They keep calling it a loan, not a bail out.

[HiFructosePronSyrup]

When you go in to the bank to get a loan, you need to have a steady source of income, you need to have some sort of collateral in case you default, and you need to have some sort of discreet plan on how you're going to spend the money and how you'll pay it back.

Yet the auto companies have been hemorrhaging money for years, well before the global economic downturn. I don't see what they're putting up for collateral. GM wants 20 billion dollars, they're only worth 3 billion. And I sure as hell don't see a discreet plan on what they'll spend it on, or how they're going to turn around to make the 20 billion to pay us back.

So as the lender I see no reason in hell I'd approve of this loan.


Yeah, yeah, yeah. Millions of manufacturing jobs. The economy will be in ruins if we don't do it. That's the same thing the banks told us. Well if you want to save the jobs, you can go ahead and nationalize the industry and fuck this bailout.

[madokie]

1. last time when they were here they were talking bailout

and the Sen. were talking about putting limits on what they could use the money for etc. the auto folks then changed to loan so as to skirt that idea. They want the money scott free

[Romulox]

3. Rightwing propaganda. Unlike AIG and CITI, it has always been proposed as a loan.

[Romulox]

2. You've never heard of an unsecured loan? Look into your wallet?

See the credit card?

It's an unsecured line of credit, dufus. :hi:

[HiFructosePronSyrup]

7. My credit card hasn't got a 15 billion dollar line of credit.

And they did a credit check before they gave me a card, dingus.

[bluecollarcharlie]

11. You don't employ thousands of people, prat.

[Romulox]

14. When your opening paragraph contains a basic conceptual misunderstanding about credit

it's hard to take the rest seriously.

"And they did a credit check before they gave me a card, dingus."

A credit check has nothing to do with whether a loan is secured or not. :shrug:

[HiFructosePronSyrup]

19. The bank does the credit check to figure out if I've got a reasonable chance of paying them back.

Do you think GM has a reasonable chance of paying back 20 billion dollars?

[Romulox]

23. Right. But that doesn't magically make a loan secured...

(Nice try at changing the subject, btw!)

[HiFructosePronSyrup]

27. No. It provides a reasonable expectation the loan will be paid back.

And the auto industry can't provide that.

[Romulox]

28. Bornagin: "you need to have some sort of collateral in case you default..."

I don't think you understand what this argument's about...

[bluecollarcharlie]

17. But you don't employ thousands of people....

do you. You seem like one of those people that just want to kill a company, any company, and damn anybody who brings up counter arguments. Even if it means poverty for thousands.

[HiFructosePronSyrup]

52. Well, if you give me 14 billion dollars, I'll hire thousands of people.

Why don't you want to create jobs for thousands of people?

[ixion]

8. you think GM will be paying typical unsecured interest rates?

think again.

It's not an unsecured loan, because it lacks the defining characteristics of one. At best, it's a 'sweetheart' loan, which they most certainly do not deserve.

[Romulox]

12. Err, it'll be an unsecured loan because it won't be secured.

The "defining characteristics" of an unsecured loan is that there is no accompanying security agreement (e.g. that no collateral is pledged to guarantee the loan.)

[ixion]

57. fair enough...however

no such loan would ever actually be made in the private sector, IMO, because it's a massive risk. It's a risk, and my bet is that the interest rate will not be typical of such a high-risk loan.

As a person who is being forced to contribute to this loan, I'm unimpressed, and would not make such a loan if it were my decision, or if my contribution were voluntary, rather than being taken from me at gunpoint.


It's funny. Every time there's a government handout being discussed, there are a few people who come out of the woodwork and start talking about what a good thing handout will be, and how much we need it, and why it's rational, and why there will be oversight.

The the legislation is passed, the money is stolen, and these same folks are suddenly absent from the discussion. I'll be looking for you once the latest robbery is completed, to see if you're still sticking up for corporate welfare.

