entry is a two-dimensional rendering of a 2015 Blue Sky Concept that addresses environmental sustainability. Called the HUMMER 02, the design was created to demonstrate that daily use of a vehicle could result in a net gain for the environment. The HUMMER 02 Concept features a phototropic body shell that produces pure oxygen throughout the life of the vehicle. Algae-filled body panels transform carbon dioxide into pure oxygen that is subsequently released back into the environment and inside the vehicle.
(Heard one interview where the use of corporate jets were justified by "terrorism"... that these CEOs might be kidnapped if they flew commercial. The interviewer, to their credit, was not impressed.)
DCRogers | 12.02.08 - 5:04 pm | #
Read up on the crook Walsh of GE. He got around the whole commercial thing by saying he was a prime candidate for terrorism or some such nonsense. Allowed him and the family to fly corporate/privately all the time and tax free.
Pure hogwash.
does the new 1040 have a line item for special GM, Ford, and Chrysler assessments?
Nothing but an union busting ploy.
Ah. So if we the taxpayers would rather not cough up $16 billion to prop up these sclerotic, uncompetitive monstrosities, that is a "union busting ploy"?
Awesome.
Not that it matters; the Dems are in the pockets of big labor and the executives drove this time, so GM will get its bail-out.
GM has the same synthetic asset-backed nightmare as Ford and they both are going to burn cash until they die:
Given the nature of many of Ford Credit's asset-backed committed facilities, it has the ability to obtain term funding up to the time that the facilities mature. Any outstanding debt at the maturity of the facilities remains outstanding through the term of the underlying assets. Ford Credits ability to obtain funding under its committed asset-backed liquidity programs is subject to having a sufficient amount of assets eligible for these programs, as well as its ability to obtain derivatives to manage its interest rate risk.
Forgot the damn link...
Metal prices fall further than during Great Depression - Telegraph
If this bailout proceeds they'll already be on the public dole. At least in a Ch. 11 they get a haircut.
Gavshire Hathaway
I would agree if Wall St. was forced into Chapter 11.
Would CDS buyers/sellers even have a seat at the table in BK? They are not stakeholders; in fact, they have no relationship with the company at all.
I don't know - another commenter a few days ago said a lot of the participants (vendors, lendors, etc.) are active in the GM CDS trade on ALL sides. He said the economic interest from the CDS is far greater than from the BK itself. Highly magnified & leveraged. He said it was like having your surgeon & anesthetist take out multimillion dollar life insurance on you prior to bypass surgery - not necessarily interested in your best outcome.
In a similar way these CDS participants don't necessarily have the same interest as the US (jobs & prosperity for all).
I'd love to read more on this if you find it.
This is like bailing out Krispy Kream Donuts at the height of the donut balloon and then telling taxpayers that Krispy is going to turn around and sell even more donuts -- this is also called fraud!
It's been just over a week since the Fed & Treasury bailed out Citi (for the second time in a month or so. Citi is not alone in their incompetence either.
I'm guessing we will see JPM being bailed out again. They are the worlds largest CDS holder if memory serves. Eventually, their armory will start exploding.
No way this financial crisis is over. If the public ever gets "FED" up, we'll see a nationalization of much of the banking system. If the public remains pliant, the giveaways will continue.
What a sham.
dryfly writes:
Would CDS buyers/sellers even have a seat at the table in BK? They are not stakeholders; in fact, they have no relationship with the company at all.
I don't know...
I don't either but, govt. injection of capital could be viewed the same as failure depending on the fine print
Another credit card company projects rising default rates:
Expired
"David Nelms, Discover's chief executive, said charge-offs could be in the mid-5 percent range in the fourth quarter and near 6 percent in the first quarter of 2009."
Am I the only one thinking of Blazing Saddles, and Cleavon Little holding himself hostage with a gun to his own head? Tried to find an online clip of that but could not do it in the time I feel justified in borrowing from my real job.
John Stark
The sheriff is a ni......
Am I the only one thinking of Blazing Saddles, and Cleavon Little holding himself hostage with a gun to his own head? Tried to find an online clip of that but could not do it in the time I feel justified in borrowing from my real job.
John Stark
NYTimes wunderboi Andrew Ross Sorkin was on Charlie Rose back when the Three Wise Guys first approach Congress for a handout. He claims that a "prepackaged bankruptcy" is very much top of mind among the folks cooking up a solution for GM, with the gummint giving DIP financing.
He did want to screw the unions somewhat (and actually quoted that $70/hour bulls*t in his column), but more than that, he wants to screw the dealers. He says that if GM wants to close down certain models and streamline its offering--which it needs to do--then state laws require the company to pay billions to dealers to buy them out. That's the obligation he wants to hose most in bankruptcy.
YouTube - the new sheriff scene from blazing saddles
Apparently stock market traders are going to keep using denial until they are carried home on the points of their own swords.
Excuse me while I whip this out.
He says that if GM wants to close down certain models and streamline its offering--which it needs to do--then state laws require the company to pay billions to dealers to buy them out.
Federal laws can over ride. Probably will be included
Thank god! They only need $4 billion immediately and all is well and good after that. Sign me up! I like this plan!
Since almost no one can think further than a month ahead, this should pass with flying colors.
The popularity of cars doesn't just have to do with sprawl... it has to do with STUFF.
