Dow Down – Crude Oil Futures Below $50/Barrel – Gasoline Below $1.20

Dated Brent Spot         $49.72 Barrel          -$1.27

NYMEX RBOB GASOLINE    $1.17 Gallon         -0.064

http://www.bloomberg.com/energy/

Dow

-223.73

-2.63%

8,273.58

NASDAQ

-34.80

-2.29%

1,482.05

S&P

-22.54

-2.58%

850.75

FTSE

-100.81

-2.38%

4,132.16

DAX

-152.97

-3.25%

4,557.27

Nikkei

+60.19

+0.71%

8,522.58

Will Oil Futures find a floor at $45/Barrel, Gasoline at $0.95 Gallon and the Dow at 7500?

I Wasn’t Kidding – NINJA & LIAR Loans Are Still Around – Former Treasury Sec’y O’Neill says “NO MORE SUBPRIME MORTGAGES!”

Former Treasury Sec’y O’Neill says “NO MORE SUBPRIME MORTGAGES!”

By Liz Claman

Can’t put down 20% for a house? TOO BAD, you’re on your own now. Former Treasury Secretary Paul O’Neill joined me on “Countdown to the Closing Bell” exclusively today to talk about a myriad of issues. He has some controversial thoughts on tax hikes for BOTH the rich AND poor, whether the U.S. Auto Industry should be bailed out, and why no one should be issued a subprime mortgage loan anymore.

O’Neill says we all need ‘tough love’ to get us out of this mess.  Please watch all three clips.  Whether you agree with him, here are some fascinating ideas from Paul O’Neill.

SEE THE VIDEOS HERE: http://liz.blogs.foxbusiness.com/2008/11/11/former-treasury-secy-oneill-says-no-more-subprime-mortgages/

Stop The Auto Industry Bailout – Pay Offs To The “Detroit 3″ At Expense of Taxpayers

They are calling this bailout the “Auto Industry Bailout” to mislead you. The “bailout” is targeting the “Detroit 3″ and won’t help any of the other “American” Auto Companies. The Wall Street Journal refers to the “Detroit 3″ as the “Old Auto Industry”.                                                                                                            http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

The “Old Auto Industry”, GM, Ford & Chrysler currently have a “market value” of about $9.2 Billion Dollars. They have already been given 25 Billion Dollars in “bailouts” to “re-tool” to make more “Green Agenda Friendly” vehilces. The $25 Billion is currently tied up in the Energy Committee in Congress. That “bailout” alone is worth 2 1/2 times the current market value of the combined companies. The “New American Auto” industry is operating at a profit, pays its employees as much as or more than the “Detroit 3″ and needs no “bailout” to produce autos that obtain top gas mileage and fit the “green agenda” without Government subsidy. By the year 2010, the “New American Auto Industry” will employee more individuals than the “Old Detroit 3″ even if the “3” are given additional  bailouts ……. The “Detroit 3′ produces 1/2 of 1% of our Gross National Product, so does the “New Auto Industry” – combined they account for just over 1% of the GNP. Gone are the days of the 1950’s when the “Auto Industry” accounted for 15% of the US economy. ………….  

The Government may want to consider buying the ‘Detroit 3″ for $10 Billion and then giving the Companies (minus existing UAW, Executives or Suppliers contracts) to Toyota with an extra $10 Billion in cash and have Toyota take over the management of the “Detroit 3″. By doing so the Government would put in place a Management Team that has a demonstrable track record, a proven knoweldge of the 21st century Auto Industry, has increased its marketshare for 25 years and has increased its annual profit growth for an over a decade, and has the respect of consumers the world over. While doing all this the Government would also save $5 Billion off the original “Bailout” money (authorized just last month). I’m only half kidding with this suggestion ….. READ ON  

Millions In Auto Bonuses While Singin The Bailout Blues

Secondly, to imply that GM, Ford & Chrysler LLC, are the “American” Auto Industry is disingenous. With global investing GM, Ford & Chrysler are no more American than Honda, Toyota or Hundai. Any American can invest in the ”New American Auto” Industry as the Wall Street Journal calls it – but Americans cannot invest in Chrysler LLC – it is a privately owned company and no one knows who actually “owns” Chrysler LLC because Cerebus Capital Management’s ownership is a closely guarded secret. http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

The largest investors in GM and Ford are Capital Management firms, hedge funds and Mutual Funds. There is no way to determine whether the individuals who have invested in those firms are “American” or from “Communist China”. Communist China controls a significant interests in many of the remaining “American” banks and investment firms.                                                             http://www.marketwatch.com/news/story/china-invests-3-bln-blackstone/story.aspx?guid={C8B110EC-2538-4461-97C8-0FD7F1CAEF15}&dist=hplatest            http://english.pravda.ru/business/103399-Citigroup-0                                            http://forbes.ccbn.com/conferencedetail.asp?client=forbes&event=1988907

Why do writers insist on calling these companies “American”. We don’t know who owns the stock or who the investors are. As for GM and Ford, either could be bought by a foreign corporation tomorrow the same way Chrysler was purchased, first by Daimler then by Cerebus. 

CHRYSLER LLC – CEREBUS Capital Management

Chrysler is owned by a private equity company – CEREBUS CAPITAL MANAGEMENT – Cerebus is named after the mythical three headed dog that guards the gates of hell  http://www.hoovers.com/cerberus-capital-management/–ID__112328–/free-co-factsheet.xhtml?cm_ven=PAID&cm_cat=INK&cm_pla=CO1&cm_ite=cerberus-capital-management )

Cerebus is a private capital investment firm that owns shares in companies all over the world. Cerebus was formed in 1992. It has its own bank, a Japanese Bank not an “American” bank, named Aozora.

