The Detroit 3 Bailout – Tell Your Politician To Vote NO Now

Well the Detroit 3 is back and Nancy Pelosi and the Democratic Congress is going to throw more of your money down a bottomless rat hole.

Why the bailout of the Detroit 3 still a rotten idea:

1) Empty Promises – The “survival plans” presented to Congress are empty promises. How can you tell that they are empty promises? Because the Detroit 3 have not implemented any of them.

Let me ask you this, if you went to a bank and asked for a loan and the bank said, you need to demonstrate that you can pay the money back (what a unique idea – don’t lend money to people who can’t pay it back) wouldn’t you need to demostrate that you could pay the money back. The Detroit 3 is simplying making emplty promises to cut their costs – TELL YOUR CONGRESSPERSON TO INSIST THAT THE DETROIT 3 ACTUALLY IMPLEMENT THEIR PLANS FIRST.

The Detroit 3 should be required to demonstrate actual UAW concessions, announce plant closure dates, place business units up for sale and identify what dealerships will be closed and when. STOP TALKING ABOUT WHAT YOU MIGHT DO AND DO IT.  

TELL CONGRESS NOT TO HAND OUT ANOTHER CHECKBOOK WITHOUT HAVING THE CONTROLS IN PLACE BEFORE HAND.

Remember the “Financial Institution” bailout or “TARP” (Troubled Assest Relief Program) that was intended to buy “Toxic Mortgage Debt” and save our economy. Remember the promises, they would actually buy “toxic mortagages, thatTARP would be competely transparent. The American public would be able to “track” how our money was spent, on-line, there would be ongoing public hearings ……..  Well, they stopped buying “toxic mortgage debt” immediately and started using the money for other purposes. “Transparency” – you have to be kidding – now they won’t even give us the specifics on how the money is being spent. 

SEE: https://mcauleysworld.wordpress.com/2008/11/13/stop-the-bailout-fiascos-the-plan-has-changed-the-promises-ignored/

https://mcauleysworld.wordpress.com/2008/11/13/broken-bailout-promises-the-bailout-oversight-committee-the-positions-havent-been-filled/

2). The Detroit 3 isn’t worthy of a bailout of this size. 

Based on the current market value of the Companies, the Detroit 3 could not obtain loans of this size in the financial “market place”.

The current market values of the Detroit 3:

Current General Motors Market Value – $2.7 Billion    IMMEDIATE GM CASH BAILOUT REQUEST – $4 Billion

Current Chrysler Market Value – $1.8 Billion    IMMEDIATE CHRYSLER CASH BAILOUT REQUEST $7 Billion 

Current Ford Motor Company Market Value  $4.7 Billion IMMEDIATE FORD CASH BAILOUT REQUEST $9 Billion 

TELL YOUR CONGRESS PERSON TO HAVE THE DETROIT 3 IMPLEMENT THEIR COST CUTTING PLANS FIRST AND THEN SHOW US THE SPECIFICS ON HOW THEY WILL PAY BACK OUR TAX MONEY IF THEY RECEIVE ANY LOANS.   

http://news.bbc.co.uk/2/hi/business/7761015.stm       http://news.yahoo.com/s/nm/20081202/bs_nm/us_autos_bailout_chrysler_1             http://news.bbc.co.uk/2/hi/business/7761015.stm

 

The Detroit 3 is seeking a total of $34 Billion Dollars in immediate and long term bailout moneys. http://news.yahoo.com/s/nm/20081202/bs_nm/us_autos_bailout_18 .

$34 Billion in bailout money for companies with a combined market value of 9.2 Billion. You don’t need an MBA (Masters in Business Administration) to know this is simply a “bad bet”. Want an apples to apples comaprison – Toyota has a market value of $168 Billion Dollars. http://www.bloggingstocks.com/2008/06/27/the-next-toyota-is-ford/ 

Toyota is worth 18 times the value of the combined Detroit 3. Toyota would have difficulty getting a loan for $34 Billion Dollars. 