You can't bring home a bigscreen TV strapped to your bicycle.
You can't bring home a crapload of groceries needed to feed a family of four children on the back of your bike.
You can't ride bikes in the snow. (Snowmobiles, maybe.)
I'm sorry, I'm just tired of these vague fantasies that seem to come from some idealized vision of "how they do it in Europe."
Metal prices fall further than during Great Depression
But we were reassured by high-profile economists now playing key roles in economic policy that these prices were driven by legitimate demand.
How can this be?
We can throw money at the big 3 until they choke on it - doesn't matter. Like the sign says "Liquidity does not equal solvency".
And besides, these Detroit ass clowns have murdered their respective brands. Trying to bring even one of them back to life much less all three of them would qualify as nothing less than a modern miracle.
Britney Spears is going on tour next year, and that will save the economy.
Federal laws can over ride. Probably will be included
Anonymous | 12.02.08 - 5:15 pm | #
Not unless part of a BK 'cramdown' in which case the dealers are part of the unsecured creditor pool & get what they get - anything else would be a 'taking' and the current sentiment & make up of the court wouldn't like that too much.
That's me at:
Anonymous | 12.02.08 - 5:13 pm
Sounds like they're using Hank Paulson's playbook.
Boz
Right.
I guess if they need 4B to survive, they must be selling all sorts of assets. Right?
Anybody know if GM has stuff up for sale? Are they selling land and leasing back? Are they selling...This to me is a load of crap.
mal,
I actually knew a couple of people who commuted by bicycle in Fairbanks, AK in the freaking winter - as the sea tale goes, now this is no sh!t - they had to use special synthetic chain oil to maintain viscosity at -40, use milspec cold weather gear and studded tires on the bike...but it can be done. For the masses? NFW.
They bought their tickets, they knew what they were getting into.
I say, let 'em crash.
Ben Bernanke is Santa Claus. We are saved!!
Not unless part of a BK 'cramdown' in which case the dealers are part of the unsecured creditor pool & get what they get - anything else would be a 'taking' and the current sentiment & make up of the court wouldn't like that too much.
dryfly
Or 537 lying, crooked politicians change the rules
GM probably has some serious covenants on their existing debt that would prevent them from selling off assets. That and a trillion basis point spread would be the only things that would make me consider lending to them.
Given the Lehman experience with CDS settlement, I think it's possible that a GM event would be handled well. What would be all kinds of exciting though would be the market movements as the losers on the contracts liquidate assets in order to pay up.
citizen energyecon writes:
mal,
I actually knew a couple of people who commuted by bicycle
Everyone I knew that commuted by bicycle was mental
OT--Breaking news--Guatemala Coffee exports down 21.1% y/y
BofA/Merril merger job cuts now estimated at 30,000:
"Bank of America CEO Kenneth Lewis wants to wring out $7 billion in savings from the merger over the next few years, so the total number of jobs lost could be closer to 30,000, they said."
Expired
How can this be?
ac
Massive deflation and inelasticity ...
rew writes:
BofA/Merril merger job cuts now estimated at 30,000:
Those financial jobs aren't coming back. Learn Mandarin if you want to stay in that field
Or 537 lying, crooked politicians change the rules
Anonymous | 12.02.08 - 5:22 pm | #
On a takings - they'd have to change the constitution - the supremes would kill them on something this straight forward unless the dealers were given due process & 'compensated' for contracts they already have in place.
The exception is BK - then the due process says F@&# YOU!
A profound argument for BK, dryfly.
On a takings - they'd have to change the constitution ...
~~~~
On an sector wide issue like CDS a National Security Finding would probably suffice to change contracts...
Say hello to the Patriot Act.
But what is the plan?
I thought they have to come up with ideas what they want to do in the future to get the money from congress.
Now they only come to DC with a car and beg for 4 bill?
This is NOT a business modell.
ugh. I remember during the summer, when the Big 3, drew all of their credit lines, that waggoner said GM would be fine for about a year.
This is what I don't understand. GM gets its $4B for December. What will they do for January? Are the sales going to miraculously improve?
Say hello to the Patriot Act.
mmckinl | 12.02.08 - 5:29 pm | #
Maybe. My guess is it would still end up in front of The Supremes... it would be one helluva session.
dryfly writes:
Looks like it's time for a prepackaged bankruptcy if you ask me.
Of course no one asks me.
dryfly | 12.02.08 - 4:27 pm | #
Ain't that the truth?
Contract rights are not identical to property rights. Specific K rights are made unenforceable by Congress all the time without much recourse.
In any case, I don't see any way out other than bankruptcy or its very close cousin.
" Black Cloud 1 writes:
I assume that $4B is the amount they need after they fail to sell cars, fire the board and CEO, close down plants and fire unproductive staff, like engineers that were pushing for bigger gas guzzlers. What is it they ill give in return for this $4B windfall?
Black Cloud 1 | 12.02.08 - 4:52 pm | # "
What makes you think that engineers were pushing for bigger cars? GM is run by bean counters, and their business model was to make large vehicles with large profit margins rather than compete with imports where where the margin was so thin that the cost of UAW labor made them unable to compete. These crappy vehicles were requested by Marketing and Accounting, not Engineering.
xxxxx
Maybe. My guess is it would still end up in front of The Supremes... it would be one helluva session.
dryfly
5-10 years from now? Dealerships sueing the govt.?