Cerebus’ Chairman is none other than former Vice-President Dan Quayle. http://www.vicepresidentdanquayle.com/biography.html

But who owns Cerebus – no one knows – it is a “private” and “unregulated” company. “It has come to this. A firm that made its name, and its fortune, feeding off companies in their death throes is demanding a government bailout.” http://www.cbc.ca/money/story/2008/11/07/f-pittis-economy.html 

No one knows if Cerebus is anymore of an American Company than Daimler was or the China Investmant bank is.          http://www.associatedcontent.com/article/244378/cerberus_buys_chrysler.html                 http://en.wikipedia.org/wiki/China_Investment_Bank                                             http://en.wikipedia.org/wiki/China_Construction_Bank                                             http://swfinstitute.org/fund/cic.php                                                      http://www.skadden.com/index.cfm?contentID=47&practiceID=33

The US government can’t own shares in Chrysler LLC and the Cerebus Investors have extremely limited liability for any bailout money we put in their pockets, “Chrysler is 81% owned by Cerebus Capital Management and 19% by Daimler AG. It is not a public company and you cannot buy or sell its stock. (It was a public company until last year when Daimler sold most of Chrysler to Cerebus.) An LLC is a corporate structure that limits the liability of its stockholders, similarly to a corporation.” http://smallbusiness.yahoo.com/r-answers-a-20080114050334AA9ZyJk-k-stock+trade

Cerberus is headquartered in New York City with affiliate and/or advisory offices in Atlanta, Chicago, Los Angeles, London, Baarn, Frankfurt, Hong Kong, Tokyo, Beijing, Osaka and Taipei. http://www.cerberuscapital.com/about_comp_prof.html

Cerebus was described this way, “Cerberus Capital Management is the very real private equity firm — one of the bidders in play for the Chrysler Group — that guards the privacy of its dealings almost as jealously. USA Today takes a look at the firm and reveals a company with a “fierce reputation” and “a combative, take-no-prisoners style.”The list of companies that are either owned by Cerebus or which the company has majority stakes include: Alamo and National rental car, Fila, Blue Bird yellow buses, Rafaella clothing, GMAC, Aegis Mortgage, auto suppliers CTA Acoustics and GDX Automotive, Remington Arms, Bell Canada, Tower Automotive, banks, mortgage companies, and property managers.” When it bought Chrylser, Cerberus instantly doubled its annual revenue, but revenue isn’t the prime concern for private equity firms — return on investment is. The issue is that no one knows how Cerberus would go about increasing return from Chrysler.” http://www.autoblog.com/2007/04/16/rare-info-on-chrylser-bidder-cerberus-reveals-a-fierce-reputati/                                                                                            http://www.washingtonpost.com/wp-dyn/content/article/2007/08/14/AR2007081401913.html     http://www.bcwf.bc.ca/documents/s=393/bcw1176303661611/  http://www.forbes.com/business/feeds/afx/2007/05/17/afx3731793.html           http://en.wikipedia.org/wiki/Cerberus_Capital_Management   http://iht.com/articles/ap/2007/03/29/business/NA-FIN-COM-US-Tower-Automotive-Bankruptcy.php                                                                                      http://www.cerberuscapital.com/

Now we know how they plan on increasing the return – a taxpayer subsidized bailout. “The UAW and the Canadian Auto Workers have publicly opposed the sale of Chrysler “to Cerebus or any other private equity group.” http://www.autoblog.com/2007/04/16/rare-info-on-chrylser-bidder-cerberus-reveals-a-fierce-reputati/
In 1984 Chrysler employed approximately 80,000 workers. (1984-09-01, Chrysler Corp. completed its 4-year employee stock ownership plan by distributing 1,661,691 shares of common stock to more than 80,000 employees, including 63,000 members of the United Auto Workers union.) http://resources.bnet.com/topic/chrysler+llc+and+stock.html
In October 2008 it was estimated that Chrysler/Dodge/Jeep combined employed 49,000.        http://search.yahoo.com/search;_ylt=Ak0_ss1oGMILRC6Sai7xc3KmN3wV?p=Chrysler+LLC+Employees+2008&fr=att-portal&toggle=1&cop=&ei=UTF-8
http://www.sullcrom.com/offices/detail.aspx?office=3                                     http://www.chinadaily.com.cn/bizchina/2008-07/17/content_6854442.htm                         http://www.ml.com/index.asp?id=7695_7696_8149_8688_8558_6274
Chrysler is only a very small piece of the Cerebus pie. Why should the American taxpayers “bailout” a huge, private, mulitnational firm with hundreds of Billions of dollars in assests and dozens of companies under its control?
Cerebus would like to sell Chrysler, but Chrysler is so dysfunctional Cerebus cannot find a buyer.  If Chrysler is a bad bet for Daimler and Cerebus, it is a bad bet for the US taxpayer.
General Motors Corporation
For those who argue GM is the victim of a sudden economic downturn, let me remind you that GM’s largest individual shareholder at the time. Kirk Kerkorian, was reported to have said this in January 2006. “General Motors Corp must cut its dividend, executive salaries and brand structure if it hopes to return to profitability”. Jerry York, an adviser to investor Kirk Kerkorian’s Tracinda Corp, said GM is currently burning through 24 mln usd per day, Agence France-Presse reported. He said the automaker must change its mindset to operate in ‘crisis mode’ and recognize the challenges it faces in the coming months. But unlike a number of analysts who have warned that GM is at risk of bankruptcy, York expressed confidence in the automaker’s ability to create shareholder value even after its shares fell more than 50 pct in the past year.
Lets see; near bankruptcy, lost 50% of stock value in the last year, “must act in crisis mode”, and this situation wasn’t new in January 2006, GM had been facing the same issues for at least 8 years running. In November 2006 Kerkorian sold his GM stock, see below.  
As to General Motors, which is in business with Cerebus as joint owners of GMAC – what are they doing to improve their economic performance – stripping out their valuable subsidiaries and setting them up as private companies, “GMAC, the money-losing finance company, sold a reinsurance business to Maiden Holdings Ltd and plans to sell two insurance units to the Bermuda-based company, to bolster capital and add liquidity. Private equity firm Cerberus Capital Management LP owns 51 percent of Detroit-based GMAC, while General Motors Corp owns 49 percent.” http://blog.pennlive.com/leftcoast/2008/11/chrysler_death_watch_week_thre.html
Who is running “Maiden Holdings” – former GMAC executives. The same Executives who led to these types of problems, “GMAC is shedding profitable assets after suffering $7.2 billion of losses in the seven quarters ended June 30. The lender has been hurt by soaring credit losses at its Residential Capital LLC mortgage unit and by write-down of leases on sport-utility vehicles that drivers no longer want. GMAC’s credit ratings have fallen deep into junk status.” http://blog.pennlive.com/leftcoast/2008/11/chrysler_death_watch_week_thre.html
Who owns GM? Just two years ago Renault & Nissan offerred to buy a “significant minority interest in the carmaker. http://www.msnbc.msn.com/id/13630565/ Kurt Kerkorian, the Billionare American Investor, who owned 9.9% of GM through his Tracinda Corporation publicly favored the partnership. GM would not consumate the deal. In November 2006 Kerkorian announced he would sell 14 Million shares in GM, in a “private transaction”, at $33 per share. Later that month, Kerkorian “dumped” his remaining GM shares at $28.75 per share.
It was reported that Bank of America purchased the stock. It was unknown if Bank of America retained the shares (9.9% of GM) or re-sold them. Morgan Stanley owned 5% of GM in 2006. Morgan Stanley and Bank of America were, in turn, partially owned by the China Investment bank.  http://www.thestreet.com/stocks/automakers/10268781.html 
Three months prior to Kerkorian dumping his GM stock in November 2006, two other “Investment Firms” dumped GM stock in August 2006. The news reports stated, ”Two Major Investors Sell Blocks of GM Shares”, “California-based investment firms that rank as the second-and third-largest institutional investors in General Motors Corp. have sold big blocks of the automaker’s stock, according to regulatory filings. Capital Research & Management Co. of Los Angeles, GM’s second-largest investor, sold 19.2 million shares, or 24% of its holdings in the company, according to second-quarter reports filed this week with the Securities and Exchange Commission. The company’s third-largest investor, Brandes Investment  Partners of San Diego, sold 2.4 million shares, or 4% of its holdings. Neither company would comment, saying they do not discuss their investments.” http://articles.latimes.com/2006/aug/17/business/fi-gmstake17
These firms also guard the identity of those who control the money they are investing. This article went on to note that, ”Credit Suisse bought 11.5 million shares to become the sixth-largest investor in GM” at that time.  Credit Suisse is a Swiss Bank/Holding Company.    http://articles.latimes.com/2006/aug/17/business/fi-gmstake17   
The point is, there is no way to tell who “owns” GM. Many of the shares are “held” by Banks, Investment Firms, Hedge Funds and Capital Management firms, but “who” owns the money invested by those firms is unknown. Investors from all over the globe are free to deposit their money with these firms.
If GM is a bad bet for Kirk Kerkorian and the International Investment Community, it is a bad bet for the American taxpayer. 
  