[On the Road]

4. It is in Fact a Loan

Not all loans are collateralized. When corporations borrow money via unsecured bonds, they're called debentures. Interest rates are a higher, but otherwise they're pretty much the same.

[DJ13]

5. Did you ask these questions when Paulson gave $60 billion to Citi 9 days ago?

Where was this cry for "accountability" while Paulson has shoveled a trillion+ to finance companies without conditions over the last two months?

If you could save 3 million jobs by loaning (with conditions) $34 billion, isnt that a better deal for our country than throwing a trillion at the banks (only to see them use that money to consolidate and eliminate tens of thousands of jobs)?

What should be our priority here?

[HiFructosePronSyrup]

9. If I just lost a shit load of money at a casino...

I'm not going to go to the casino across the street and lose a bunch of money over there just to be fair.

[DJ13]

15. 3 million jobs

Real jobs, with better than McDonalds wages.

Can we afford to let those people become another unemployment statistic just to satisfy your blood lust for vengeance agsinst an industry you've decided you dont like?

Are you willing to live in another depression?

[HiFructosePronSyrup]

16. Then support nationalization.

If you don't support nationalization of the auto industry, you don't really care about the 3 million jobs.

Like I said above, the banks made the same sort of innane threats.

[DJ13]

20. Nationalize the banks

You know, the people who caused this mess.

But theres point in nationalizing the car companies when a bridge loan to help them through until 2010 when new lower wage union contracts will do the job.

[HiFructosePronSyrup]

21. The banks caused the auto industry mess?

Really?

[NightWatcher]

6. be it a loan or bailout or gift from the tooth fairy, it wont keep them afloat for long

if no one down here in Poor-Citizenville can afford to buy a car.

The banks arent lending money to those of us (numbers gorwing everyday) without decent prospects of paying it back with interest.

Those people with money are holding onto it fearing a deeper crash and are not about to go throw down big chunks of change for a car that might not have a solid company behind it if they fail or slip into bankruptcy.

We need to fix things from the bottom up and not keep wasting money and time trying to trickle down.

[bluecollarcharlie]

10. More dogmatic narrow-minded thinking....

Nationalize this, nationalize that,just come from a position of anger and suspicion and not care how many people get hurt. Somewhere Lee Atwater is dancing with glee. The only consolation i seem to have is i lose my job you get to lose yours.
See you on the unemployment line.

[Uben]

13. Let's not forget......

....who our brothers and sisters in the auto industry endorsed in past elections. They endorsed democrats, Gore, Kerry, and Obama.
They are democrats! I would much rather reward them with financial aid than the banks.....we all know who they endorsed.

So, think about that before you make a decision. It is important.

[bluecollarcharlie]

22. November 2, 2010

It can either be a bolster to the democratic majority or Revenge and Retribution.
Don't think we won't forget who our friends or enemies are and were. Especially if our enemies masqueraded as friends.

[HiFructosePronSyrup]

25. The error of the false dichotomy.

Either we give the auto industry a check for 34 billion, or we lose 3 million jobs and all their votes.

It's pure bullshit.

[JVS]

58. Watch them get the money and decide that all operations must go to BRIC to...

be competitive.

[TexasObserver]

18. It's a bailout, no matter how it is structured.

And it's a loan that no lender would ever make, which is why we call it a bailout. Unless we bail out the big three, they go under.

When a company like GM needs an immediate gift (or loan) from the government in order to pay its current obligations of $4 billion in the month of December, and the entire common stock is worth only $3 billion, that is a measure of the magnitude of the problem.

Here's the problem: Loaning money to a company after they file bankruptcy is sound. Loaning money to a company on the verge of bankruptcy is insane, because such unsecured debt becomes a big fat ZERO if the company then goes into the bankruptcy.

That's why many of us want to see the big three go into bankruptcy before they get any help. We want them to be able to effectively retool on the fly, and that will require lowering the expectations of everyone involved - the UAW workers and retirees, the vendors owed money, the lenders owed money, for example. Everyone is going to have to accept less than they want, and if they don't, they'll get nothing.