I've read that auto production in the Great Depression was down about 75% from the 1929 peak.
That does not seem out of the range of possibility today, even though cars are far more essential today than then.
How can this be?
ac
Massive deflation and inelasticity ...
mmckinl
How can economists that claim to have the authority to rule the masses with their brilliant ideas have missed something so obvious as the biggest decline in metal prices ever?
Our new overloads were making eloquent enlightened economic arguments just a few months back as to why such things were driven by fundamentals, not the sort of monetary and credit issues shock deflation would seem to imply.
How can people who have been so wrong about something so dramatic now claim to have the knowledge to solve our current problems?
ac writes:
Metal prices fall further than during Great Depression
But we were reassured by high-profile economists now playing key roles in economic policy that these prices were driven by legitimate demand
Same story with oil. The stockpiles of commodities referenced by Dryfly as evidenced by large piles of corn under tarps are a reflection of no-bid....
The run-up in price was pure speculation (manipulation). I'm just shocked by the slow response of the hedge fund implosion. Someone went long and took it in the shorts. Where are the corpses?
The consumer wanted big cars, trucks and SUV's. Tax cuts to the wealthy drove up demand for the biggest via 100% first year write off.
I've read that auto production in the Great Depression was down about 75% from the 1929 peak.
I recall an 80% decline in 1929 alone. I could be wrong. Alternatively there could be some debate about the actual figures.
Home construction fell 90% during the (first) Great Depression IIRC.
just like religion, ac. Same justification, too: voices tell them.
Dryfly, Nemo,
I am with you on GM. And I am one of those dreaded latte liberals who drives a Honda CRV!
But I will take this one step further: Let them all fail. The Big Three had plenty of warning about the market, oil prices, etc...and did nothing, absolutely nothing to improve our economy and national security (get off our oil addiction) through their R&D and manufacturing capabilities. Should have hit the US for bucks after 9/11 with a patriotic push to get off petro. But instead rolled out the "Let's Roll" interest free SUV and Muscle-Car "Keep America Rolling" marketing bonanza. How crass was that and to what good of the economy?
Those no-interest car loans could be killing the economy. - By Daniel Gross - Slate Magazine
So I fail to see how saving them is in our national interest and the Billons would be better spent reconstructing our economy and rebuilding our infrastructure capacity.
The Big Three have relied on credit to exist in the first place and with easy credit came monstrous oil burners and forays into real estate, etc.
Here in Oregon we are working our asses off to bring in electric and hybrid vehicles from China and Japan and looking at how to improve our infrastructure to handle the demand. Pacific Power has already invested a 10 percent in Chinese automaker BYD.
Kulongoski lobbies to bring China's new hybrid car to Oregon | Oregon Business News - OregonLive.com
Gov. Kulongoski lobbies to bring China's new hybrid car to Oregon
Good bye petro-pterosaurs. Good riddance. You had your turn at the wheel.
Bwahahaha
So this is what a dying empire looks like. Sorry folks. Not to be pessimistic, but this really is the end.
Gavshire Hathaway | 12.02.08 - 4:33 pm | #
Yup, it looks as if the Founding Fathers' efforts to found a stable, prosperous nation are proving to be no match for modern-day Americans' penchants for unsustainable behavior. Hope meets reality. Or is it simply human nature?
But instead rolled out the "Let's Roll" interest free SUV and Muscle-Car "Keep America Rolling" marketing bonanza. How crass was that and to what good of the economy?
Because Bush told them to via his tax cuts. Auto mfrs. are no different than any other consumer driven enterprise, you build what the customer wants.
"The stockpiles of commodities referenced by Dryfly as evidenced by large piles of corn under tarps.."
Not always under tarps. Some local co-ps have storage bins, others pile it on the ground, exposed. You can drive through Iowa, southern MN and see it in town after town. At first you think it is some kind of gravel or other aggregate, but it is shelled corn.
just like religion, ac. Same justification, too: voices tell them.
Sometimes I wonder how Keynes would react to what's being done in his name.
Even if his ideas are completely valid in the general case, that doesn't mean in the specific they cannot be abusive when applied without discrimination or morality.
Perhaps he would be disturbed by his name being invoked to justify the heaping of lies on top of lies.
I'm sorry, I'm just tired of these vague fantasies that seem to come from some idealized vision of "how they do it in Europe."
mal | 12.02.08 - 5:16 pm |
You mean those were real traffic jams I was stuck in commuting near Cologne?
It's a great time to be a bum.
1 currency soon [yogi] writes:
"There are multitudes of auto fatalities. You'd be surprised how easy it is to set up safe bike routes with a little paint and a few inexpensive signs or plastic cones."
Right. Like from Bismarck to Pierre. Piece o' cake.
"If they created a tax credit equal to 10% of the purchase price of a car, let you use that tax credit as your downpayment, and then let you borrow the rest at, say, 5% or less...cars would start to move again, a bit."
Down payment assistance for cars? My god we're fucked.
My car is still moving, Anonymous. I don't really need a new one at any price.
November sales for all brands: By The Numbers — Autoblog
What will they do for January? Are the sales going to miraculously improve?
Oh Basel, Basel, Basel... January is SO next year.
maxyge
So this is what a dying empire looks like. Sorry folks. Not to be pessimistic, but this really is the end.