GM, the largest of the “Detroit 3″ may employ as many as 123,000 or as few as 74,000 at present.  Analyst state GM needs to downsize by half. (Retaining 40,000 to 60,000 workers). Optomistic analysts report GM has already reduced its headcount to 74,000 after announcing 4 more plant closing and the elimination of an additional 10,000 workers in June 2008.
These cuts follow 30,000 job cuts in 2005, http://money.cnn.com/2005/11/21/news/fortune500/gm_cuts/
34,000 jobs in 2006,
and 30,000 more in 2007. In February 2008, after posting a $38 Billion Loss, Business Net noted the 2007 job cuts and stated, “After cutting more than 30,000 employees in the last round of restructuring, GM is now offering buy-outs to all 74,000 staff.”
During this same time period, “foreign automakers have built or announced plans to build five U.S. assembly plants, he said. In 2007, foreign auto companies employed 113,000 people in the U.S., a number McAlinden projects will rise to 152,000 by 2011.”   http://www.msnbc.msn.com/id/24947044
International Financial analysts have stated that GM’s future, even given a “bailout” looks bleak,  ”An analyst forecast their price would fall to zero, saying that even if there is a government bailout of the auto giant, shareholders would not benefit. “We are lowering our target on GM equity to zero dollars,” the Deutsche Bank report said. “Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,” it said.” http://news.yahoo.com/s/afp/20081110/bs_afp/stocksusautocompanygm
Ford Motor Company
“Financier Kirk Kerkorian is pulling out of the stake he took in Ford Motor Co. just six months ago, selling 7.3 million shares at a fraction of his purchase price.” “Kerkorian announced in April that he had bought 100 million shares for an average price of $6.91. He then announced a tender offer under which he paid $8.50 a share for an additional 20 million shares. In addition he bought another 22.3 million shares between late April and mid-June at an average price of $6.54 a share, giving his total investment an average price of just over $7 a share.” “I don’t know if Ford’s North American operations are even going to profitable by 2010,” said Kevin Tynan, auto analyst with Argus Research.

Kerkorian sold his shares for a little more than $2 a piece, losing almost $5 a share and taking a Billion Dollar plus loss. If Kerkorian was willing to take a Billion Dollar loss to get rid of his Ford shares, why is Ford a good bet for American taxpayers?

Art Hogan, chief investment strategist at Jefferies & Co., said that Kerkorian signalling that he wants out of the auto industry is yet another nail in the industry’s prospects in the eyes of investors.”Do you need a good excuse to pull out of Ford? What you need is an excuse for getting in in the first place,” said Hogan. “It’s been in demise for a decade.” http://money.cnn.com/2008/10/21/news/companies/ford_kerkorian/index.htm?eref=rss_topstories

“GM, Ford stock sell-off contributes to Dow’s drop”, GM lost half of its value — or $2.7 billion — and Ford has lost 60 percent, or $7 billion. [The combined value of the Detroit 3 is estimated at 9.2 Billion, $2.7 Billion for GM, $4.7 Billion for Ford, 1.8 Billion for Chrysler]              http://www.detnews.com/apps/pbcs.dll/article?AID=/20081010/AUTO01/810100386&imw=Y

“Ford to sell $500m in new stock”, In an effort to secure more capital and reduce debt, Ford plans to sell $500m in new stock. Ford will use the cash infusion to buy bonds from Ford Motor Credit, which has been strugling with the slow economy and nation-wide credit crunch. Goldman Sachs is handling the stock sale, and Ford has given no timetable for when the stocks will enter the market. Ford has already exchanged debt for equity to the tune of $927m in the past year. With shares of Ford stock at under $5 per share right now, anybody can own a share of the Blue Oval for the price of a value meal.” http://www.autoblog.com/2008/08/15/ford-to-sell-500m-in-new-stock/  

Unfortunately, there were no takers, the International Investment Community is just not interested.  

In September Ford announced plans to close nine plants by 2008 and another seven plants after that, more than half of its U.S. hourly employees recently agreed to take one of the various packages to leave the company in the coming months.

