Madoff and Greece - why there are no protests on Wall Street?

• Author unknown

  Big Three (er, rather Two) Bailout is Finally Outlined… But Still Hanging on the Balance

  http://www.banks.com/blogs/auto/2008/12/11/big-2-bailout-is-...
  28 days ago in Auto Trends · Authority: 1

  Big Three (er, rather Two) Bailout is Finally Outlined… But Still Hanging on the Balance By Eric J. Leech December 11th, 2008 Posted in SUV, Trucks, 2009 Cars, American Cars, New Cars, 2008 Cars, Cars 12 5 08 Bearman Cartoon Big Three Auto Bailout, originally uploaded by Bearman2007 Congress and the Bush administration have finally reached somewhat of an agreement on what just might be done as far as bailing out the Big Three (Chrysler, GM, and Ford). The package they have put together is going to be made up of a nice $14 billion chunk of change that will be coming from funds previously set to be given to the Department of Energy in September, for the development of future fuel-efficient vehicles. These short term loans will put-off the lingering threat of bankruptcy for another 3 months, which of course by then, they should be back to normal and pumping out new cars to hungry citizens left and right… Not! But they are not expected to perform miracles for their share of the loan. They only need to prove to the appointed “car czar”, as they like to be called, that they are going to be able to pull themselves together enough to take care of business from here on out. Of particular interest, is Ford has actually not requested immediate funding, stating that they would like to have a $9 million line of credit, but they don’t really need it just yet. This news puts the bailout more in terms of just two of the Big Three, at least for now. They must know something that the other two don’t, but is this going to be enough to save them, we don’t know. This situation sadly reminds us kind of like that moment when a 30-year-old son, who has been lying around in their parents basement for the past, well, 30 years, is told they better get out and find a job, or else they will be kicked out on their ear. Fearing that very curb, GM’s Rick Wagoner told the Senate Committee during their first day of testimonies, “We made mistakes, which we’re learning from.” What mistakes? Well there is an entire outline of changes the Big 3 plan on doing to get themselves back on track, but one of the most talked about mistakes, is their decision to focus on larger gas guzzling vehicles, rather than smaller, fuel efficient vehicles. Yes, we’re talking about those very SUV’s and trucks which have been sitting on dealer lots collecting dust and snow for the past year. Well, a couple slaps on the wrist and back to the grind doesn’t sound like such a bad deal for the Big Three, but the word right now that at least part of the Republican party is against the plan

  • Author unknown

    Tales from the Rand (Part II)

    http://iuplanet.com/forum/election-2008-columns/20893-tales-...
    32 days ago in IUplanet: Indiana Hoosier forums, sports, recruiting, photos, and Indiana University news · Authority: 14

    It was another busy night for the staff at the Rand. All the townspeople and tourists were flocking into the establishment to escape from the cold winter weather outside. Mr. Ford scoffed as he watched the tourists scurry into the place from his seat in the booth. "Look at them," he said, "Asking for a handout, thinking they can just take the heated air from this place and pay nothing for it. His friends, Mr. Chrysler and Jim, perused the menu and nodded in agreement. The tourists had the nerve to walk in like they owned the place! Couldn't they pull themselves up by the bootstraps like Ford, Chrysler, and Gim had? Eventually, a waiter came over to the table to take their order. Ford studied the waiter for a moment before commenting negatively on his appearance. "The three of us would like a cut of your finest Double-Standard Steak," Ford announced, "Now make it snappy, chop chop!" The waiter scribbled down the order on his notepad and disappeared into the kitchen. As the three men at the table sipped their glasses of water and cracked jokes, the waiter suddenly reappeared at their table. "Didn't I tell you our order?" Ford spoke in a petulant manner, "We wanted your Double-Standard Steak! Now tell your chef to cook it for us!" "I'm sorry, sir." The waiter said, "But that option is no longer available to people like you." "People like us?" Chrysler spoke up, "What do you mean, 'like us?'" "The Double-Standard Steak only goes to those with the right qualifications, like that financier over there." The waiter gestured to the table where several Double-Standard Steaks were piled high on one plate, and the financier in question was still working on his first one while the poorer families were begging for scraps from his table. "How did he get all of those steaks?" "Simple, he used the Shock Doctrine. He bypassed the waiters and told the chefs that their jobs would all be cut if they didn't give him all those steaks. Besides..." Ford heard the waiter groan before he continued, "...he needs those steaks to stay healthy and strong." "So do we!" Ford snapped, "Our people build cars that make this city run the way it should! That guy just moves numbers around a spreadsheet! Look, he's not even eating all of those steaks!" "Perhaps, but he scared the chefs long before you came in here demanding to be served our special steak." "So how do we get that steak?" "Go over to the kitchen, get on your hands and knees, and beg them to make it for you." Chrysler choked up. "B-b-but that might put us out of business! Thousands of American jobs might be lost! Don't you care?" The waiter shrugged his shoulders and replied, "Not my fault you didn't get here before the financier."

