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December 5th, 2008, 22:43
Ideally what they would do is force them into bankruptcy but have the government secure the bankruptcy financing (no one else will and without it, Chap 11 re-org becomes Chap 7 liquidation).

This would allow them:

1) the ability to negate the union contract, with court approval, and get current operating costs inline with competitors, as well as get out of these ridiculous paying of furloughed workers.

2) the ability to declare the pension plan insolvent and push it on the PBGC, thus reducing their massive cost of keeping the plan solvent. This obviously would suck for the pensioners and soon to be pensioners as they'd end up with a sharp cut in pension benefits, but it's either that or essentially have the tax payers indirectly pay their full pensions with bailouts now and again in the future. Congress would have to give more money to the PBGC (or it would have to raise premiums), but that would be cheaper than continued bailouts

3) The ability to shift operations out of Michigan/Ohio and into more labor friendly places.

4) Save the majority of the 2-3MM jobs that stand to be lost if they liquidate.

Of course this will never happen because no politician wants to piss off the unions or their members.

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December 5th, 2008, 23:09
Originally Posted by magerette View Post
I have to go cook dinner but I have to at least respond to your name 5 challenge, and I"m not cheating, this is from my political junkie memory:—Okyland first with Istook & Imhofe(I think Istook is still around but if not, it's still a repub—Imhofe is my personal guy; Boren is a Dem but he may be House) Lindsey Graham, Mike McConnell, Boehner(oops—he's House),Larry Craig, Olympia Snow.
*breaking out the red pen*
Istook is gone, replaced by Coburn (guess that wasn't a layup after all)
Imhofe +1
Graham +1
Mitch McConnell +1 (close enough)
Craig +1
Snowe +1

Well done. You did better than me. I managed McConnell (only because I get Louisville TV), Luger, McCain (kick yourself for that one), and Chambliss (only because he's in the news).

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December 6th, 2008, 04:32
Originally Posted by dteowner View Post
*breaking out the red pen*
Istook is gone, replaced by Coburn (guess that wasn't a layup after all)
Imhofe +1
Graham +1
Mitch McConnell +1 (close enough)
Craig +1
Snowe +1

Well done. You did better than me. I managed McConnell (only because I get Louisville TV), Luger, McCain (kick yourself for that one), and Chambliss (only because he's in the news).
Yeah I thought of Tom Coburn half way through the lettuce chopping. I'm kicking myself over Luger, though, and Chuck Hagel. I didn't do Chambliss, Stevens or Coleman because they've had so much coverage lately, but I do know them. It's sort of sad that McCain never even entered my mind.

I really don't know that there's much substance to the argument anyway, though—two years ago I couldn't have named 5 senators total if I used *both* parties, and I'm sure the average Joe the Uninformed Voter would be right there with me. The power of either party in Congress would probably not be diminished much thusly.

More or less back to topic:
Dems, White House Move Toward Auto Deal
Looks like we'll see some short term compromise reached next week using the $25 B already designated for the supposed greening of the industry—looks like a different kind of green is coming into play.

Where there's smoke, there's mirrors.
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December 6th, 2008, 21:16
Originally Posted by blatantninja View Post
I do feel sorry a little (not too much, they all get paid more than enough to take on this mess) for the CEO's, because the things that are crushing them they largely inherited. While it is true that the unions have made large concessions regarding new workers, and that the average hourly wage for new workers is close to what Toyota and Honda have in their plants (which are almost all in non-union states), the wages for existing workers and the expenses related to laid off and retired workers are through the roof. Short of government intervention to all them to get out of these obligations, or significantly reduce them, there is nothing they can do.
How come you seems to be so pissed off by, allegedly, excessive carworkers' salaries but not by the extraorbitant salaries of Wall Streeter's? Especially that 3 car makers ask for about 34 billion loan which looks like peanuts comparing to 700 bilion bailout offered to Wall Street?
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December 6th, 2008, 23:10
Originally Posted by zahratustra View Post
How come you seems to be so pissed off by, allegedly, excessive carworkers' salaries but not by the extraorbitant salaries of Wall Streeter's? Especially that 3 car makers ask for about 34 billion loan which looks like peanuts comparing to 700 bilion bailout offered to Wall Street?
Because greed is good if you're crawling over the backs of your coworkers but not if you cooperate with them?
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December 8th, 2008, 18:57
http://news.yahoo.com/s/ap/20081208/…JtAjPEPYFH2ocA