PLANT CLOSINGS & LAYOFFS –

The New York Times reported, “Highly Rated Auto Plants Set to Close”, Some of the most productive automobile factories, as rated by an influential study released Thursday, are closing down or losing large numbers of jobs in the motor industry’s upheaval. “Among the factories scheduled to close are a General Motors minivan plant in Doraville, Ga., and the Ford Motor Company’s midsize pickup truck plant in St. Paul, both of which ranked first in their segments in this year’s Harbour Report on automotive productivity. The top-rated full-size pickup plant, a Ford factory in Norfolk, Va., closed a year ago, showing that even the best-run plants are not immune to cuts. Two of the top three large S.U.V. plants are closing, as is the second-ranked midsize S.U.V. plant. The plant that ranked fourth over all, where Chrysler builds compact cars and crossovers in Belvidere, Ill., recently lost one of its three shifts. G.M.’s plant in Orion Township, Mich., ranked last in the midsize-car segment, taking 65 percent longer to build each vehicle than the top performer, while its plant in Moraine, Ohio, ranked second in midsize S.U.V.’s. But this week G.M. said it would add a third shift in Orion and close the Moraine factory.” http://www.nytimes.com/2008/06/06/business/06auto.html

Plant closings are negotiated with the UAW.

SINGING THE BAILOUT BLUES – BONUS CHECK IN HAND

Ford Motor Company Happy With Profit                                                                Australian News.Net
Friday 25th April, 2008                                                                                      
The Ford Motor Company in the US has posted a US$100 million profit for the period from January to April. Most companies reported losses for the first quarter of 2008 due to the economic slump and the subprime mortgage crisis, but Ford has attributed its success to its job reduction scheme in North America and triple earnings in Europe. http://www.australiannews.net/story/352149

 

Chrysler leaders get millions                                                                  Automaker defends payouts amid looming bailout talks                                      As Detroit’s crumbling auto industry asks Congress for a bailout, Chrysler is in the awkward position of paying about $30 million in retention bonuses to keep top executives while the company cuts thousands of jobs.

http://www.freep.com/article/20081113/BUSINESS01/311130002/1014

HEAD OF FORD DEFENDS BONUS

DEARBORN, Mich., May 4 – Philip Caldwell, the chairman of the Ford Motor Company, today defended the large bonuses paid to auto executives last year …..

AN IMAGE PROBLEM FOR DETROIT

To some people, the decision of General Motors and Ford, the two largest automobile makers, to pay record bonuses to their executives while enjoying protection

http://topics.nytimes.com/top/news/business/companies/ford_motor_company/index.html?s=oldest&&query=BONUSES&field=des&match=exact

More UAW workers bankrupt                                                                                                     Autoworkers who used to thrive on overtime now find it tough to keep up their lifestyles. Oscar Gray achieved the good life during 28 years of hard work at Delphi Corporation — a six-figure income, a nice home in Holly and two vehicles. But as Michigan’s auto industry tanked in recent years, the forklift operator lost huge amounts of overtime pay and gradually sank into financial ruin. Saddled with $469,000 in debt, he declared bankruptcy last month. Gray didn’t lose his job. His health isn’t failing, and he is not going through a divorce — the typical reasons many declare bankruptcy. Gray has been losing overtime. His gross pay was cut $16,000 one year, sliding to $87,000, and may dip again …. Despite the loss of time-and-a-half pay, some Michigan autoworkers continue to live large. Many bankrupt autoworkers own two homes — one is usually up north — which means multiple mortgages. Most have two or more cars and sometimes a boat or snowmobile payment, according to information culled from cases filed by autoworkers in U.S. Bankruptcy Court in the Eastern District of Michigan. http://www.detnews.com/2005/autosinsider/0509/18/A01-318432.htm

At the time this article was written, the median annual income (half above/half below) in Michigan was just under $40,000. The article doesn’t address the increases in Michigan’s personal and property tax rates that now make ownership of two homes extremely difficult ….. not only overtime been cut, but taxes on both income, sales and property taxes on homes have gone up. Michigan’s tax rates are not “consumer” or “business” friendly – rather than address those issues the proposed solution from the Michigan Politicans is for the rest of the Country to come up with a “Public Bailout” ………..   

Ford workers get $733M in profit-sharing checks. http://www.usatoday.com/money/autos/2001-03-07-ford-profit-sharing.htm

DETROIT, Jan 25 (Reuters) – Ford Motor Co., is considering paying bonuses to managers for 2006, despite record losses and massive job cuts. Ford reported a record loss of $12.7 billion for 2006, during which its U.S. sales fell 8 percent and it announced plans to close 16 plants and cut over 40,000 jobs in a bid to restore profitability to its North American operations by 2009. http://www.reuters.com/article/idUSN2528789420070125

Apparently, absenteeism at GM’s North American plants is such a huge issue that the automaker has to offer more than just a paycheck to get workers to show up. The new labor contract the General signed with the UAW includes an incentive for workers that go a full year without missing a day. Their reward is to be entered into a drawing that gives five lucky employees $15,000 to put towards a new GM car or truck. While the idea of offering an incentive for employees to do their job might be a surprise to the rest of us working stiffs, the auto industry’s hourly workforce has one of the highest annual absenteeism rates in the U.S. A 2004 study showed that about 10-percent of workers aren’t manning their positions during any one point in the year – three-times higher than other industries. Naturally, this has a massive effect on labor costs and quality control. http://www.autoblog.com/2007/11/12/do-your-job-at-gm-win-cash-for-a-car

“New” Auto Industry Plants Pay More Than “Detroit 3″ -

UAW Losing Pay Edge: Foreign Automakers’ Bonuses Boost Wages in U.S. Plants as Detroit Car Companies Struggle – February 1, 2007 – The UAW is losing its edge in pay compared with non-unionized U.S. assembly plant workers for foreign companies, even as Detroit automakers aim for deeper benefit cuts to trim their losses. Workers for a foreign automaker for the first time averaged more in base pay and bonuses than UAW members working for domestic automakers, according to an economist for the Center for Automotive Research and figures supplied to the Free Press by auto companies. Toyota Motor Corp. gave workers at its largest U.S. plant bonuses of $6,000 to $8,000. Honda Motor Co. and Nissan Motor Co. are not far behind Toyota and UAW pay levels. Comparable wages have long been one way foreign companies fight off UAW organizing efforts. http://www.aftermarketnews.com/Item/28594/uaw_losing_pay_edge_foreign_automakers_ bonuses_boost_wages_in_us_plants_as_detroit_car_companies_struggle.aspx

DETROIT 3 – CONDITIONS NO WORSE FOR THEM THAN ANY OTHER COMPANY

You may have read this headline, “Citigroup to cut another 53,000 jobs”, “The company said total headcount is being reduced by 20 percent from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels. The total workforce reductions include thousands of jobs that will be lost when Citigroup completes the sale of Citi Global Services and its German retail banking business.” http://news.yahoo.com/s/ap/20081117/ap_on_bi_ge/citigroup_jobs;_ylt=AvI.vrNuJO1e5AeczxKJB2Ks0NUE

Even after making these horrendous cuts, Citi will still employ 1 1/2 times the number of employees currently under contract to all of the “Detroit 3″ combined. After the cuts Citi will employ approximately 325,000 to approximately 200,000 employees at the “Detroit 3″.

