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Thread: Comgrats US taxpayers ... you are about to give the UAW a $15 billion 'gift' !

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    Default Comgrats US taxpayers ... you are about to give the UAW a $15 billion 'gift' !

    (snip)"For the upteenth time. The only way to make GM profitable is to remove the stranglehold the Unions have on the cost of production. A cost that adds an average $2,000 to every vehicle produced, and thus renders them more expensive than their non-union made counterparts.

    Well, Obama in his infinite wisdom has decided to reward the UAW (United Auto Workers), the very people who are responsible for GMs unprofitably with outright ownership of the new company, and as icing on the cake, the $15.4 billion in loans; we the taxpayers gave GM are going to be converted into a gift.

    Political payback sure is sweet.

    - General Motors Corp’s (GM.N) plan for a bankruptcy filing involves a quick sale of the company’s healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.

    The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source…

    …In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said."(snip)


    complete Reuters coverage at

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    Default Re: Comgrats US taxpayers ... you are about to give the UAW a $15 billion 'gift' !

    Quote Originally Posted by Melonie View Post
    http://www.puma08.com/2009/05/20/con...-billion-gift/

    (snip)"For the upteenth time. The only way to make GM profitable is to remove the stranglehold the Unions have on the cost of production. A cost that adds an average $2,000 to every vehicle produced, and thus renders them more expensive than their non-union made counterparts.

    Well, Obama in his infinite wisdom has decided to reward the UAW (United Auto Workers), the very people who are responsible for GMs unprofitably with outright ownership of the new company, and as icing on the cake, the $15.4 billion in loans; we the taxpayers gave GM are going to be converted into a gift.

    Political payback sure is sweet.

    - General Motors Corp’s (GM.N) plan for a bankruptcy filing involves a quick sale of the company’s healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.

    The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source…

    …In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said."(snip)


    complete Reuters coverage at http://www.reuters.com/article/merge...43363120090519
    It won't work. It never has and never will. Remember the Triumph and British Leyland ? Puegot and Citroen ? The Russian Zil and Lada ? The Yugo ?

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    Default Re: Comgrats US taxpayers ... you are about to give the UAW a $15 billion 'gift' !

    Just great ... so if you're one of the lucky tax payers who owns GM stock you get to be screwed both ways!

    You know other industries will be watching this development with keen interest.



    And don't forget this little tidbit...

    - The government's plans include giving stakes in the new company to GM's union and bondholders, although the ownership structure of the company is still being negotiated, said the source who is familiar with the company's plans.

    It could at least be interesting to watch what happens when the union is on both sides of the negotiating table.
    If you can't win. Make the fellow in front of you break the record.


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    Default Re: Comgrats US taxpayers ... you are about to give the UAW a $15 billion 'gift' !

    Quote Originally Posted by Melonie View Post
    http://www.puma08.com/2009/05/20/con...-billion-gift/

    (snip)"For the upteenth time. The only way to make GM profitable is to remove the stranglehold the Unions have on the cost of production. A cost that adds an average $2,000 to every vehicle produced, and thus renders them more expensive than their non-union made counterparts.

    Well, Obama in his infinite wisdom has decided to reward the UAW (United Auto Workers), the very people who are responsible for GMs unprofitably with outright ownership of the new company, and as icing on the cake, the $15.4 billion in loans; we the taxpayers gave GM are going to be converted into a gift.

    Political payback sure is sweet.

    - General Motors Corp’s (GM.N) plan for a bankruptcy filing involves a quick sale of the company’s healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday.

    The source, who would not be named because he was not cleared to speak with the media, did not specify a purchase price. The new company is expected to honor the claims of secured lenders, possibly in full, according to the source…

    …In addition, the government would extend a credit line to the new company and forgive the bulk of the $15.4 billion in emergency loans that the U.S. has already provided to GM, the source said."(snip)


    complete Reuters coverage at http://www.reuters.com/article/merge...43363120090519
    Hold onto your hats ! Obama is readying a bail-out of California !

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    Default Re: Comgrats US taxpayers ... you are about to give the UAW a $15 billion 'gift' !

    And this news weren't interesting enough, another part of the deal is a plan to provide federal assistance to GMAC (which presently finances GM and Chrysler vehicle purchases). In fact the discussions extend to a plan that would make GMAC the auto loan equivalent of Fannie Mae and Freddie Mac, granting below market interest rate auto loans to would-be auto buyers whose credit rating is so poor that 'normal' auto lenders won't approve loans for them !