Gavshire Hathaway
Yes, this is exactly how it happens. The perimeter is strong (China, Japan), but the center is a hollowed out shell.
GM's getting worse, not better. No amount of loans will make them successful, ever. I'll bet anyone GM will never turn a net profit from today in 100 years, if they even live til next year.
Actually, more likely, January is SO next administration...
I recall an 80% decline in 1929 alone. I could be wrong. Alternatively there could be some debate about the actual figures.
Home construction fell 90% during the (first) Great Depression IIRC.
What does auto production in the great depression have to do with auto production in the current credit crunch? The industry was much different then than it is today. This is not the first time the automotive industry has struggled since the Depression.
"Off to my single's meeting where most of the women will be drenched in like-minded delusional thinking, ergo fun sex will be but a dream but my earning ability & motivation will be all-important." Brownard Horne
Irritating: Click
Ken Cooper is a God.
This is so horrible that I find myself laughing. How did we ever get into this position?
Partly NAFTA and outsourcing, although that gets little mention now. But that's the nature of the credit cycle.
Globalization hasn't been about comparative advantage as most of these economists like to believe. It's been about currency manipulations, temporary differentials and different points along the credit cycle.
I thought skill would matter so I focused on that to survive The Crash but what I didn't understand is that it's really about building your conspiracy network and getting your cut of the scam.
Sad.
Yes, there is much truth in what you say, Mr. Horne.
Personally, I hide out as a public sector professional, with my excess income socked away in bonds . . . until today. It got me through 1998 through today, with modest positive returns. Now, I think it is CDs going forward, at least for 2-3 years.
Anyway, I think that us public sector folks will be among the last victims, at least those of us with seniority.
Fortunately, we have all those brilliant congresspeople who will be "analyzing" the car makers plans, down to the last nickel. Meanwhile, the Treasury and the Fed just keep shoveling the billions out to Wall Street. No "plan" necessary for those guys.
mykillk writes:
"I'm all for electric cars, but any realistic move to electric cars is going to require a complete overhaul of the electrical transmission grid. It won't be able to handle all the extra demand. Also, where will the additional electricity come from?"
mykillk | Homepage | 12.02.08 - 4:53 pm | #
Oh, come on. Stop asking pointed questions and get with the program. Alternative power promoters are betting on miracles (and Obama). If you join them, you will feel really good.
Oh, for the love of...I could go on a long rant here, but I'll just add my voice to the chorus in favor of a pre-packaged BK--for all 3 of 'em. And the Financials while we're at it. The economy is going TU sooner rather than later, so let's just rip off the bandaids and be done with it instead of standing in a big circle on the deck of the Titanic passing IOUs to each other. The sooner we crash, the sooner we can start rebuilding.
Oh yeah--any guesses on how many ticks this is worth on Conjure's clock?
Dave(Unrated) writes:
Fortunately, we have all those brilliant congresspeople who will be "analyzing" the car makers plans, down to the last nickel. Meanwhile, the Treasury and the Fed just keep shoveling the billions out to Wall Street. No "plan" necessary for those guys.
Dave | 12.02.08 - 5:50 pm | #
No plan is a plan.
January or maybe February will bring big specials on pre-packaged bankruptcies. Call it a Presidents' day sale, the biggest one ever.
Until then everyone and everything is just trying not to drown.
Anything other than a temporary stop-gap of emergency loans/injections/bail-outs is impossible until January 20.
First up on January 20 is a stimulus package.
Pre-fab bankruptcies might be second in line.
Well, stfu.
I've ridden in snow, especially when the subways were closed in a blizzard. Groceries are no problem.
It's not just Amsterdam, it's China.
I just want to stay a fat, lazy American with wasted space. In New York, bike commuting is on the rise.
If I asked for an explanation why there was a light frost in DC this morning, and the answer was that it usually gets that cold in early December here, I would surmise that the person answering was no meteorologist. Look at the discussions at your local NOAA site.
If I ask why the market went up today and the answer is vague and general, I would conclude that nobody really knows.
Are there 'insiders' who can give better answers, or is everyone that way?
Bail out the taxpayer....Sent me my money that I have paid in FEDERAL INCOME TAXES all these years....No problem, you have every dime recorded.
mmckinl writes:
...50 trillion in aggregate U.S. debt ...
But that is only ca. 5.000 (new,modern) aircraft carriers. Is that a lot ?
(The US currently has 12 or so, possibly not all the new 10 billion type).
Re: UAW pensions. Sorry, but they will need to take a cut just like all the rest of us who lost money in the market. Take it down 30%.
OT- Ben Stein maybe a bit of a born and bred Jas style, but, he makes a rather obvious point with a twist:
In fact, if it had been possible for George W. Bush to run for and win a third term, wouldn't Mr. Geithner have been exactly whom he would have chosen to replace Henry Paulson if Mr. Paulson ever decided to leave the Treasury? But wait a second. Didn't Mr. Obama campaign against Bush policies? Is he now giving us a third Bush term? Geithner at Treasury, Gates at DOD, Mrs. Clinton at State? Sure looks a lot like what Bush would have chosen if he had been able to run and win.
Just came back from Minnesota. Saw a lot of people on bicycles. In November.
Are there 'insiders' who can give better answers, or is everyone that way?
Pavel Chichikov | 12.02.08 - 5:53 pm | #
Yes.