The Detroit 3 are not the only companies dealing with the economic slowdown, all business and all employers are forced to deal with this economy.

Throwing good money after bad at the Detroit 3 is no solution. The “Detroit 3″ only accounts for 1/2 of 1 percent of the Gross National Product, slightly less than that produced by the “New Auto Industry Plants”.  The current combined “value” of the entire “Detroit 3″ is something under $10 Billion Dolllars. Prior to the election Congress passed a $25 Billion bailout targeted at “retooling” at the ‘Detroit 3″ and the production of “green agenda autos”. That money is currently tied up in the Energy Committee in Congress. Detroit is now asking for an additional $50 Billion Dollars for a  total of a $75 Billion handout. $75 Billion is 7 1/2 times the current value of three companies combined and is equal to a payment of $375,000 for every employee under contract to the “Detroit 3″.

From a business point of view this proposal makes no sense. If the proposal is passed, it will be the biggest political payoff in the history of the Country

Billions In Auto Bonuses While Singin The Bailout Blues

First – The problem with the Detroit 3 is not new nor is it temporary. It is long term and systemic. It will not be solved by a bailout. Why are the “Detroit 3″ looking for a bailout? It is not because the economy is in recession. It is because the Detroit 3 are badly managed and have been badly managed for so many decades that they cannot now obtain financing on the open market. The “international business marketplace” refuses to invest in the ‘Detroit 3″ so they are looking for a “public handout”. A “Bailout” with public funds will provide the UAW and Auto Exces one last chance to divide up one last “Big Payday” before they go under. Only after a bankruptcy and a wholesale change in both Mangement and Union Leadership will the Detroit 3 have a chance to survive.  

Secondly, to imply that GM, Ford & Chrysler LLC, are the “American” Auto Industry is disingenous. With global investing GM, Ford & Chrysler are no more American than Honda, Toyota or Hundai. Any American can invest in the “New American Auto” Industry as  the Wall Street Journal calls it – but Americans cannot invest in Chrysler LLC – it is a privately owned company and no one knows who actually “owns” Chrysler LLC because Cerebus Capital Management’s ownership is a closely guarded secret. http://online.wsj.com/article/SB122608860916209213.html?mod=article-outset-box

The largest investors in GM and Ford are Capital Management firms, hedge funds and Mutual Funds. There is no way to determine whether the individuals who have invested in those firms are “American” or from “Communist China”. Communist China controls a significant interests in many of the remaining “American” banks and investment firms.                                                             http://www.marketwatch.com/news/story/china-invests-3-bln-blackstone/story.aspx?guid={C8B110EC-2538-4461-97C8-0FD7F1CAEF15}&dist=hplatest            http://english.pravda.ru/business/103399-Citigroup-0                                            http://forbes.ccbn.com/conferencedetail.asp?client=forbes&event=1988907

Why do writers insist on calling these companies “American”. We don’t know who owns the stock or who the investors are. As for GM and Ford, either could be bought by a foreign corporation tomorrow the same way Chrysler was purchased, first by Daimler then by Cerebus. 

CHRYSLER LLC – CEREBUS Capital Management

Chrysler is owned by a private equity company – CEREBUS CAPITAL MANAGEMENT – Cerebus is named after the mythical three three headed dog that guards the gates of hell  http://www.hoovers.com/cerberus-capital-management/–ID__112328–/free-co-factsheet.xhtml?cm_ven=PAID&cm_cat=INK&cm_pla=CO1&cm_ite=cerberus-capital-management )

Cerebus is a private capital investment firm that owns shares in companies all over the world. Cerebus was formed in 1992. It has its own bank, a Japanese Bank not an “American” bank, named Aozora.

Cerebus’ Chairman is none other than former Vice-President Dan Quayle. http://www.vicepresidentdanquayle.com/biography.html

But who owns Cerebus – no one knows – it is a “private” and “unregulated” company. “It has come to this. A firm that made its name, and its fortune, feeding off companies in their death throes is demanding a government bailout.” http://www.cbc.ca/money/story/2008/11/07/f-pittis-economy.html 

No one knows if Cerebus is anymore of an American Company than Daimler was or the China Investmant bank is.          http://www.associatedcontent.com/article/244378/cerberus_buys_chrysler.html                 http://en.wikipedia.org/wiki/China_Investment_Bank                                             http://en.wikipedia.org/wiki/China_Construction_Bank                                             http://swfinstitute.org/fund/cic.php                                                      http://www.skadden.com/index.cfm?contentID=47&practiceID=33

The US government can’t own shares in Chrysler LLC and the Cerebus Investors have extremely limited liability for any bailout money we put in their pockets, “Chrysler is 81% owned by Cerebus Capital Management and 19% by Daimler AG. It is not a public company and you cannot buy or sell its stock. (It was a public company until last year when Daimler sold most of Chrysler to Cerebus.) An LLC is a corporate structure that limits the liability of its stockholders, similarly to a corporation.” http://smallbusiness.yahoo.com/r-answers-a-20080114050334AA9ZyJk-k-stock+trade

Cerberus is headquartered in New York City with affiliate and/or advisory offices in Atlanta, Chicago, Los Angeles, London, Baarn, Frankfurt, Hong Kong, Tokyo, Beijing, Osaka and Taipei. http://www.cerberuscapital.com/about_comp_prof.html