[Romulox]

24. Is that why we are giving the money to Citi and AIG as straight gifts?

"Loaning money to a company after they file bankruptcy is sound. Loaning money to a company on the verge of bankruptcy is insane, because such unsecured debt becomes a big fat ZERO if the company then goes into the bankruptcy."

It's hard to swallow this pearl of wisdom in the context of the $8 trillion Wall Street bailout. :hi:

[TexasObserver]

37. Giving money to CITI and AIG was stupid.

Using them as justification for more stupidity is an EPIC FAIL.

You don't seem like a person who absorbs much wisdom, pearls or not.

I'd suggest you accept that being annoying to people who don't agree with your "logic" is one more reason the entire big three operation needs to be put down, like a sick animal. The sooner the bad contracts are voided, the sooner we can start rebuilding the American car manufacturing business on a model that will work.

The number one reason there will not be the bailout you want is because of people like you, who stand to benefit the most, but are entirely unreasonable and far too demanding. We're not going to save your expectations, so get used to thinking about what you will do under either a new contract or no job.

[Romulox]

43. They gave the money to Citi AFTER turning Detroit away.

"I'd suggest you accept that being annoying to people who don't agree with your "logic" is one more reason the entire big three operation needs to be put down, like a sick animal."

LOL. So your perceptions of personal inadequacy are why you oppose the Big 3 bailout? :crazy:

[TexasObserver]

63. Again. That was Paulson. It was a bad idea.

One bad bailout does not justify another.

[JVS]

26. Isn't it funny that bad loans like this triggered the current economic crisis?

[Romulox]

29. Yep. And $8 billion to Wall Street while 3 million auto workers are out of jobs is the punchline!

:rofl:

Thanks for standing up for fiscal responsibility, btw. We wouldn't want our money turned over to the same fatcat CEOs who got us into this!

Unless they're bankers.

[JVS]

30. As much as I detest the bankers, at least they have a product that is in demand.

[Romulox]

32. Obviously not if they need $8 trillion of taxpayer money to be profitable selling it.

Hell, I could sell quarters for a penny if the government underwrote my losses.

At $.26, not so much. :hi:

(You've got a small problem with your logic here! :hi: )

[JVS]

33. You're just jealous because the banks got a handout and the big 3 can eat shit.

[Romulox]

34. LOL. And you're just jealous at your inability to logic. nt

[JVS]

36. The banks can still easily move their loans. Many businesses wish they could get one.

Whereas the detroit shit-mobiles sit in their lots rusting.

[Romulox]

39. You just don't get it: They can't "move" their loans if they had to charge what it cost them

to extend them.

Detroit could sell every car on its lots for pennies on the dollar too, if the government absorbed their losses.

[JVS]

50. The banks could easily lend less money for higher prices. Washington didn't want that...

so washington decided to bail it out in order to subsidize an easier credit market. Of course the banks just started using the money for acquisitions instead of lending, so it was ineffective.

[Romulox]

53. Not while remaining PROFITABLE...

[JVS]

54. Where the hell do you get that from? In order to remain profitable they were tightening credit

[Romulox]

61. LOL. I get that from the threats of a Financial Sector collapse if we didn't forward $8 trillion

Have you been in a coma for the past 8 weeks? :shrug:

[TahitiNut]

31. The MAJOR problem the auto industry faces immediately is CAUSED by the financial sector.

The meltdown of the financial sector has, as its IMMEDIATE effect, the lack of affordable CREDIT to purchasers of automobiles. The vast majority of people just don't buy cars for cash, even in good times. Furthermore, automotive manufacturing is and has always been a business sustained by operating lines of credit. Once upon a time (in the mid-20th century), the automobile companies had to charter their own banks ("Manufacturer's Bank") in order to obtain a cooperative financial services entity doing retail banking. (Those banks were VERY successful.)