    • Author unknown

      Automakers Win Hearts in D.C., But No Cash (Yet)

      http://padangnews.com/?p=69
      33 days ago in Padang News.Com · Authority: 2

      Padang News.com-And now they drive back to Detroit. The second money-begging pilgrimage to Washington by the CEOs of the three U.S.-based automakers went a lot better than their first vist two weeks ago. Then General Motors’ Rick Wagoner, Ford’s Alan Mulally and Chrysler’s Ron Nardelli came in corporate jets and left with the angry words of lawmakers ringing in their ears. This time they traveled in hybrid cars, offered detailed plans for how they would spend and repay the $34 billion in government loans they requested, and met with a much friendlier reception. They still didn’t leave with any money — although that could change next week.  It wasn’t that nobody wanted to give them any. The members of the Senate and House committees who interrogated the auto CEOs Thursday and Friday seemed mostly united in the conviction that something must done to avert the companies’ collapse. The sticking points remain how, and with whose money. Ever since the automakers first asked for a bailout last month, the Bush Administration has been urging that it come out of a $25 billion loan package Congress approved in September that the automakers were supposed to use to retool their assembly lines to build more fuel-efficient vehicles. Democratic Congressional leaders have wanted the cash to come instead from the $700 billion financial rescue pot they gave Treasury Secretary Hank Paulson in October — which is why the auto executives found themselves in the strange position of pleading their case before the House and Senate banking committees. During Friday’s House Financial Services Committee hearing, Michigan Republican Thaddeus McCotter proposed what he called a “Solomonic approach” — taking half the money from each pot. By Friday night, Democratic Congressional leaders were signaling that they were ready to cede ground and take all the funding from the $25 million loan program, on the assumption that they can replenish it later. But even if that flies, there remain a lot of big questions about how it would work. In its restructuring proposal, GM called for the creation of a federal Oversight Board that would not only watch over the taxpayers’ money but twist the arms of the company’s creditors to get them to reduce their demands — essentially playing the role that a bankruptcy judge would if the company filed for Chapter 11. Almost everybody on Capitol Hill liked the idea, and the other two automakers endorsed it. But GM and Chrysler both say that because of plummeting auto sales they won’t have enough cash to pay their bills by the beginning of next month, long before an effective oversight board could get up and running. New York Democrat Chuck Schumer recommended that a single official — the Treasury Secretary, or someone else — be appointed to oversee the process. But nobody’s volunteering for that job. Officials at Treasury and the Federal Reserve, already overburdened with the banking bailout, aren’t interested. And the rest of the Bush administration seems to be running on autopilot for the final weeks of its existence. This means the really big decisions about the automakers’ future will have to wait until Barack Obama takes over in January. But again, GM and Chrysler don’t have that much time, so discussion Friday turned to the possibility of a bridge loan to get them through until the end of March. Under questioning from Pennsylvania Democrat Paul Kanjorski, Wagoner said GM needed $10 billion to survive that long, and Nardelli said Chrysler would need $4 billion. Ford could make it that far without any help, Mulally said. So that’s what appears to be on the table: A $14 billion loan, from sources undecided, to be administered by parties unknown. Said House Financial Services Chairman Barney Frank after Friday’s hearing, “We will now see whether we can put a bill together.”

      • Photo of Lundbird

        Big Three Plans - Crisis is beyond Operations and Labor Relations

        http://trainingwithinindustry.blogspot.com/2008/12/big-three...
        36 days ago in Training Within Industry · Authority: 6