Cerebus was described this way, “Cerberus Capital Management is the very real private equity firm — one of the bidders in play for the Chrysler Group — that guards the privacy of its dealings almost as jealously. USA Today takes a look at the firm and reveals a company with a “fierce reputation” and “a combative, take-no-prisoners style.”The list of companies that are either owned by Cerebus or which the company has majority stakes include: Alamo and National rental car, Fila, Blue Bird yellow buses, Rafaella clothing, GMAC, Aegis Mortgage, auto suppliers CTA Acoustics and GDX Automotive, Remington Arms, Bell Canada, Tower Automotive, banks, mortgage companies, and property managers.” When it bought Chrylser, Cerberus instantly doubled its annual revenue, but revenue isn’t the prime concern for private equity firms — return on investment is. The issue is that no one knows how Cerberus would go about increasing return from Chrysler.” http://www.autoblog.com/2007/04/16/rare-info-on-chrylser-bidder-cerberus-reveals-a-fierce-reputati/                                                                                            http://www.washingtonpost.com/wp-dyn/content/article/2007/08/14/AR2007081401913.html     http://www.bcwf.bc.ca/documents/s=393/bcw1176303661611/  http://www.forbes.com/business/feeds/afx/2007/05/17/afx3731793.html           http://en.wikipedia.org/wiki/Cerberus_Capital_Management   http://iht.com/articles/ap/2007/03/29/business/NA-FIN-COM-US-Tower-Automotive-Bankruptcy.php                                                                                      http://www.cerberuscapital.com/

Now we know how they plan on increasing the return – a taxpayer subsidized bailout. “The UAW and the Canadian Auto Workers have publicly opposed the sale of Chrysler “to Cerebus or any other private equity group.” http://www.autoblog.com/2007/04/16/rare-info-on-chrylser-bidder-cerberus-reveals-a-fierce-reputati/
In 1984 Chrysler employed approximately 80,000 workers. (1984-09-01, Chrysler Corp. completed its 4-year employee stock ownership plan by distributing 1,661,691 shares of common stock to more than 80,000 employees, including 63,000 members of the United Auto Workers union.) http://resources.bnet.com/topic/chrysler+llc+and+stock.html
In October 2008 it was estimated that Chrysler/Dodge/Jeep combined employed 49,000.        http://search.yahoo.com/search;_ylt=Ak0_ss1oGMILRC6Sai7xc3KmN3wV?p=Chrysler+LLC+Employees+2008&fr=att-portal&toggle=1&cop=&ei=UTF-8
http://www.sullcrom.com/offices/detail.aspx?office=3                                     http://www.chinadaily.com.cn/bizchina/2008-07/17/content_6854442.htm                         http://www.ml.com/index.asp?id=7695_7696_8149_8688_8558_6274
Chrysler is only a very small piece of the Cerebus pie. Why should the American taxpayers “bailout” a huge, private, mulitnational firm with hundreds of Billions of dollars in assests and dozens of companies under its control?
Cerebus would like to sell Chrysler, but Chrysler is so dysfunctional Cerebus cannot find a buyer.  If Chrysler is a bad bet for Daimler and Cerebus, it is a bad bet for the US taxpayer.
General Motors Corporation
For those who argue GM is the victim of a sudden economic downturn, let me remind you that GM’s largest individual shareholder at the time. Kirk Kerkorian, was reported to have said this in January 2006. “General Motors Corp must cut its dividend, executive salaries and brand structure if it hopes to return to profitability”. Jerry York, an adviser to investor Kirk Kerkorian’s Tracinda Corp, said GM is currently burning through 24 mln usd per day, Agence France-Presse reported. He said the automaker must change its mindset to operate in ‘crisis mode’ and recognize the challenges it faces in the coming months. But unlike a number of analysts who have warned that GM is at risk of bankruptcy, York expressed confidence in the automaker’s ability to create shareholder value even after its shares fell more than 50 pct in the past year.
Lets see; near bankruptcy, lost 50% of stock value in the last year, “must act in crisis mode”, and this situation wasn’t new in January 2006, GM had been facing the same issues for at least 8 years running. In November 2006 Kerkorian sold his GM stock, see below.  
As to General Motors, which is in business with Cerebus as joint owners of GMAC – what are they doing to improve their economic performance – stripping out their valuable subsidiaries and setting them up as private companies, “GMAC, the money-losing finance company, sold a reinsurance business to Maiden Holdings Ltd and plans to sell two insurance units to the Bermuda-based company, to bolster capital and add liquidity. Private equity firm Cerberus Capital Management LP owns 51 percent of Detroit-based GMAC, while General Motors Corp owns 49 percent.” http://blog.pennlive.com/leftcoast/2008/11/chrysler_death_watch_week_thre.html
Who is running “Maiden Holdings” – former GMAC executives. The same Executives who led to these types of problems, “GMAC is shedding profitable assets after suffering $7.2 billion of losses in the seven quarters ended June 30. The lender has been hurt by soaring credit losses at its Residential Capital LLC mortgage unit and by write-down of leases on sport-utility vehicles that drivers no longer want. GMAC’s credit ratings have fallen deep into junk status.” http://blog.pennlive.com/leftcoast/2008/11/chrysler_death_watch_week_thre.html
Who owns GM? Just two years ago Renault & Nissan offerred to buy a “significant minority interest in the carmaker. http://www.msnbc.msn.com/id/13630565/ Kurt Kerkorian, the Billionare American Investor, who owned 9.9% of GM through his Tracinda Corporation publicly favored the partnership. GM would not consumate the deal. In November 2006 Kerkorian announced he would sell 14 Million shares in GM, in a “private transaction”, at $33 per share. Later that month, Kerkorian “dumped” his remaining GM shares at $28.75 per share.
It was reported that Bank of America purchased the stock. It was unknown if Bank of America retained the shares (9.9% of GM) or re-sold them. Morgan Stanley owned 5% of GM in 2006. Morgan Stanley and Bank of America were, in turn, partially owned by the China Investment bank.  http://www.thestreet.com/stocks/automakers/10268781.html 
Three months prior to Kerkorian dumping his GM stock in November 2006, two other “Investment Firms” dumped GM stock in August 2006. The news reports stated, “Two Major Investors Sell Blocks of GM Shares”, “California-based investment firms that rank as the second-and third-largest institutional investors in General Motors Corp. have sold big blocks of the automaker’s stock, according to regulatory filings. Capital Research & Management Co. of Los Angeles, GM’s second-largest investor, sold 19.2 million shares, or 24% of its holdings in the company, according to second-quarter reports filed this week with the Securities and Exchange Commission. The company’s third-largest investor, Brandes Investment  Partners of San Diego, sold 2.4 million shares, or 4% of its holdings. Neither company would comment, saying they do not discuss their investments.” http://articles.latimes.com/2006/aug/17/business/fi-gmstake17
These firms also guard the identity of those who control the money they are investing. This article went on to note that, “Credit Suisse bought 11.5 million shares to become the sixth-largest investor in GM” at that time.  Credit Suisse is a Swiss Bank/Holding Company.    http://articles.latimes.com/2006/aug/17/business/fi-gmstake17   
The point is, there is no way to tell who “owns” GM. Many of the shares are “held” by Banks, Investment Firms, Hedge Funds and Capital Management firms, but “who” owns the money invested by those firms is unknown. Investors from all over the globe are free to deposit their money with these firms.
If GM is a bad bet for Kirk Kerkorian and the International Investment Community, it is a bad bet for the American taxpayer. 
  