Looks like it's going to happen. A few thoughts:
1) When did GM CEO Wagoner pee in Senator Dodd's cheerios? Dodd is bound and determined to get Wagoner canned. Whether it's justified or not doesn't explain why Dodd is singling out Wagoner from the other CEOs.
In return for the money, the carmakers would have to agree to terms similar to those placed on banks that receive funds under the $700 billion Wall Street bailout: to limit their top executives' pay packages, cease paying dividends, give the government a chunk of future gains and guarantee that taxpayers would be reimbursed before any other shareholders, the aides said.
2) That sticks it to the rich pretty well. How could that possibly be supported by a Republican administration, eh? Maybe that left wing class warfare nonsense really is BS after all.
It would create a presidentially named overseer charged with running a broad auto industry restructuring, with the power to require immediate payback of the emergency loans early next year if the companies fail to take the steps necessary to overhaul themselves.
3) Only Congress could come up with something this stupid. The auto companies wouldn't need the loans in the first place if they had enough money for "immediate payback". Toothless, pointless posturing.

Sorry. No pearls of wisdom in this oyster.
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December 8th, 2008, 22:34
Originally Posted by dteowner View Post
http://news.yahoo.com/s/ap/20081208/…JtAjPEPYFH2ocA

Looks like it's going to happen. A few thoughts:
1) When did GM CEO Wagoner pee in Senator Dodd's cheerios? Dodd is bound and determined to get Wagoner canned. Whether it's justified or not doesn't explain why Dodd is singling out Wagoner from the other CEOs.
I think GM is in the worst shape, and also he makes the most bread. Like 20 times what the CEO of Toyota's American outfit does. Ford is in better shape so theoretically management is less at fault, but Chrysler, being a privately held company, shouldn't even be at the table IMO and is supposedly so bad it's own owners (Cerberus—kind of an rpgish name for a corporation) won't put any money into it, so I agree I don't see why the harsh on Wagoner.

2) That sticks it to the rich pretty well. How could that possibly be supported by a Republican administration, eh? Maybe that left wing class warfare nonsense really is BS after all.
If I'm not glaringly off on my facts(always a possibility) I think this is mostly supposed to be mimicing Chapter 11 bankruptcy procedures; the Republicans are as you've said pretty pragmatic about free market failures, even if CEO's are usually adept enough to bail with enough cash regardless—which I'd say these probably have since they're offering to work for a buck a year—I doubt Mrs. CEO will be opening a can of pork and beans for supper anytime soon.

3) Only Congress could come up with something this stupid. The auto companies wouldn't need the loans in the first place if they had enough money for "immediate payback". Toothless, pointless posturing.
That was actually my first thought when I saw this—how can they pay back a loan that is supposed to be all that stands between them and the Board of Directors, shareholders and assorted proletariat all living under the bridge? Then I realized that our wily Congressional overlords with their vast experience of the scent of money may be able to smell just how much the books have been cooked and have an idea that just perhaps there's a few pennies laying around they can suck out between the lines of the supposedly hemorrhaging balance sheets .

Either that or it's pointless, toothless posturing.

Where there's smoke, there's mirrors.
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December 9th, 2008, 10:34
This gave me a little giggle.



