Should the Government own a stake in the "BIG Three"?

[8Mud]

wealth is not a fixed sum. wealth is created when value is created. the more people that create value, the more wealth there is. there is no upper limit on wealth.


that is because the standard of living has gone up as well. people could be one-worker household when they did not have multiple cars, big houses, etc.

Wealth isn't static, it can't be, the money has to keep flowing. The thousand dollars you have today will be worth about $300 forty years from now. "Conservation" of wealth means planning for a 300% return in forty years. As more people start looking for that 300%, where is it going to come from? In other words it's a pyramid with a base, wealth may have no upper limit, but it has to have structure.

IMO to few people actually producing anything and those that do are largely underpaid and way too many are manipulating them for profit. The base is being weakened.

Way to many people extremely busy finding ways to tap the flow without producing anything of substance. The pyramid is getting way too top heavy, the base weakened and/or the middle is getting hammered.

 

[IslanderOffRoad]

They should only "invest" in the big 3 under very strict rules as far as what that money can be spent for.. development to make them more competitive.

 

[goodburbon]

They should only "invest" in the big 3 under very strict rules as far as what that money can be spent for.. development to make them more competitive.

who gets the dividends if there are any?

 

[ehall]

who gets the dividends if there are any?

hopefully the treasury, but realistically the dems will just pass it back to other underwriter projects ie Museum of Soybean History that is chaired by former campaign aide or the like

 

[IslanderOffRoad]

who gets the dividends if there are any?

Dividends go to pay off the gov't stake/loan, etc.. the idea is to get them in and out as quickly as possible.

If dividends are greater than that, how about we reduce the national debt?

 

[goodburbon]

Dividends go to pay off the gov't stake/loan, etc.. the idea is to get them in and out as quickly as possible.

If dividends are greater than that, how about we reduce the national debt?

So it's a stake/loan? How does that work? I'm just trying to get a grip on what is being suggested here.

If the government "buys stake" in the companies with their "bail out" then the overall per share value goes down for all other stakeholders. If the method of payback is dividends then the shares must be then sold to someone else or the company buys them back.

If the business fails the taxpayers bear the burden, if the business succeeds then the government gets to spend the dividends?

 

[IslanderOffRoad]

So it's a stake/loan? How does that work? I'm just trying to get a grip on what is being suggested here.

If the government "buys stake" in the companies with their "bail out" then the overall per share value goes down for all other stakeholders. If the method of payback is dividends then the shares must be then sold to someone else or the company buys them back.

If the business fails the taxpayers bear the burden, if the business succeeds then the government gets to spend the dividends?

You're right, I mean it as a loan. I used the term invest loosely. I'm not interesed in government controlled businesses.

If it weren't for how bad it would eff everything up, I'd be on the "let em fail" bandwagon.

GM should have canned Rick Wagoner 15 years ago.

 

[tharlanjr]

I understand that, but with the unions and the government forcing business's to pay more, that is hurting business. THe unions force them into holding onto workers and if they let them go they still have to pay unemployment.

The buying of vehicles is slowing down, so they need to cut back on employees and slow production

The banking industry is screwed because of the housing industry.

The government needs to let the companies suffer and let the people buy them off.

LIke I said, giving them a fat check isnt going to make things better unless they restructure and cut some losses...

IMHO

Right now killing the auto unions and wages will just lead to less consumer buying power, more deflation and lost jobs. What we need is more cars sold which requires fixing the banking & credit industry and retooling Detroit to build something consumers will buy. 2 years ago consumers all wanted huge behemoth SUVs.

Japan forces the Japanese to retire cars at 50,000 miles, to buy new cars, just to get permits to drive the cars in Japan. The old cars are sold overseas, in third world countries from what I have heard. Gives Japan a stable home automotive market. They also have far tighter vehicle regulations in Japan than we do here, and yet they, Toyota are kicking our ass. But keep in mind that Toyota sales are down nearly 50% this last quarter due to the worldwide recession. It's the world wide drop in auto sales world wide that is killing all the auto companies world wide, it is not just the big 3 Detroit problem anymore. Even Prius sales are way down now.