GM, the largest of the “Detroit 3″ may employ as many as 123,000 or as few as 74,000 at present.  Analyst state GM needs to downsize by half. (Retaining 40,000 to 60,000 workers). Optomistic analysts report GM has already reduced its headcount to 74,000 after announcing 4 more plant closing and the elimination of an additional 10,000 workers in June 2008.
These cuts follow 30,000 job cuts in 2005, http://money.cnn.com/2005/11/21/news/fortune500/gm_cuts/
34,000 jobs in 2006,
and 30,000 more in 2007. In February 2008, after posting a $38 Billion Loss, Business Net noted the 2007 job cuts and stated, “After cutting more than 30,000 employees in the last round of restructuring, GM is now offering buy-outs to all 74,000 staff.”
During this same time period, “foreign automakers have built or announced plans to build five U.S. assembly plants, he said. In 2007, foreign auto companies employed 113,000 people in the U.S., a number McAlinden projects will rise to 152,000 by 2011.”   http://www.msnbc.msn.com/id/24947044
International Financial analysts have stated that GM’s future, even given a “bailout” looks bleak,  “An analyst forecast their price would fall to zero, saying that even if there is a government bailout of the auto giant, shareholders would not benefit. “We are lowering our target on GM equity to zero dollars,” the Deutsche Bank report said. “Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,” it said.” http://news.yahoo.com/s/afp/20081110/bs_afp/stocksusautocompanygm
Ford Motor Company
“Financier Kirk Kerkorian is pulling out of the stake he took in Ford Motor Co. just six months ago, selling 7.3 million shares at a fraction of his purchase price.” “Kerkorian announced in April that he had bought 100 million shares for an average price of $6.91. He then announced a tender offer under which he paid $8.50 a share for an additional 20 million shares. In addition he bought another 22.3 million shares between late April and mid-June at an average price of $6.54 a share, giving his total investment an average price of just over $7 a share.” “I don’t know if Ford’s North American operations are even going to profitable by 2010,” said Kevin Tynan, auto analyst with Argus Research.

Kerkorian sold his shares for a little more than $2 a piece, losing almost $5 a share and taking a Billion Dollar plus loss. If Kerkorian was willing to take a Billion Dollar loss to get rid of his Ford shares, why is Ford a good bet for American taxpayers?

Art Hogan, chief investment strategist at Jefferies & Co., said that Kerkorian signalling that he wants out of the auto industry is yet another nail in the industry’s prospects in the eyes of investors.”Do you need a good excuse to pull out of Ford? What you need is an excuse for getting in in the first place,” said Hogan. “It’s been in demise for a decade.” http://money.cnn.com/2008/10/21/news/companies/ford_kerkorian/index.htm?eref=rss_topstories

“GM, Ford stock sell-off contributes to Dow’s drop”, GM lost half of its value — or $2.7 billion — and Ford has lost 60 percent, or $7 billion. [The combined value of the Detroit 3 is estimated at 9.2 Billion, $2.7 Billion for GM, $4.7 Billion for Ford, 1.8 Billion for Chrysler]              http://www.detnews.com/apps/pbcs.dll/article?AID=/20081010/AUTO01/810100386&imw=Y

“Ford to sell $500m in new stock”, In an effort to secure more capital and reduce debt, Ford plans to sell $500m in new stock. Ford will use the cash infusion to buy bonds from Ford Motor Credit, which has been strugling with the slow economy and nation-wide credit crunch. Goldman Sachs is handling the stock sale, and Ford has given no timetable for when the stocks will enter the market. Ford has already exchanged debt for equity to the tune of $927m in the past year. With shares of Ford stock at under $5 per share right now, anybody can own a share of the Blue Oval for the price of a value meal.” http://www.autoblog.com/2008/08/15/ford-to-sell-500m-in-new-stock/  

Unfortunately, there were no takers, the International Investment Community is just not interested.  

 

In September Ford announced plans to close nine plants by 2008 and another seven plants after that, more than half of its U.S. hourly employees recently agreed to take one of the various packages to leave the company in the coming months.

PLANT CLOSINGS & LAYOFFS –

The New York Times reported, “Highly Rated Auto Plants Set to Close”, Some of the most productive automobile factories, as rated by an influential study released Thursday, are closing down or losing large numbers of jobs in the motor industry’s upheaval. “Among the factories scheduled to close are a General Motors minivan plant in Doraville, Ga., and the Ford Motor Company’s midsize pickup truck plant in St. Paul, both of which ranked first in their segments in this year’s Harbour Report on automotive productivity. The top-rated full-size pickup plant, a Ford factory in Norfolk, Va., closed a year ago, showing that even the best-run plants are not immune to cuts. Two of the top three large S.U.V. plants are closing, as is the second-ranked midsize S.U.V. plant. The plant that ranked fourth over all, where Chrysler builds compact cars and crossovers in Belvidere, Ill., recently lost one of its three shifts. G.M.’s plant in Orion Township, Mich., ranked last in the midsize-car segment, taking 65 percent longer to build each vehicle than the top performer, while its plant in Moraine, Ohio, ranked second in midsize S.U.V.’s. But this week G.M. said it would add a third shift in Orion and close the Moraine factory.” http://www.nytimes.com/2008/06/06/business/06auto.html

Plant closings are negotiated with the UAW.

SINGING THE BAILOUT BLUES – BONUS CHECK IN HAND

Ford Motor Company Happy With Profit                                                                Australian News.Net
Friday 25th April, 2008                                                                                      
The Ford Motor Company in the US has posted a US$100 million profit for the period from January to April. Most companies reported losses for the first quarter of 2008 due to the economic slump and the subprime mortgage crisis, but Ford has attributed its success to its job reduction scheme in North America and triple earnings in Europe. http://www.australiannews.net/story/352149

Chrysler leaders get millions                                                                  Automaker defends payouts amid looming bailout talks                                      As Detroit’s crumbling auto industry asks Congress for a bailout, Chrysler is in the awkward position of paying about $30 million in retention bonuses to keep top executives while the company cuts thousands of jobs.

http://www.freep.com/article/20081113/BUSINESS01/311130002/1014

HEAD OF FORD DEFENDS BONUS

DEARBORN, Mich., May 4 – Philip Caldwell, the chairman of the Ford Motor Company, today defended the large bonuses paid to auto executives last year …..