(From ritholtz.com.)
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December 9th, 2008, 10:37
ROFL, indeed a good point!!!
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December 9th, 2008, 12:24
Originally Posted by dteowner View Post

3) Only Congress could come up with something this stupid. The auto companies wouldn't need the loans in the first place if they had enough money for "immediate payback". Toothless, pointless posturing.
Not really, it makes it a suspended bankruptcy sentence. If they fuck about at all congress pulls the plug and they go straight into bankruptcy, they've got one last chance to play ball and then they're over.
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December 9th, 2008, 12:31
Overall, I think they've missed a trick here. The main issue is a lack of R&D for decades that's left them with hugely undesirable cars compared to their global peers.

As they're all up against the wall the US had a great chance to centralise the R&D and have it run for the benefit of the nation instead of individual shareholders, and run way more efficiently and with greater economies of scale than any other company in the world could hope to compete with. In return for the loans they could insist that each company donate their intellectual property rights to a centalised US car industry research pool that could produce the innovations they'll need to become viable again.

As it is they're going to throw a load of taxpayers money at them for each of the three to invent the same kind of stuff independently, with little or no hope of catching up and overtaking any global rivals.
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December 9th, 2008, 14:02
Originally Posted by Benedict View Post
Not really, it makes it a suspended bankruptcy sentence. If they fuck about at all congress pulls the plug and they go straight into bankruptcy, they've got one last chance to play ball and then they're over.
That's fine for spanking the Big3, but it's being paraded as protection for the taxpayers, who would recover about $.05 if they're lucky. I'd love to meet the politician that's going to let that switch get pulled anyway, particularly with it being done under a labor-friendly Obama administration.

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December 9th, 2008, 14:31
Originally Posted by dteowner View Post
That's fine for spanking the Big3, but it's being paraded as protection for the taxpayers, who would recover about $.05 if they're lucky. I'd love to meet the politician that's going to let that switch get pulled anyway, particularly with it being done under a labor-friendly Obama administration.
Ah right, I agree for that it's completely fucking useless. Although it is kind of protection for the taxpayer, in that it's added incentive for them to sort their shit out and an indication that they won't just keep throwing money at it.

Surely there's ways of pulling that switch that aren't too labour unfriendly? Put it into bankruptcy, destroy any remaining shareholder value, take some of the money out of the obligations to existing & retired workers, some out of creditors to them, make all intellectual property the property of the government to form the basis of new US leadership on car technology (particularly fuel efficiency), massively trim inefficient layers of management while protecting the workers who actually add value, and still take away some of the unsustainable pay & conditions deals that the workers have but by that point they'll be so grateful to have a job at all.

Seems a reasonable way to play it IMO, throw a small amount of money (by comparison to other bailouts) at them now, if they're successful he's done well, if they're not successful he can say that he's respected business enough to give them a chance that they've squandered and then push through some form of bankruptcy and nationalisation more easily, he can mak a lot of noises about how the workers need to be protected while they gradually get so fearful of not having any job at all that they'll agree to absolutely anything that still puts food on the table and not feel hard done by, and they'll have six months or so of scrutinising all the inner workings of these companies so that when they do (almost certainly) put them into bankruptcy they can do it properly and turn them around quickly and the initial stumbling around messing things up that is bound to happen whoever's trying to sort it out can all be their fault.
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December 10th, 2008, 18:48
Nearly a done deal:
http://ap.indystar.com/dynamic/stori…CTION=BUSINESS

"This is a bridge to either fundamental restructuring or bankruptcy," he added. "They either have a long-term plan that's viable or we get our money back. And if we call our money back, which is required under this bill, then those firms are not going to be able to survive."
I call bullshit. The taxpayers won't get a plugged nickel back in a backruptcy scenario. I'm still not sure where I stand on the whole thing, but I wish they wouldn't lie to us about it.

Sorry. No pearls of wisdom in this oyster.
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December 10th, 2008, 21:54
Yeah—there's a bit of posturing going on—not that either side would ever indulge in that, of course—*snort*— but it really looks like the votes may just not be there:

Bailout Future Unclear

Where there's smoke, there's mirrors.
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December 11th, 2008, 11:09
Is it just me who keep seeing all the irony?