1 currency soon [yogi] writes:
"Just came back from Minnesota. Saw a lot of people on bicycles. In November."
1 currency soon [yogi] | 12.02.08 - 5:56 pm | #
In Grand Marais, I presume?
" dryfly writes:
Are there 'insiders' who can give better answers, or is everyone that way?
Pavel Chichikov | 12.02.08 - 5:53 pm | #
Yes.
dryfly | 12.02.08 - 5:56 pm | # "
So you look through the aperture formed when the snake swallows its tail, and there it is.
Anonymous writes:
OT- Ben Stein
F#ck Ben Stein and his pissant daddy. Stein peaked on MTV
[if so, I say they can get $1000 per hummer... about the going rate (for spitzer that is)]
Ha. I'm married so mine cost a lot more and I get a lot less.
"The argument that is advanced against a prepackaged BK is who will buy their cars ... from a BK company."
People need to figure out that the last car they bought is the last car they will ever buy. If you really need a car, the one you have will have to last 20 or 30 years.
As for the Big 3 -- buy Chysler and nationalize it for military vehicles. Let the other two fend for themselves.
Worked for a an engineering company for many years. They designed, and built many electric trolleys for many U.S. cities; Boston, Houston, Tampa, SF are a few of the locations. Where did they all go? Think big car company! See link.
Who Killed the Electric Trolley? | Autopia | Wired.com
So that is $470 million loss and an additional $355 million contingent loss? All in another $825 million (potentially) hit? That sounds about right for a 14% pop in value...
Legg Mason Rises After Providing More Cash to Funds (Update1)
By Christopher Condon
Dec. 2 (Bloomberg) -- Legg Mason Inc. rose 14 percent in New York trading after the asset manager set aside an additional $470 million to cushion investors from losses in four money- market funds.
Legg Mason said yesterday that the fresh capital will be used to absorb losses on debt issued by structured investment vehicles. The Baltimore-based company also said it renewed a contract with banks designed to prop up $355 million of SIV securities, which tumbled in value earlier this year when credit markets froze and the investment funds couldnt refinance their borrowings.
Legg Mason Rises After Providing More Cash to Funds (Update1) - Bloomberg.com
You hicks can keep your guzzlers. I thought you were self-sufficient in your fallout shelters, hunting squirrels?
Bicycling is NOT for everyone.
It is not for the fat.
It is not for the lazy.
I am an American.
As for the Big 3 -- buy Chysler and nationalize it for military vehicles. Let the other two fend for themselves.
John S | 12.02.08 - 6:00 pm | #
Your view seems overly pessimistic. What sense does it make to allow Ford and GM fend for themselves. Would you really like to see two of the biggest companies in America die?
If I ask why the market went up today and the answer is vague and general, I would conclude that nobody really knows.
Are there 'insiders' who can give better answers, or is everyone that way?
It looks to me like it was pumped at the end of the day as we approached flat-line. But your frost analogy may be apt. A lot of market movements are probably chaotic in origin and their cause cannot be separated out of the noise floor.
The Supremes take a dim view of Congress or the Administration trying to derail or usurp what they see as the "normal" access people have to the courts or the route of issues through the courts. Typically just calling an action a different name or accomplishing it under a different law generally doesn't remove the Constitutional issue. This was one of the reasons that they've biffed the Bush administration and Congress on many of the issues with the prisoners held at Gitmo recently. Needless to say they also have a dim view of the Patriot act and declarations of Presidential power these days.
So this is what a dying empire looks like. Sorry folks. Not to be pessimistic, but this really is the end.
Gavshire Hathaway | 12.02.08 - 4:33 pm | #
Go read up on what Buckminster Fuller said in the 1970s about our world paradigm undergoing a major shift within 25-50 years. He predicted all of this and said very clearly why it would happen and where it will lead. That, my friends, is the best leading indicator you'll ever get.
But wait a second. Didn't Mr. Obama campaign against Bush policies? Is he now giving us a third Bush term?
More like giving Reagan a 6th term if you ask me.
Nothing so seductive or inescapable as borrow and spend economics.
In Grand Marais, I presume?
JohnR(VA) | 12.02.08 - 5:58 pm | #
I know folks in Grand Marais crazy enough to bike all winter... they would also go kayaking if they could find fissures in the pack ice to get out to open water... but that's Grand Marais for ya.
[Seriously one of these guys a few years ago drove their mountain bike out on the Mississippi hit a hidden fissure and went in - sent the bike to the bottom and his buddies had to fish him out - was about twenty below that day. Moron wasn't from the river valley & never considered the current under the ice might thin it enough to make it dangerous. Oh well - live and learn - if you live.]
Go read up on what Buckminster Fuller said in the 1970s about our world paradigm undergoing a major shift within 25-50 years. He predicted all of this and said very clearly why it would happen and where it will lead. That, my friends, is the best leading indicator you'll ever get.
Bucky balls are so awesome, how can you not believe what he says?
GM hurting for cash!
recall this?
Nov. 7 (Bloomberg) -- General Motors Corp., the world's biggest carmaker, opened a $300 million factory in Russia as it looks to compensate for slumping sales in western Europe and North America.