        If you have the patience to read through them, I’ve provided the links to the Big Three bailout plans provided to Congress yesterday. The bottom line is that Ford is asking for 9 billion, GM 12 billion and Chrysler 7 billion. I have focused a lot of criticism on the production and design side of the efforts made by the Big Three – especially in the light of providing what the customer wants – and have done this exclusively in the context of comparing them to Toyota. I’ve also been critical of the legacy costs induced by a less than amicable history between the unions and management. I don’t think this is unreasonable, but I have to remember that there is always more to the picture. Like I said, we Leanies tend to (not exclusively – but are biased towards) focus on production and value added design – giving the customer what they want. How often do us Leaners talk about actually getting the cars into the owners’ driveway? I’m talking about dealerships. According to the NADA, the National Auto Dealers Association, there are 20,000 franchised automobile dealers in the U.S. So let’s take a look at the Big Three’s plans regarding their vast dealership networks: Excerpts from Ford’s Plan: “By year end, Ford estimates it will have 3,790 U.S. dealers, a reduction of 606 dealers overall – or 14 percent from year-end 2005 – including a reduction of 16 percent in large markets.” After reading through Ford’s plan, they look profitable in 2011, but that means 9 billion in aid. That also comes at a cost to the dealers, suppliers, white-and-blue collar workers alike. In short, Ford may come out of this with some battle scars, but they will probably be best poised of the three to compete with foreign competition. GM is less optimistic. Their financing arm, GMAC takes center stage in their report linking the effect on their 6,450 dealerships directly to their bailout plans. In fact, GMAC is seeking a path towards becoming a “full service, FDIC insured bank.” Of course, getting there will require bailout money according to GM. From GM’s Plan: “GM’s financing arm, GMAC, cannot effectively access the secondary markets today. One year ago, GMAC was able to provide either installment or lease financing for nearly half of GM retail sales. That number has fallen to 6% today. In addition, GMAC is no longer able to buy contracts for customers with a credit score under 700, which excludes roughly half the buying population." "If GMAC is approved as a BHC, GMAC Bank would have an increased retail deposit focus, which is expected to provide a more stable and lower cost funding source to GMAC. As a BHC, GMAC would also have the ability, at the discretion of the Treasury, to participate in recent Government-sponsored liquidity and capital programs.” GM also plans on reducing the number of dealers by 1,750 in the U.S. by 2012. This will give GM a total network size of 4,700 dealers. So, GM’s plan is to reduce production capacity, increase productivity, reduce the burden dealers are putting on production and inject bailout cash into a newly created banking arm of GM in order to finance new sales. It makes sense, but will it solve problems in the long run? It sounds like it will get them through this credit crunch, but who knows? Shouldn't the Big Three have been trying to do these things all along? From Chrysler’s Plan: "At Chrysler, 75 percent of our dealers rely on Chrysler Financial to finance their business, and 50 percent of all customers finance their vehicle purchases through Chrysler Financial. With credit markets frozen, our customers – average working Americans – do not have access to competitive financing to purchase or lease vehicles…our dealers do not have access to market competitive funding to place wholesale orders for new vehicles…resulting in the constriction of cash inflows to the Chrysler." Like GM, the center of Chrysler’s plan is around unfreezing credit, but their plan is a bit more digital in nature – either bailout us out or we will need to liquidate everything, production facilities, design centers, everything - including the 3,300 dealerships -through bankruptcy. Bankruptcy Despite requesting 9 billion in aid, Ford is far from discussing bankruptcy. GM and Chrysler have quite a bit to say about this option in their plan: “Chrysler believes that the amount of DIP financing that it would need to remain viable even during a relatively short bankruptcy (just one year) would approximate $12 to $15 billion. And, even that estimate presumes that financing remains available for the company’s dealers and customers, which cannot be counted on given current market conditions. “If financing for its dealers is unavailable from traditional sources during its Chapter 11 process (as Chrysler must assume would be the case), then Chrysler would need at least $5 billion of additional DIP financing just to support its dealers, pushing the expected total size of the year-one DIP financing need approximately $17 to $20 billion.” Chrysler is asking for about USD 7 billion in its bailout plan. The company makes a good case that a bailout will cost less than bankruptcy. I don’t believe we will hear this bankruptcy financing fact in the mainstream media. If we do, many people will contend that the cost of bankruptcy is on Chrysler and not the customers. Just keep in mind that in our economy – ALL costs are ultimately passed on to the customer. Or, in the case of a bailout, the taxpayer. Regarding bankruptcy, both GM and Chrysler are very concerned that a stigma will be attached to their products, they back this up with a study, rather than conjecture which the mainstream media specializes in (if you want a really sophomoronic article to read, check out Time’s article - they seem to be more worried if the Big Three are “sincere” [Chrysler predicts market penetration of 500K electric vehicles by 2013] about hybrid’s and if their private jets are being sold or not.) “According to very recent market research (conducted by CNW Marketing Research), more than 30% of consumers who considered a GM vehicle and purchased a competitive product instead cited the possibility of GM bankruptcy as the top reason for not buying a GM product.” So, this whole ball of yarn just keeps getting harder to unknot. The biggest problem at this point seems to be balancing demand with future production levels in order to compete with foreign competition – which is not out of reach - but in order to do so, the credit markets need to unfreeze. It seems that thawing the credit market right now may provide a different short term outlook for the Big Three’s financing and dealership network. At the very least it will free up the credit needed for dealers to work with customers and perhaps stop the downward sales trend. But the bailouts do not seem to be slowing and with bailouts being thrown into the crowd like strings of beads at Mardi Gras, one has to wonder if there is any incentive to lend? Sources: NADA before Congress Ford Plan GM Plan Chrysler Plan