 

[besthaticouldo]

goodbourbon...

i dont even know what to say...

just as example...when the flint plant closed in michigan a decade or so ago it basically destroyed an entire state, and if you ever get a chance to drive through there, and i suggest you do...check out all the boarded up houses and places of business...its quite scary...

now think of that on a national scale...

plants, dealerships, corp headquarters, etc...millions upon millions of people would be desolate in an instant. it would bankrupt the united states...simply put...if they dont step in and help...odds are we will have a worse market crash then we've already have...it could be disastrous on so many levels. its scary to even think about.

so yes...let them step in, give them a loan, force them to fix their wrongs (ie more efficient vehicles), and force them to pay back the loan with interest. then the interest will be applied to paying down the national debt...seems simple.

i agree with islander...if it wouldnt destroy the US...id say let em fail...but it would...i dont see a choice really...

 

[besthaticouldo]

this is a good video too

Lobbyist on right is arguing to bailout American Auto makers. He gets asked to name one fuel efficient American car that he would want to own.

http://jalopnik.com/5084355/more-proof-the-big-threes-lobbying-efforts-kinda-blow?autoplay=true

the big three needs to be fixed...

 

[tharlanjr]

The car companies wouldnt shut down, if they were allowed to sell off their assets and get rid of the union contracts.

And if the US would relax its stupid diesel standards we could have a good car that gets 60+MPG.

Most of these companies arent actually broke, they are just trying to cut their losses and get bailout money.

I guarantee you they could be saved by people buying their stocks and them downsizing.

I know if they re organised I would buy some stock, hell at less than 2 bucks a share its almost worth it, lol

 

[besthaticouldo]

lol already bought ford yesterday...

actually ford spent 7.3 billion of its own money after losses, and GM 7.7 billion...how large do you think those cash reserves they have are?

 

[tharlanjr]

Probably pretty big considering the HUGE boom in sales they have had for the past few years.

I have thought about buying them I just havent yet, lol

I was even thinking about getting some fannie or freddie stock since its like .50 a share.

If the gov bails them I might make a lil profit...

Say you invent 1K and it goes up to 2 bucks a share which isnt much, you will have 4k.

And if it drops down the most your gonna lose 1K, and there isnt much more room to drop from .50 ya know, lol

 

[besthaticouldo]

i put 1200 into ford yesterday...i think ill make at least my money back...lol

you'd hope its huge...but honestly who knows...

we'll see what happens...lol

 

[goodburbon]

goodbourbon...

i dont even know what to say...

just as example...when the flint plant closed in michigan a decade or so ago it basically destroyed an entire state, and if you ever get a chance to drive through there, and i suggest you do...check out all the boarded up houses and places of business...its quite scary...

now think of that on a national scale...
...

Save us Obama, we welcome your socialism, give the government even more say in private industry We can't let them fail that would put hard times on us, please take more of our money to save them. We are all thouroughly convinced that socialism is better than a 5 year depression, we couldn't possibly live through that, not with the standard of living we have! boo hoo.

Being bailed out is bad for us. It's bad for our children, it's bad for our character, it's bad for our country! Think helicopter kids on a global scale!

You wanna ride the bull, you gotta face the bear every once in a while. With freedom COMES THE FREEDOM TO FAIL.

I have seen the writing on the wall and began to prepare months ago, have you?

 

[Ecomike]

So it's a stake/loan? How does that work? I'm just trying to get a grip on what is being suggested here.

If the government "buys stake" in the companies with their "bail out" then the overall per share value goes down for all other stakeholders. If the method of payback is dividends then the shares must be then sold to someone else or the company buys them back.

If the business fails the taxpayers bear the burden, if the business succeeds then the government gets to spend the dividends?

The Treasury is taking the preferred stock and or senior debt loan route, so if they fail (i.e. AIG, the banks, GS, or others which might include the big three) the government has first rights to any assets to settle the debt. The existing stock holders, bond holders and loan holders get screwed in a failure either way, while the Treasure may actually profit (using the loan or Preferred Shares purchase as the basis for profit, although failures would trickle down to us with huge systemic financial loses to all of us) from a failure, and Treasury would loose big time in lost taxes due to further down turn in economic activity.