The environmental debate - we spend billions and billions on promoting the environment, and take the bus instead of your car, take the tram instead of your car take the train instead of your car. Take the biiiikkeee instead of your car!

OOOO surprise the car industry is in a crisis ??? whoever could have seen this cooming ???? Let's us shift focus away from the environment and aim billions and billions from each gouverment on the car industry so they can start advertise us to buy cars again….

It really is stupidity X 1000. I want to see the gouverment spending billions on public transportations instead, re-allocate all those people working on cars to building environmental friendly busses, trams, and trains, and drive them as well, o and to the bicycle factories, build new subways which would be a faster alternative to taking the car, use the space now used for roads for more useful stuff.
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December 12th, 2008, 15:55
Or maybe not…

Dead, after the UAW refused to play ball with mid-contract pay cuts.

Sorry. No pearls of wisdom in this oyster.
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December 12th, 2008, 16:05
Well, looks like the bailout—at least the Congressional version—is history—(apologies to world-wide markets, which are plummeting as we speak.) Latest word is that now it's all in Bush's lap, which means it's in Paulsen's lap, and up to him to determine whether they will use the TARP money to give the Big 3 some mouth-to-mouth.

And just for dte's benefit, I want to point out that this proposal(which I don't necessarily favor myself) was stymied by a Republican-led filibuster for which there were not enough votes to obtain cloture(60) Final vote was 52-35. So much for the Democrats 'controlling' the Senate—though some 10 Republicans did back it while four Dems from the South voted against it due to the presence of foreign auto-makers in their constituency as pointed out below in the process-skinny for die-hard political junkies, from First Read:

*** Bailout crashes and burns: The $14 billion auto bailout collapsed in the Senate last night after supporters were unable to get the 60 votes needed to clear a filibuster; the cloture vote was 52-35…Ten Republicans voted to invoke cloture and move the legislation forward (Bond, Brownback, Collins, Dole, Domenici, Lugar, Snowe, Specter, Voinovich, Warner). Four Democrats voted against it (Baucus, Lincoln, Tester, and Reid, who opposed it so he could procedurally bring up the bill again). But get this — more than the a third of the votes against (14 out of 35) came from Democrats and Republicans hailing from southern states (Bunning, Burr, Chambliss, Cochran, Corker, DeMint, Hutchinson, Isakson, Lincoln, McConnell, Sessions, Shelby, Vitter, Wicker). Much of this southern opposition can be explained by labor politics. The South is mostly anti-union, and southern GOPers last night blamed the United Auto Workers for the collapse. Also, donít forget that foreign automakers have plants in the South: BMW is in South Carolina; Mercedes is in Alabama; and Toyota, among other places, is in Alabama, Kentucky, Mississippi, and Texas.
Todd & Co. also make an interesting point about the future of the upcoming Congress:

…itís worth reminding everyone that tensions between northern and southern US senators have existed throughout this countryís history (regarding slavery, secession, and civil rights). And given that Democrats will either hold a 57-42 or 58-42 or 59-41 majority in the next Senate — depending on what happens in Minnesota and Illinois — and given that much of the GOP caucus will hail from the South, we can only expect these tensions to increase during the first two years of the Obama administration. By the way, itís amazing how McConnell was able to run circles around Reid. Sure, the numbers are closer now than they will be in a month. And, sure, itís always easier to be minority leader than majority leader. But McConnell is proving to be a pretty smart minority leader, while Reid continues to get frustrated again. And the lesson the Senate GOP caucus is going to learn from this fight is that by sticking together, they can hold up Obama's agenda.
I knew there was a reason I couldn't stand Reid.