The plant in the Shushary district on the outskirts of St. Petersburg will produce 70,000 Chevrolet Captiva sport-utility vehicles and the Opel Astra, with plans to manufacture the Chevrolet Cruze compact car next year
anybody remember the Lehman CDS settlement disaster- you don't because there wasn't one. If at this point there is anybody out there with GM CDS exposure who hasn't taken some kind of protective action with regard to their Counter party risk they deserve to get screwed.
I think the AIG CDS exposure has been blown way out of proportion. The reason that AIG caused so many problems is that they were probably the largest net writer of CDS essentially anchoring one side of the CDS market. Most of the other large players are much smaller net writers and all of them operate under netting agreements that cover not just CDS but all kinds of derivative transactions.
Looks like it's time for a prepackaged bankruptcy if you ask me.
Yep.
Backstop a re-org, let common stock and the bulk of bondholders feel a whole lot of pain, and then let the free market decide whether or not their go-forward plan is "viable".
Ok now this is good news...
Fidelity Reopens Funds to Offset Investor Withdrawals (Update2)
By Christopher Condon
Dec. 2 (Bloomberg) -- Fidelity Investments plans to let new investors buy Contrafund, its largest mutual fund, and Low- Priced Stock Fund in an effort to rebuild assets after investor defections and market losses.
Contrafund, which was closed in April 2006, has seen client assets fall 36 percent this year to $51.5 billion at Oct. 31. The $19.9 billion Low-Priced Stock Fund, closed in December 2003, has lost 43 percent of its assets. Both funds will start taking cash from new investors on Dec. 16, the Boston-based company said today in a statement.
- Bloomberg.com
This staunch Democrat will vote Republican for the first time in his life if an Auto bailout is based on trying to support auto unions.
leg power:
http://blog.wired.com/gadgets/610x.jpg
Your creditors:
https://www.allposters.co.uk/View_HighZoomResPop.asp?apn=1688508&imgloc=15-1589-HEFFD00Z.jpg&imgwidth=894&imgheight=671&sc=True&ct=Su,%20Keren%20Danita%20Delimont%20POD&cw=20&ch=20
"Details of GM Bailout Proposal Emerge
Company insiders today leaked information about GM's plans for the first $4 billion of its requested assistance. 'It's for a demolition derby Survivor-type theme show,' commented one highly placed insider, requesting anonymity. 'People bring in their GM cars and compete for fabulous prizes and vacations. We figure if we can smash up around 8 million cars, we'll be in business again.'"
I'm of two minds here. One says that Americans should get a true taste of what they say they want (unregulated free markets/weak gov't). The other wrestles with the fact that this might destroy the affluence of an entire generation.
Anyone who voted for any Democrat cannot say anything about the auto bailout.
--
"Didn't Mr. Obama campaign against Bush policies? Is he now giving us a third Bush term? Geithner at Treasury, Gates at DOD, Mrs. Clinton at State? Sure looks a lot like what Bush would have chosen if he had been able to run and win."
Anonymous,
Obama is an ideal leader for born-and-bred American dopes. McCain and Hillary were close seconds. Gangistan is full of, you guessed it, gangsters!
Obama happened to be NO-CHANGE candidate!!
Jas
SRW- "The other wrestles with the fact that this might destroy the affluence of an entire generation."
Conjure says, "You'd better get off Cloud 9, pal. This will destroy the affluence of an entire generation."
"And you can take that to the *&^%ing bank."
Feckless Ness: Can you provide any specific speeches of his? I would be very interested in reading on what he had to say
We need some action from TPTB.
And we need it now.
A year ago would have been better.
CDSs are used widely internationally. I don't think it would be perceived very nicely if CDS contracts on GM would be unilaterally invalidated by congress.
IMO, it can only happen within the framework of a new BW3.
If they go bankrupt do they have to pay this back?
mp,
Do you think that BK will be worse than a bailout? If so, why? The airlines went bankrupt and they are ok.
Waves of collapse are now propagating.
The government will be quite helpless to stop them, and maybe should instead be contemplating putting a safety net under the populace instead of pumping money into black holes at the top.
After all, send money to people who will spend it instantly, the poor.
That is true stimulus.
After all, all of the money I pay on my debts every month doesn't seem to stimulate anything.
Someday this war's gonna end...
"A lot of market movements are probably chaotic in origin and their cause cannot be separated out of the noise floor."
Chaos I can understand, or at least I can contemplate it without being completely mystified. There are well-known equations that describe it. But the global economy must be at least as complex as climate, and perhaps much more complex, because human beings and their social systems are incorporated into it.
It makes me wonder if Dr. Bernanke and Mr. Paulson are really trying to start a stalled automobile by repeatedly lifting the hood and slamming it down again. Did such an operation work before? Who can say for sure?
"If they created a tax credit equal to 10% of the purchase price of a car, let you use that tax credit as your downpayment, and then let you borrow the rest at, say, 5% or less...cars would start to move again, a bit."
Then they go and buy Honda's and Toyota's.
Only people that still buy domestics are those with bad credit or no down payment, and it isn't by choice.
Pavel Chichikov
They need to put the uptick rule back into place ... 1/4 pt
Entire sectors are getting pummeled then the bargains are scooped up again.
"Go read up on what Buckminster Fuller said in the 1970s about our world paradigm undergoing a major shift within 25-50 years."
Yes, and changes in the global economy are an effect. It's almost like watching a metamorphosis.
"The airlines went bankrupt and they are ok."