GENERAL MOTORS IS ALREADY $60 Billion in Debt (Negative Equity) WHILE FORD IS ALREADY $160 BILLION IN DEBT. http://blog.hsh.com/?tag=gm , http://finance.yahoo.com/q/bs?s=GM&annual , http://www.powerlineblog.com/archives/2008/11/022087.php?format=print , http://www.marketwatch.com/news/story/fitch-downgrades-ford–ford/story.aspx?guid={76B7D716-9E74-4105-9883-A8F07645BBA5}&dist=hppr , http://seekingalpha.com/article/105806-gm-bailout-or-bankruptcy

3). The Detroit 3 can’t pay this money back.  At this time last year the unemployment rate was at    4.7 %, the stock market was at 14,000, gas was just over $2 a gallon and house values had not plunged 20%.

How did GM do under those ecomomic conditions? GM lost $38 Billion dollars in the 3 month period ending on September 30 2007. $38 Billion Dollars in a 3 month time period. (Remember the UAW calling strikes at 6 GM plants, costing the Company $100 of millions of dollars).

The Detroit 3 guarantee they will “pay the money back”, while their sales are falling through the floor: “GM sales fell 41 percent in November, and the automaker said publicity about its request for a federal bailout had hurt showroom sales.” http://news.yahoo.com/s/nm/20081202/bs_nm/us_gm_2 , Now it appears that GM could fail in a matter of weeks without immediate aid. http://www.latimes.com/business/la-fi-autos3-2008dec03,0,7543383.story , GM executives have said the company has been unable to borrow money in the last six months. http://www.latimes.com/business/la-fi-autos3-2008dec03,0,7543383.story?page=2

Chrysler LLC’s November sales fell a staggering 47.1 percent http://www.detnews.com/apps/pbcs.dll/article?AID=/20081203/AUTO01/812030350&imw=Y , Ford Motor Co.’s were down 30.5 percent, according to Autodata Corp. Ford and GM announced Tuesday they would slash by one-third their first-quarter production in 2009.  http://www.detnews.com/apps/pbcs.dll/article?AID=/20081203/AUTO01/812030350&imw=Y 

All eight of GM’s brands have seen significant sales drops in 2008.Chrysler offered few highlights for its November sales other than that it cut its fleet sales by 63 percent when compared with last November. Most vehicles saw dramatic losses when compared with last November: The Dodge Caliber and Avenger were down 56.4 percent and 76.9 percent, respectively. Only the low-volume Dodge Viper and Chrysler Aspen showed improved sales. Jim Farley, Ford Motor Co.’s group vice president of marketing, said he expects the industry to post continued year-over-year declines in auto sales until at least the second half of 2009. “We could see some strengthening in the second half of next year, or at least some stabilization, albeit at a much lower level,” Farley said in a conference call. http://www.detnews.com/apps/pbcs.dll/article?AID=/20081203/AUTO01/812030350&imw=Y

This is why Deutsche Bank noted that GM’s future, even with a bailout, would be “bankruptcy like”. http://www.marketwatch.com/news/story/deutsche-bank-cuts-gm-sell/story.aspx?guid=%7BCAFEF63F%2D017D%2D42E2%2D874A%2D14146A6D20A5%7D&dist=TNMostRead

SO LET ME GET THIS STRAIGHT, THEY ARE LOSING MONEY HAND OVER FIST FOR 5 YEARS, THE ECONOMY IS GETTING WORSE, THE DETROIT 3 WILL CUT PRODUCTION BY 30%, BUT THEY WILL BE ABLE TO PAY BACK AN ADDITIONAL $34 BILLION DOLLARS IN DEBT.

Tell your Congressperson you won’t be fooled again. Remember the AIG bailout that started at $85 Billion just 2 months ago (that is right, just 2 months). http://www.fool.com/investing/general/2008/11/10/aigs-bailout-take-two.aspx , Well the AIG bailout has “ballooned” to $152 Billion in just 60 days. http://news.yahoo.com/s/nm/20081202/bs_nm/us_aig_cds_1

4). Tell Congress and the Detroit 3 to stop the lies and “campaign of fear” in their quest to get your tax money. The Detroit 3 currently employs about 175,000 US workers. The “New US Auto Industry” or “transplants” as the Detroit 3 calls them, employ about 125,000 US employees. The “New US Auto Industry” is not seeking a bailout. It is projected that the ‘New US Auto Industry will employ more workers than the Detroit 3 at the end of 2009. The “transplants” have anounced plans to build 5 new plants in the US while the Detroit 3 will continue to close plants. One half of all jobs related to “suppliers” of the US Auto Industry are involved with work related to the “New US Auto Industry” and not the Detroit 3.  