    (snip)"According to Reuters, the Treasury Department is ready to commit an additional $7.5 billion to GMAC. You may recall that the stress test indicated that GMAC needed an additional $11.5 billion, so this looks like the first tranche. It’s probably safe to assume that GMAC couldn’t persuade any private investors to pony up. Based on the successful capital raising efforts of other banks, there would appear to be lots of private equity interested in financial services companies so the fact that the government is the only player with regard to GMAC probably tells you all you need to know about the value of this investment.

    If you’re counting, so far the we’ve invested $5 billion in the company and loaned it an additional $884 million. With this new investment, the government can if it so chooses claim majority ownership of the company. That has to send chills down the spines of the non-state owned manufacturers. Competing with a lender that has unlimited capital and no profit motive isn’t a pleasant prospect."(snip)


    of course, gov't subsidized GMAC loans will not be available for Ford buyers, or buyers of other American assembled foreign owned auto brands.

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    Default Re: Comgrats US taxpayers ... you are about to give the UAW a $15 billion 'gift' !

    I've been thinking (Uh Oh!) and wondering - with all that has been going on with outsourcing and offshoring and ripping off the public with debt - more and more of the economy is becoming dependent on subprime.

    Do we simply let the economy slowly melt down to a freeze or try to do something about it by making debt available to people who might have trouble paying it off? I mean - whats the option - a complete freeze up of the economic engine?

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    Default Re: Comgrats US taxpayers ... you are about to give the UAW a $15 billion 'gift' !

    ^^^ actually the option du jour seems to be the Fannie/Freddie 'fication' of GMAC. If GMAC winds up becoming a GSE, then just like Fannie in the 90's, lending policy directives can be issued by Washington that will require GMAC to write new auto loans for 'subprime' new car buyers of GM and Chrysler vehicles ... providing that the would-be 'qualify' on other grounds (like income level, minority status etc). And like Fannie/Freddie, the extreme losses incurred as these 'subprime' borrowers default will be covered by US taxpayers.

    The conspiracy theorists are of the opinion that such a development would create a 'full circle' micro-economy where GM and Chrysler were concerned. For starters, only GM and Chrysler vehicles would qualify for GSE GMAC financing ... thus a wide swath of 'subprime' US auto buyers would be 'forced' to purchase GM and Chrysler vehicles (versus Ford or foreign owned US assembled brands) because they wouldn't qualify / couldn't afford 'standard' auto financing. Like Fannie/Freddie versus real estate prices, this would allow GM and Chrysler to charge a comparatively high price for their new vehicles (since all the would-be buyers are really looking at are the monthly payments not the total purchase price). This in turn would maintain / expand UAW employment at Chrysler & GM, while eventually eroding non-union auto worker employment at the foreign owned US assembly plants.

    The same conspiracy theorists are also of the opinion that Ford will 'see the light', and will decide to 'marry' the US gov't to obtain US gov't subsidized auto financing. If and when this happens, it would place the quote quote 'US auto industry' ( i.e. the UAW dominated US auto industry) in a 'protected' position as a result of the preferential US gov't backed auto loan financing which only these companies would receive. Foreign owned automakers will have a difficult time objecting, since virtually all trade agreements deal with gov't subsidies which affect the sale price of the item. In this case, the US gov't subsidies would affect the monthly payments necessary to purchase the item but not the actual sale price.

    Thus from a cash standpoint, a Toyota Corolla and a Chevy Malibu might both sell for the same $20,000 price (or whatever). Thus 'cash buyers' receive no direct gov't subsidies. However, when financed by a 5 year auto loan, 'subprime' buyers of the Toyota may wind up paying 15% interest through 'standard' auto loan sources, while 'subprime' Chevy buyers would wind up paying 5% interest via GSE GMAC. This would in turn translate into a monthly payment of perhaps $400 for the Toyota versus only $300 for the Chevy, even though they both 'sell' for the same price (and are thus free from WTO challenge).

    From a Machiavellian perspective this is also smart in another way. If the Japanese auto makers wish to remain competitive, they would need to plead with the Japanese gov't to create an equivalent GSE based auto financing arm for US auto buyers ... which would actually amount to Japanese taxpayers subsidizing 'subprime' US auto buyers plus assuming the risk of their future default ! Starting to sound even more like 'subprime' mortgages ?

    ~
    Last edited by Melonie; 05-23-2009 at 04:09 AM.

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    Default Re: Comgrats US taxpayers ... you are about to give the UAW a $15 billion 'gift' !

    The yen is as much as 40% undervalued according to currency traders. Toyota imports more cars into the US then it builds here. No amount of give backs can compete against that.

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