AN IMAGE PROBLEM FOR DETROIT

To some people, the decision of General Motors and Ford, the two largest automobile makers, to pay record bonuses to their executives while enjoying protection

http://topics.nytimes.com/top/news/business/companies/ford_motor_company/index.html?s=oldest&&query=BONUSES&field=des&match=exact

More UAW workers bankrupt                                                                                                     Autoworkers who used to thrive on overtime now find it tough to keep up their lifestyles. Oscar Gray achieved the good life during 28 years of hard work at Delphi Corporation — a six-figure income, a nice home in Holly and two vehicles. But as Michigan’s auto industry tanked in recent years, the forklift operator lost huge amounts of overtime pay and gradually sank into financial ruin. Saddled with $469,000 in debt, he declared bankruptcy last month. Gray didn’t lose his job. His health isn’t failing, and he is not going through a divorce — the typical reasons many declare bankruptcy. Gray has been losing overtime. His gross pay was cut $16,000 one year, sliding to $87,000, and may dip again …. Despite the loss of time-and-a-half pay, some Michigan autoworkers continue to live large. Many bankrupt autoworkers own two homes — one is usually up north — which means multiple mortgages. Most have two or more cars and sometimes a boat or snowmobile payment, according to information culled from cases filed by autoworkers in U.S. Bankruptcy Court in the Eastern District of Michigan. http://www.detnews.com/2005/autosinsider/0509/18/A01-318432.htm

At the time this article was written, the median annual income (half above/half below) in Michigan was just under $40,000. The article doesn’t address the increases in Michigan’s personal and property tax rates that now make ownership of two homes extremely difficult ….. not only overtime been cut, but taxes on both income, sales and property taxes on homes have gone up. Michigan’s tax rates are not “consumer” or “business” friendly – rather than address those issues the proposed solution from the Michigan Politicans is for the rest of the Country to come up with a “Public Bailout” ………..   

Ford workers get $733M in profit-sharing checks. http://www.usatoday.com/money/autos/2001-03-07-ford-profit-sharing.htm

DETROIT, Jan 25 (Reuters) – Ford Motor Co., is considering paying bonuses to managers for 2006, despite record losses and massive job cuts. Ford reported a record loss of $12.7 billion for 2006, during which its U.S. sales fell 8 percent and it announced plans to close 16 plants and cut over 40,000 jobs in a bid to restore profitability to its North American operations by 2009. http://www.reuters.com/article/idUSN2528789420070125

Apparently, absenteeism at GM’s North American plants is such a huge issue that the automaker has to offer more than just a paycheck to get workers to show up. The new labor contract the General signed with the UAW includes an incentive for workers that go a full year without missing a day. Their reward is to be entered into a drawing that gives five lucky employees $15,000 to put towards a new GM car or truck. While the idea of offering an incentive for employees to do their job might be a surprise to the rest of us working stiffs, the auto industry’s hourly workforce has one of the highest annual absenteeism rates in the U.S. A 2004 study showed that about 10-percent of workers aren’t manning their positions during any one point in the year – three-times higher than other industries. Naturally, this has a massive effect on labor costs and quality control. http://www.autoblog.com/2007/11/12/do-your-job-at-gm-win-cash-for-a-car

“New” Auto Industry Plants Pay More Than “Detroit 3″ -

UAW Losing Pay Edge: Foreign Automakers’ Bonuses Boost Wages in U.S. Plants as Detroit Car Companies Struggle – February 1, 2007 – The UAW is losing its edge in pay compared with non-unionized U.S. assembly plant workers for foreign companies, even as Detroit automakers aim for deeper benefit cuts to trim their losses. Workers for a foreign automaker for the first time averaged more in base pay and bonuses than UAW members working for domestic automakers, according to an economist for the Center for Automotive Research and figures supplied to the Free Press by auto companies. Toyota Motor Corp. gave workers at its largest U.S. plant bonuses of $6,000 to $8,000. Honda Motor Co. and Nissan Motor Co. are not far behind Toyota and UAW pay levels. Comparable wages have long been one way foreign companies fight off UAW organizing efforts. http://www.aftermarketnews.com/Item/28594/uaw_losing_pay_edge_foreign_automakers_ bonuses_boost_wages_in_us_plants_as_detroit_car_companies_struggle.aspx

DETROIT 3 – CONDITIONS NO WORSE FOR THEM THAN ANY OTHER COMPANY

You may have read this headline, “Citigroup to cut another 53,000 jobs”, “The company said total headcount is being reduced by 20 percent from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels. The total workforce reductions include thousands of jobs that will be lost when Citigroup completes the sale of Citi Global Services and its German retail banking business.” http://news.yahoo.com/s/ap/20081117/ap_on_bi_ge/citigroup_jobs;_ylt=AvI.vrNuJO1e5AeczxKJB2Ks0NUE

Even after making these horrendous cuts, Citi will still employ 1 1/2 times the number of employees currently under contract to all of the “Detroit 3″ combined. After the cuts Citi will employ approximately 325,000 to approximately 200,000 employees at the “Detroit 3″.

The Detroit 3 are not the only companies dealing with the economic slowdown, all business and all employers are forced to deal with this economy.

Throwing good money after bad at the Detroit 3 is no solution. The “Detroit 3″ only accounts for 1/2 of 1 percent of the Gross National Product, slightly less than that produced by the “New Auto Industry Plants”.  The current combined “value” of the entire “Detroit 3″ is something under $10 Billion Dolllars. Prior to the election Congress passed a $25 Billion bailout targeted at “retooling” at the ‘Detroit 3″ and the production of “green agenda autos”. That money is currently tied up in the Energy Committee in Congress. Detroit is now asking for an additional $50 Billion Dollars for a  total of a $75 Billion handout. $75 Billion is 7 1/2 times the current value of three companies combined and is equal to a payment of $375,000 for every employee under contract to the “Detroit 3″.

From a business point of view this proposal makes no sense. If the proposal is passed, it will be the biggest political payoff in the history of the Country.

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