“Nonetheless, motor vehicles, bodies, trailers, and parts represented less than 1% of the country’s entire gross domestic production in 2007, according to the U.S. Bureau of Economic Analysis. While jobs in the industry numbered at about 994,000, down from just over 1 million in 2006.” http://www.marketwatch.com/news/story/deutsche-bank-cuts-gm-sell/story.aspx?guid=%7BCAFEF63F%2D017D%2D42E2%2D874A%2D14146A6D20A5%7D&dist=TNMostRead

Half of this production and half of the jobs are related to the “New US Auto Industry” and not the Detroit 3. The Detroit 3 work product maybe related to 1/2 of 1% of the GNP. (Gross National Product) 

Congress and the Auto Executives are telling a hugh lie to the American public. The US Auto Industry, New and Old combined, do not represent 1 job in 10 in the US. The entire US auto Industry, New and Old, are related to less than 1 job in 100. Even with a bailout, the Detroit 3 plan to cut their share of auto related employment by half or 200,000 of the 400,000 jobs related to the Detroit 3 auto production. This number (200,000) represents less than 1/2 of 1% of the jobs in the US not the 10% of jobs used in the scare tactics. THE AUTO EXECS AND THEIR FRIENDS IN CONGRESS ARE JUST LIKE SNAKE OIL SALESMAN, TRYING TO SEPERATE THE GULLIBLE FROM THEIR MONEY. http://www.marketwatch.com/news/story/deutsche-bank-cuts-gm-sell/story.aspx?guid=%7BCAFEF63F%2D017D%2D42E2%2D874A%2D14146A6D20A5%7D&dist=TNMostRead

In 2008 Auto Industry lobbying groups contributed some $36 million to U.S. campaigns, compared to $70 million for all of 2007, its largest amount on record, according to the Center for Responsive Politics. http://www.marketwatch.com/news/story/deutsche-bank-cuts-gm-sell/story.aspx?guid=%7BCAFEF63F%2D017D%2D42E2%2D874A%2D14146A6D20A5%7D&dist=TNMostRead 

 

TELL YOUR CONGRESSPERSON YOU ARE NOT INTERESTED IN FUNDING ANOTHER ROUND OF PAY INCREASES FOR THE UAW.                                                                                                                                                

Contact Your Congressperson & Senators here: http://www.congress.org/congressorg/home

Additional posts on the Auto Bailout:

https://mcauleysworld.wordpress.com/2008/11/11/stop-the-detroit-3-bailout-375000-cost-per-employee-to-taxpayers/

https://mcauleysworld.wordpress.com/2008/11/21/warren-buffett-on-detroit-3-new-business-model-needed/

https://mcauleysworld.wordpress.com/2008/11/19/top-10-reasons-to-say-no-to-auto-bailout/      

https://mcauleysworld.wordpress.com/2008/11/13/bailout-lies-how-americans-were-misled-why-the-bailout-isnt-working/

https://mcauleysworld.wordpress.com/2008/11/11/stop-the-detroit-3-bailout-375000-cost-per-employee-to-taxpayers/

A COMMON SENSE ALTERNATIVE TO THE REQUESTED AUTO BAILOUT:

A). BUY THE DETROIT 3 FOR CURRENT MARKET VALUE – $9.2 BILLION

B). PLACE THE DETROIT 3 IN BANKRUPTCY REORGANIZATION, FIRE THE CURRENT AUTO EXECUTIVES AND VOID UAW AND SUPPLIER CONTRACTS.

C). Give the Detroit 3, lock, stock and barrel, to Toyota Motor Company with $10 Billion Cash and let Toyota run the Detroit 3.

Total cost $19.2 Billion.

Scrap the original $25 Billion Bailout, which was intended to re-tool the Detroit 3 so they could build “green autos”. Immediate savings to US taxpayers $39.8 Billion Dollars (Current $34 Billion bailout request and $5.8 Billion from original retool “bailout” moneys).   

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