Point 1- The airlines aren't the automotive industry. If the automotive industry collapses, the job losses would be absolutely enormous.
Point 2- The financial sector wasn't on the rocks when the airlines went under. They were refinanced. That won't happen this time around.
I don't think you folks realize how desperate the situation has become. Conjure said it a few weeks ago. We are a hair's breadth from collapsing into a full-blown depression, something that would make Japan look like a walk in the park. It's that bad.
This isn't "maybe," "might," or "could" any longer.
IT WILL HAPPEN UNLESS DECISIVE ACTION IS TAKEN. IMMEDIATELY.
IT WILL HAPPEN UNLESS DECISIVE ACTION IS TAKEN. IMMEDIATELY.
~~~ Hope it can wait until 1/20/09
"They need to put the uptick rule back into place ... 1/4 pt
Entire sectors are getting pummeled then the bargains are scooped up again."
OK, at a certain scale this is rational behavior.
Too late.
The only way to avoid global depression is to rebuild the US middle class.
"~~~ Hope it can wait until 1/20/09"
We are running out of time. Days matter now.
Get it!?
IT WILL HAPPEN UNLESS DECISIVE ACTION IS TAKEN. IMMEDIATELY.
I agree but problematically the severity of the situation is not well understood widely. The media is downplaying it on a consistent basis.
Unless major action is taken soon we will one day soon wake up in a depression.
OK, at a certain scale this is rational behavior.
Pavel Chichikov
~~~~
Once the market is going down it is rational behavior to short the sh#4 out of it.
Well, if they "have" to do something how about giving the money to decent poor people that fulfill their obligations, rather then to the crooked speculators that default on their obligations or shoddily assemble products that are not competitive?
If George, Hank and Ben are on board, I'm all for it!
Tipping point time...ever been in a boat that is about to heel over? Often, there is a moment when not much more than a featherweight will determine if it rights or rolls.
Not sure, but thinking the feather has already landed on the wrong side...
Conjure says, "You'd better get off Cloud 9, pal. This will destroy the affluence of an entire generation."
Yeah, I figured, I just wondered if we could avoid the meltdown of civil society since we've already destroyed their affluence.
Frankly, the equity markets became irrelevant to all of this months ago. They should forget about the equity markets.
They're a write-off at this point.
"Once the market is going down it is rational behavior to short the sh#4 out of it."
What is rational at one level of discourse can be catastrophic on another. The Invisible Hand can rummage through other people's pockets.
That's why there are laws, and that's why anarchy is the worst of all possible outcomes. We are suffering from, among other things, an outbreak of anarchy.
any suggestions as to what decisive action to take, mp?
Sorry mp, that was me above with the BK question.
So, you are saying that since the banks are basically BK, that we cannot let the Big 3 go BK?
Are bank funds needed for BKs?
Sorry if this is a dumb question, but I am just trying to wrap my head around this.
But how about that bond market? Now that's a place that matters.
People will demand order. Some form of fascism will begin to seem attractive.
Anonymous is me above. Geesh, I think I need a nap.
"any suggestions as to what decisive action to take, mp?"
Canada, I have all kinds of suggestions. They can begin by having a meeting at the White House of all the bankers. The President's speech has one line:
"If someone walks into your bank tomorrow and asks for a loan, give it to them."
"Meeting over."
"Have a nice day."
It makes me wonder if Dr. Bernanke and Mr. Paulson are really trying to start a stalled automobile by repeatedly lifting the hood and slamming it down again. Did such an operation work before? Who can say for sure?
Wow. That image strikes.
Now when a bicycle breaks down, the solution is always perfectly visible, and inexpensive.
For every short seller there is a short buyer
GM has big plans for that cash:
General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program
...According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012..." (bold mine)
"Sorry if this is a dumb question, but I am just trying to wrap my head around this."
At this point, forget about bankruptcies or bailouts.
THINK EMPLOYMENT, DAMN IT, EMPLOYMENT.
We are suffering from, among other things, an outbreak of anarchy.
~~~~
Anarchy partially planned and implemented by this administration to take advantage of the Shock Doctrine.
Since the bottom has already been ripped out of the TSX-Venture, (90% down), wonder what the impact would be on that market.
Pavel Chichikov asked: "Why did the market rise today?"
Speaking as a born-again bear, I think it had something to do with the fact that yesterday (Monday) 98% of the NYSE volume was to the downside, along with 97% of the Nasdaq volume. The market bounced today because it was so oversold on a short-term basis that it almost had to.
JMO.
Sebastian
"If someone walks into your bank tomorrow and asks for a loan, give it to them."
"Meeting over."
"Have a nice day."
mp
I agree. Zero leadership shown to this point. Tell them fat, rich slobs to loan or else. Before you write them a blank check of course
According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding
Anyone want a job in Brazil? I see one opening up soon.
[We are running out of time. Days matter now.
Get it!?
mp ]
It's too late. The time to act was in 2003/4. No need to pre-emptively nationalize everything in this country. Pick some winners after the field has been narrowed substantially. I think it was a mistake to saddle the marginally solvent financials with the losers. Now the entire financial sector is BK...
Bankruptcy reform of 2005 contains a provision that severely limits executive retention bonuses and pay.
I think GM needs to go BK, and as they walk out the door from filing, Congress can swoop in with some flow cash. Then as the court performs its work, the real negotiating can begin. The nice thing is that the co will be legally liable for all the statements in files in court.