To better understand this, it's necessary to understand that domestic automobile companies don't sell directly to individual consumers. The 'sell' only to dealers. Dealers need to finance their inventory ... and they have certain complex sell-back arrangements with the manufacturers. This is all credit-based.

One of the fundamental flaws in TARP has been the failure to achieve the kind of credit lending (liquidity) necessary to sustain a durable goods manufacturing base, largely do to the structural problems inherent in the multi-tiered leveraging using derivatives - largely unregulated and non-transparent. BECAUSE TARP FAILED, the largest single manufacturing base in the U.S. (the auto industry) faced immediate operational cash flow issues.

All the gnashing of teeth and ax-grinding on DU about the PRODUCTS completely misses that point and merely offers opportunities for self-aggrandizement and couch-potato-quarterbacking.

Of far longer and GREATER consequence is the decimation of the working class... particularly the middle class. As the working class has been given a continuously smaller piece of the economic pie over the last 30 years, the customer base for such manufacturing companies has been virtually obliterated. With all of the TRILLIONS in 'bail-outs' almost NOTHING has been done to shore up the middle-class. Indeed, most of the 'solutions' we're hearing (and reading) have, as a consequence, the INCREASED DECIMATION of the working class: auto workers. These people are the heart of the blue collar middle class. Michigan has been the "canary in the coal mine" in terms of viewing the decimation of our NATIONAL blue collar middle class -- and it has been ignored.

[Two Americas]

35. the difference

You say "that's the same thing the banks told us." The difference is that the banks are not producing anything.

The collateral is the work force, the human beings, the workers, are the asset and the value. Money is just a symbol, a representation of wealth, all of which is produced by the working people. (Hope it is not too controversial here to take the traditional Democratic party and Union point of view on this.)

I agree with you that propping back up management is a bad idea, but that applies to more than just the auto industry, it is a problem throughout the so-called "economy" - otherwise know as a giant casino for the privileged few to play in at the expense of the people. Management at the auto companies would rather break the Union than be successful as automobile manufacturers (the people running the companies become fabulously wealthy regardless, and unlike the working people in the companies are at no personal risk) and will take the companies down rather than abandon their attempts at destroying the Union.

What we need as a condition of the loan being made is strengthening of the Union, not forcing it to make concessions.

The workers are the value in the auto industry. They are at risk, not management. They are the ones whose side we should all be on. They are the "collateral." They ARE the auto industry. They are us. Anything done to them, will eventually be done to all of us.

Marion, Alliance, Lima, Akron, Wooster, Flint.... we can imagine that we let those manufacturing towns die without the rest of us being too badly affected or paying too stiff a price. Let Detroit die and we will all discover the folly of our thinking, the hard way.

[HiFructosePronSyrup]

38. But they're not worth the price of the loan.

You can buy the companies for less than 34 billion and put them to work yourselfs.

"The workers are the value in the auto industry. They are at risk, not management. They are the ones whose side we should all be on. They are the "collateral." They ARE the auto industry. They are us. Anything done to them, will eventually be done to all of us."

Right now they're being treated like hostages. "Give us 34 billion, or we'll fire these hostages." This bailout isn't about the workers, it's about management and stockholders.

[Romulox]

40. Neither were the banks. QED

[HiFructosePronSyrup]

41. Then we agree.

Both bailouts are a terrible idea.

[Romulox]

44. No, we don't agree. And the only extant bailout (to the financials) is now pegged at $8 trillion

[HiFructosePronSyrup]

46. So you think giving $700 billion to the banks was a good idea?

Interesting.

[JVS]

48. Both were a terrible idea.

But the bank one at least had the potential to help, if it had been done by nationalizing the banks

[Two Americas]

56. "hostages"

Yes, indeed. Now we are talking.

You know, if we were all able to get clarity on this issue, there would be little of the bitter feuding and divisiveness we see here here and within the party nationally, we would not be so weak as opposition to the extreme right wing, and we would be much more effective and productive.