If the investments work they are set up to encourage the companies to buy out the Treasury stocks ASAP, as soon as the company is profitable and sound enough to do so.

At least that is what I have read, and I have spent about 40 hours digging into this, reading, the last 4 weeks.

 

[Ecomike]

goodbourbon...

i dont even know what to say...

just as example...when the flint plant closed in michigan a decade or so ago it basically destroyed an entire state, and if you ever get a chance to drive through there, and i suggest you do...check out all the boarded up houses and places of business...its quite scary...

now think of that on a national scale...

plants, dealerships, corp headquarters, etc...millions upon millions of people would be desolate in an instant. it would bankrupt the united states...simply put...if they dont step in and help...odds are we will have a worse market crash then we've already have...it could be disastrous on so many levels. its scary to even think about.

so yes...let them step in, give them a loan, force them to fix their wrongs (ie more efficient vehicles), and force them to pay back the loan with interest. then the interest will be applied to paying down the national debt...seems simple.

i agree with islander...if it wouldnt destroy the US...id say let em fail...but it would...i dont see a choice really...

All Well said, X2!

 

[Ecomike]

Probably pretty big considering the HUGE boom in sales they have had for the past few years.

I have thought about buying them I just havent yet, lol

I was even thinking about getting some fannie or freddie stock since its like .50 a share.

If the gov bails them I might make a lil profit...

Say you invent 1K and it goes up to 2 bucks a share which isnt much, you will have 4k.

And if it drops down the most your gonna lose 1K, and there isnt much more room to drop from .50 ya know, lol

A word of advise to all of you, based on my loses in the 1987 stock market crash. This is much worse than anything we have seen since 1929.

Back to my advise, I would not be buying stock in any of the companies that the Treasury or Government has an investment in, or a pending investment in, as common stockholders, etc will probably not be allowed to profit until the government is bought out. But there are some attractive stocks that are getting hosed that still have solid companies and solid profits, that should do well on an automotive bail out and rebound, Borg warner and Goodyear at two that I am watching. Goodyear's PE is 4.57 right now and is selling for about 20% of its 52 week high. Borg Warner just announced an increase in it's dividend today, and its dividend has been increasing for 6 years straight, and it was hammered on fear the last 2 months as well. It was $55.99 in may, now it is 17.74.

Ford and GM stock will go down or side ways for a good year or two from here, except for daily ups and downs due to volatility, the long term trend is down or sideways IMHO.

 

[Ecomike]

Late Friday evening market news:

"General Motors Corp. and Ford Motors Co. saw their shares rise Friday evening, lifted after a report that President George W. Bush is in favor of extending loans to the struggling U.S. auto industry without having the funds attached to fuel-efficiency obligations."

 

[Boatwrench]

Yes.

The countries that hold the biggest trade imbalance with the USA are the countries whose major manufacturing industries are heavily subsidized by their governments. Fair Trade my :moon:

The dividends from the U.S. investments would return to the treasury just as when Chrysler was on the skids in the early 1980's. Started under the Carter administration the "bailout" was later renewed in 1983 under the poster boy of conservatism President Ronald Reagan administration. I lived through it, just out of the military and working in the shops at a dealership.

If it wasn't fot the US stepping up to help save Chrysler would there be a ?


Now on the mechanics of it, unfortunately the restructuring will need to eliminate some jobs. The number of models and lines need to be pared down. Why a Lincoln Navigator and a Ford Expedition? One or the other. Same with all the GM cloned redundancies. Then get rid of the numbskull at GM that decided there is no need for a hybrid only to have Toyota smack them in the face with the success of the Pirius (side bar: are all Pirius owners snooty or just those in California?). It takes 3+ years to go from concept to production, have some vision. That stupid truck flashback Chevy had, what was with that other than a big mistake? and the HRR? or is it HHR? The ONLY retro vehicles that had any style were the Prowler, Mustang and the latest limited addition Charger, the rest fell way short. Jeep, dump the H4, yeah it is trail ready off the show room, but it gets away from your roots, small & manuveurable.