I'd much, much rather have this all court-supervised.
MP, BK but operating means we keep a lot of jobs, jobs.
"It's too late."
Sorry, I'm a businessman and, believe it or not, an optimist by nature.
And thoroughly believe in my ability to snatch victory from the jaws of defeat.
According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding
If the mainstream media gets on this story, the auto bailout will be history.
mp, with all due respect, I think optimism should be reserved for the way this collapse plays out, not whether or not it occurs.
We could have years of struggle. We could also have a year (or less) of anarchy. The optimist hopes for the former.
"I think GM needs to go BK, and as they walk out the door from filing, Congress can swoop in with some flow cash. Then as the court performs its work, the real negotiating can begin. The nice thing is that the co will be legally liable for all the statements in files in court."
MOM, I have absolutely no problem with your idea, but they need a plan to screw the industry's top brass and that plan needs to be publicized so well that it is known by every fourth grader in this nation.
NOW.
I would be quite interested to hear the original banker's take on our current parlous state...
Wouldn't a BK by GM trigger cascading cross defaults?
lama-
do you have a public link to the white paper on spreadsheet exchange your colleague produced?
TIA
"Wouldn't a BK by GM trigger cascading cross defaults?"
At this point, who cares?
I don't. Conjure doesn't. The people who get a check from GM don't. The pizza parlor across the street from the GM plant don't.
Can you think of anybody who really cares? Think about it.
So, thinking employment, does it matter if the employment is for Brazilians or American? What a crock of shit.
I wonder why anyone is buying a new car in this environment. Not easy to get financiang and if you have the free cash to buy without one, arent there better uses for the money? Wonder how many of the sales today were fleet sales vs. to individuals. As to GM needing more cash so quickly, at least we arent in the AIG situation where they went from needing $20B to $40B to $85B in the course of a weekend.
It is our patriotic duty to never buy a car from the Detroit 3 ever again.
Point 1- The airlines aren't the automotive industry. If the automotive industry collapses, the job losses would be absolutely enormous
I think that with demand destruction in the order of 30-40% job losses are inevitable
Any way you cut it there will be defaults.
The Big 3 may come back but it will be at a much lower level of production producing lower margin cars and trucks.
Hope this isn't old news:
Fed extends its emergency lendinghttp://www.ft.com/cms/s/0/95b3761a-c0a4-11dd-b0a8-000077b07658.html
The lending facilities provide loans to bond dealers, lend to banks buying asset-backed commercial paper from mutual funds, and auction loans of Treasury securities. They will now last a further three months until the end of April.
"So, thinking employment, does it matter if the employment is for Brazilians or American? "
What the hell are you talking about? It matters a lot.
"Can you think of anybody who really cares? Think about it."
I do. While it would suck for GM to go into BK, it would suck even more if that set off a chain reaction that systematically crashed the financial system.
What Barley said.
I heard on the radio yesterday (some talk show) that only 1% of Americans (presumptively individual Americans rather than corporations) plan to buy a car - any car - in the next year. If true, the auto makers will be back for more, much much more.
FT.com / World - Fed extends its emergency lending
sorry for the bad link
"The Big 3 may come back but it will be at a much lower level of production producing lower margin cars and trucks."
I don't care.
CA-
I wonder how many citizens would support a "don't support bailouts by not doing business with recipients" campaign?
Any ideas for catchy slogans?
My off the cuff suggestion:
"The Bogus Army"
"While it would suck for GM to go into BK, it would suck even more if that set off a chain reaction that systematically crashed the financial system."
You forgot that Conjure said the "financial system" should be NATIONALIZED.
I don't care.
mp
~~~~
out of context
ok mp what do you know that the rest of us don't yet know that has thrown you into such a fluster today?
I care. I have 2,000 shares
mp writes:
"any suggestions as to what decisive action to take, mp?"
Canada, I have all kinds of suggestions. They can begin by having a meeting at the White House of all the bankers. The President's speech has one line:
"If someone walks into your bank tomorrow and asks for a loan, give it to them."
"Meeting over."
"Have a nice day."
mp | 12.02.08 - 6:43 pm | #
For a second there I thought you were going to suggest the Borgia solution, invite them all to a meeting, walk out, lock the doors behind you and set the building on fire.
On the GM-Brazil thing, GM has operations down there that produce Opels for the local market. Very few bits come north - at least from Brazil. Investment there makes sense; saying that the funding will come from a Congressional bailout was moronic.
I think people forget that both F and GM are global companies with overseas operations that are mostly independent of their North American clusterf***s. (Chrysler is almost exclusively a NA outfit.)
The backers of the electric car remind me of the same pack of shills and idiots who lied us into ethanol mandates. Bad for the economy, bad for the environment.
if you really needed wheels, like if your lease is up or your car got smashed or stolen, why would you think only about new cars? Go on to Ebay or Craigslist and you can find individuals and dealers letting hardly used cars go for astonishing discounts. You can research the VIN, even check the car out locally. These are likely cars that were 'owned' by people who got in trouble.
This channel is terrible for new car makers, but its rational.
"I think that with demand destruction in the order of 30-40% job losses are inevitable"
Fine, but we're not playing office here, we're playing with people's lives. Take the damned thing over and wind it down, employment programs taking up the slack.