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December 12th, 2008, 16:15
Originally Posted by zahratustra View Post
How come you seems to be so pissed off by, allegedly, excessive carworkers' salaries but not by the extraorbitant salaries of Wall Streeter's? Especially that 3 car makers ask for about 34 billion loan which looks like peanuts comparing to 700 bilion bailout offered to Wall Street?
Well first off, there aren't many exorbitant salaries on Wall Street. It's the total comp you are talking about. I don't have a problem with someone that performs and gets paid well for it. For instance, a trader I used to work with routinely makes $10-15MM for the company every year making a market in dollar swaps. His bonus is usually 10% of that. He made money for the company, he gets paid. He loses money, he gets nothing.

There is no Wall Street Union that tries to hold the street hostage for higher salaries. There are no mandatory payments if you get laid off. There are few guarantees. Most payments of bonuses are in the form of restricted stock or options that vest over time, so for most guys, these 'excessive' comp packages of the past few years have in many cases become worthless.

Wall Street compensation is driven completely by the employment market and the trading market. When times are good, the payments are great. When they are bad, the payments are bad.

And most of the people on the street pulling in those salaries work insane hours 70-100 hour weeks.

If the market is simply that car workers make $75/hr (or whatever it is), then so be it, but that isn't what the market is. The market has been throttled by unions that have a near monopoly on skilled workers (thank you union states) and can threaten to destroy a company if they don't get what they want.

The fact that workers in non-union states make less (but still not poor wages) shows that the workers in union states are over-paid, particularly on the benefits side (seriously, can anyone justify having to pay a worker for two YEARS 90% of their salary after you lay them off?)

And lastly on compensation, let me be clear: I have no love what-so-ever for some of the loss hiding scams that have been allowed to occur and resulted in massive payments on 'gains' that later turned into losses.

As for the bailout figures, I wasn't fully in support of the way the wall street bailout was done. Even so though, the banks and brokerages are not companies that have been running themselves in an incompetent manner for decades to get in the position that they are in. Did they make mistakes? Absolutely, but we can also point back to the lack of regulation (or loosening of regulation) that allowed it to happen. While the street certainly enjoyed the profits of the sub-prime extension and CDO market creation, make no mistake that their was tremendous pressure from Washington over the past decade to continue to lend more and more, which of course meant more and more risk.

Finally, the United States as an economy cannot survive without a stable banking system. If that system collapses, it would the Great Depression all over again. The government has a fundamental interest in keeping at least some lending institutions solvent. If even half of the major banks failed, the contraction of our economy would be massive. Literally 50-70% in a few short years.

Our entire economic model is driven by the efficient use of leverage (and when you have inefficient use like now, you see large contractions). You need banks for that to happen. Right now we have a problem where even the banks that have money aren't lending. Amex has been cutting business lines of credit left and right. The more that happens, the harder it is for companies to stock inventory, meet expenses between when products are sold and the payment received, etc. The point of the bailout was to get banks lending. It hasn't worked quite that way, but that was at least the point.

The same can't be said of the automotive industry. Sure, the high end of estimates is that if the Big3 fail up to 3MM jobs could be lost. That would suck and it would hurt our economy. However, the bailout, as it is currently structured, won't prevent that. It will merely delay it and hence I cannot support it.

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Last edited by blatantninja; December 12th, 2008 at 16:24.
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December 12th, 2008, 16:47
I hear there are some big scandals on The Street, today bn, especially this one about a Wall Street big name, Bernard Madoff:
Top Trader Accused of defrauding Clients
I can understand a little skimming, but $50 billion? That's government level corruption.
There's also something about some hedge-fund guy defrauding clients for $300 million or something.

You don't have to tell me you personally deplore it, I know you do, I'm just wondering if this is the tip of the iceberg, or just a few very ugly exceptions to the hard-working model you're talking about above. You have to realize Wall Street is getting a very bad rep with America right now. This sucks for honest traders and those who haven't exploited every possible loophole for personal profit—but I'm wondering if they (among which I include you) are the exceptions?

Where there's smoke, there's mirrors.
Last edited by magerette; December 12th, 2008 at 16:54.
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