Stand together with the working people - with ourselves - and everything else could be effortlessly worked out between us and we could focus on going after the right wingers rather than each other.

[JVS]

45. Actually the banks are producing something, and the importance of what they produce is way greater

The banks produce credit, which all other businesses require for regular operation. The reason that the bailout was considered so important by those in charge is that since the banks had eaten a big shit sandwich with their stupid dealings concerning mortgages and their derivatives they had very little money to continue lending. This was called a liquidity crisis. With the banks unable to lend, the businesses that needed credit (including the car companies) had to be much more competitive for getting loans because the banks are really risk-averse after being burned. Loans are harder to get and more expensive. Cars are easy to find and getting cheaper. The loans are the product that is in demand.

[Romulox]

51. You are confused. The banks are middle men distributing taxpayer monies at the moment,

They don't "produce credit"(sic!) --at this point, the credit they are extending (such as it is,) is being borrowed from our grandchildren in the form of national debt.

[JVS]

55. They produce credit, and that money is all theirs now. That's how bailouts work

[Romulox]

62. They "produce" credit by getting it from the Federal Reserve and Congress...

I think you're just clowning around here. You either don't understand the situation, or you are shit stirring (probably a little of both.)

[Two Americas]

59. that is one view

If we had to distill down what the Republicans stand for, it would be that - that the creation of credit, and other activities for the manipulation of capital, is as important as labor and is deserving of equal or more consideration than labor is.

"Loans" are not "a product" and money changers are not "producers - that is the heart and soul of the traditional principles and ideals of the Democratic party, the labor movement, and the political Left. It is how we define ourselves, and the opposite point of view is how conservatives, the right wing, and the Republican party define themselves.

Nothing wrong with that point of view, it is legitimate and I respect people who hold it - I strongly disagree with them, yes - but we need to be clear about it.

Abraham Lincoln described this well, in terms that anyone can understand, back when the Republican party was the "liberal" party, and not in some obscure document or in some quote taken out of context. This is from his first annual message to Congress, and was an oft expressed sentiment that he couched as consistent with the battle against slavery, and the battle against all tyranny throughout history.

It is not needed nor fitting here that a general argument should be made in favor of popular institutions, but there is one point, with its connections, not so hackneyed as most others, to which I ask a brief attention. It is the effort to place capital on an equal footing with, if not above, labor in the structure of government. It is assumed that labor is available only in connection with capital; that nobody labors unless somebody else, owning capital, somehow by the use of it induces him to labor. This assumed, it is next considered whether it is best that capital shall hire laborers, and thus induce them to work by their own consent, or buy them and drive them to it without their consent. Having proceeded so far, it is naturally concluded that all laborers are either hired laborers or what we call slaves. And further, it is assumed that whoever is once a hired laborer is fixed in that condition for life.

Now there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences from them are groundless.

Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.

[nadinbrzezinski]

42. IT IS A LOAN... and it is starting to look like the same type of LOAN

given to Chrysler back in the 1980s

Mark my words... things will go into depression territory... why is it that people are so ignorant of HOW the economy works, and the webs of relationships

At least in the 1930s people UNDERSTOOD what was going on. These days... with a higher percentage of college educated americans, the level of ignorance is just astounding.

[Two Americas]

60. agreed

And the Conrail program, both of which paid back to the federal treasury much more than they cost the tax payers.

[hughee99]

47. What do you mean?

You don't think someone could get a loan by telling a bank "Look, I've been losing a lot of money for years with no signs of turning it around. I've promised a lot of money to a lot of people and I need this loan to pay them off. I know there are things that I could have done in the past that might give me a better chance of making money, and since now I've completely fucked myself, I'm considering trying them out." and then lighting a cigar with a $100 bill.

[HiFructosePronSyrup]

49. lulz.

"and if you don't give me the money, I'll fire Cratchit and little Tiny Tim will certainly die of consumption."