If the U.S. Big Three automakers want bailout help from the Federal government they should submit to at least an afternoon of new public hearings.
Automakers were heard from in September on the subject of attaching the $25 billion loan program to a continuing resolution for the Federal budget. That legislation, which passed, kicked off the process for such loans to move ahead—-loans that were part of last year’s energy legislation. The money is meant to go to help the companies re-tool factories and offset some research and development costs associated with more fuel efficient vehicles. The key is that all the loans must be attached to offset costs of vehicles that get 25% better fuel economy than the vehicle segment average. In other words, if Ford wants loan money to offset the costs of bringing its Fiesta to market, the car will have to exceed the average of the vehicles in the segment by 25% at the time the application is made.
In a global marketplace each country will find appropriate industries in which they’ll thrive, and they will adapt to survive.
However, usually politics, and lobbyists become invovled, and often the pain and hardship experienced by sizable communities during the shakeout cause short term remedies, which perpetuate the imbalances.
The US auto industry has NOT been able to compete on features, price, or styling for decades, and outside of the US you see very few American cars – apart from the notalgic classics.
For the US – with citizens with a high hourly wage (on a global basis) – there has to be a general trend away from manufacturing (which can always be done cheaper somewhere else) into knowledge and leadership enterprises where the labour component is only a small peice of the overall price.
That’s the global economic view, but unfortunately, that leaves a large local workforce that is either unskilled, or only skilled in obsolecent technologies, and at a local level its PEOPLE that feel the pain of a changing economy.
A one-off bailout would only be appropraite if the government somehow beleived that the US auto industry could then retool itself and create cars that people wanted at affordable prices at global level.
A prolonged subsidy would only be appropriate if this industry was considered a “way of life’ that the US wanted to continue.
A handout ? Well isn’t that called the unemployment benefit anyway ? It’ll be coming one way or the other.
On the subject of the US auto market I don’t know if they need a bailout but they need to learn to adapt.
The Financial Times reported on its Web site late Friday, citing people close to the situation, that AIG (AIG:American International Group, Inc News, chart, profile, more executives were in negotiations Friday night with authorities over a plan that could involve a debt-for-equity swap and the government’s purchase of mortgage-backed securities from AIG.
The FT said talks might still collapse, but noted that the insurer was pressing for a decision before it posts third-quarter results on Monday.
American International Group Inc. is expected to report third-quarter loss of 90 cents a share, according to analysts surveyed by Thomson Reuters.
Leading industry analysts have said that turmoil in equity and credit markets has been hampering AIG’s efforts to sell some of its businesses, a crucial part of the insurer’s plan to repay billions of dollars in expensive government loans.
Rival insurers that may be considering bidding for AIG businesses are now facing their own problems as slumping stock prices and wider credit spreads cut into capital, Andrew Kligerman of UBS wrote to investors about a week ago.
That’s slowing what investors hoped would be fast asset sales by AIG, possibly preventing the insurer from quickly repaying the Federal Reserve’s loan, the analyst wrote.
Wider credit spreads may be triggering more demands for AIG to post collateral to support the credit default swaps it wrote. That likely increases the amount of money the insurer has to borrow from the Fed, which, in turn, means even more asset sales, the analyst explained.
Kligerman said he expected that AIG would take about $25 billion in write-downs on its credit default swap exposures when the insurer reports third-quarter results.
Troubled mortgage loans seem to be getting all the press lately, but bad credit card debt is following close behind. The US Congress will vote today on a revised bailout plan that could allow the Treasury Secretary to take possession of securities backed by auto loans and credit card debt.
The consumer credit market is currently worth $2.6 trillion. But delinquent credit card debt has risen 20% in the past year alone. And with job cuts and bankruptcies affecting more and more Americans, defaults and delinquencies are only expected to get worse. As a result, the value of all that credit card debt will plummet.
More credit card payments are 90 days or more behind schedule than have been since 1991. Compared to a year ago, banks are writing off 40% more of this debt as uncollectible.
All of this bad credit card debt trickles down to individual card holders in the form of lower credit limits, tougher standards for obtaining credit, and more aggressive debt collection.
Will the bailout plan be enough to help the credit industry? Martin Weiss, founder of Weiss Research, said, “When you sum up all the debt sectors and all the potential for bad debt, you recognize that $700 billion is a drop in the bucket.”
The question is:
Does he drive a GM, a Ford or a non-US manufactured car?
Here is one like his, but his is a 2006. He gets a discount. ” title=”” class=”bbcode_smiley” />
China announced a huge economic stimulus package Sunday aimed at bolstering its weakening economy and, in the process, perhaps helping to counter the effects of the global economic slowdown.
In a sweeping move, Beijing said it would spend an estimated $586 billion by 2010 on wide array of national infrastructure and social welfare projects. They would include new railroads, subways and airports and rebuilding areas like those devastated by the Sichuan earthquake in May.
On Saturday, Hu spoke by telephone with President-elect Barack Obama about issues including the global financial crisis and how China and the United States might cooperate to help resolve economic problems, according to the Chinese state-run news media.
At home, Beijing is struggling to cope with a rapidly slowing economy. After five years of growth in excess of 10 percent, the Chinese economy is weakening because of slowing export and investment growth, declining consumption and severely depressed stock and property markets.
I am with you 100% and even though I am a union member, I couldn’t agree more, Unions do suck and they are getting worse. I think most people would agree too that they have no right to use out dues for any political part, either way. we need a say so in that.
But the bail out thing, No More, I am tired of this BS, I don’t care who does. Taxation without representation was one of out battle cry’s back in the 70’s, the 1770’s.
This has nothing to do with this posy, but a friend of mine is a detective and he just called me and suggested I be more careful in locking up the house. He said with many ppl pulling their $$ out of the banks and keeping it in their homes, that break ins shot up big time, thought I’d pass that on.
especially this bit about health care which is very true:
And please, spare me the alligator tears about G.M.’s health care costs. Sure, they are outrageous. “But then why did G.M. refuse to lift a finger to support a national health care program when Hillary Clinton was pushing for it?” asks Dan Becker, a top environmental lobbyist.
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