I think we're in a world of @#$% and A LOT of companies are going down. It's going to hurt A LOT of people, namely everybody.
I'm afriad throwing MORE money at companies who have already showed they don't know how to do it right and THEN getting the gov't involved who REALLY knows how to screw things up is a monumentally BAD IDEA!
It's going to HURT like crazy but I think if you let Capitalism TRULY work we will emerge from this stronger than ever with the strongest economy in the history of the World.
Of course that would involve the gov't largely leaving it alone which will never happen so I don't think we have a prayer either way.
There are too many special interests looking out for themselves and nobody wanting to feel any pain.
Of course we should hold the appropriate people's feet to the fire in the Gov't and Private Sector but that won't happen either.

 

A lot of people are already hurt by it, and it looks like it will get worse before it gets better. Makes me glad I can hunt and fish and grow vegetables.....and glad I drive a van I can live in and run on waste veggie oil....... If this bailout thing doesn't work, I have my OWN plan to bail.

 

I was thinking after I posted the above reply.

Take a serious look at what all each of the big three have as subsidiaries.
We are not just talking automobiles here.

As a quick off the top of my head, GMAC Financial,.
Wonder if that is why GM is in such dire straights, my guess is yes.

A quick look at Ford comes back to,
Ford Motor Company, Dearborn,Mi. Ford Motor Company: Cars, Trucks, SUVs, Hybrids, Parts - Ford
Automobile Protection Corperation, Norcross, Ga. EasyCare.com
Ford Motor Credit, Dearborn, Mi. Ford Credit Vehicle Financing
Mazda Motor Corperation, Hiroshima, Japan �yMAZDA�z OFFICIAL WEB SITE
Premier Automotive Group, London, England
Ford Motor Company of Canada, Onterio, Canada www.ford.ca

Now check out the 2004 gross revenue 170,839,000,000.
170 billion in 2004 for revenue.
86.1% of that was automobile related
13.9% was financial services related
And only 83 billion of the auto revenue in 2004 was from North America.
Ford South America auto operations reported 3 billion in revenue
Ford Europe 4.3 billion
Premeir Auto Group 26.5 billion
Ford Asia Pacific and Africa 7 billion
Ford Financial and Hertz 23.7 billion

Notice Ford South America, Ford Europe, Ford Asia Pacific and Africa, Hertz were not even listed as major subsidiaries, wonder how many more companies fall through through the same cracks.

To put this in another perspective Ford does 170.8 billion in business and is asking for a lets say 10 billion loan to make it easier.
That is like a person making 170,800 a year asking for a 10,000 dollar loan.

Take that one step farther, to have the same earnings to loan value, if you went down for a 40,000 dollar car loan you would have to make 683,200 a year.

Just happened across another couple subsidiaries, Americian Road Services Company, Auto and Home Insurance
Automotive Component Holdings makes glass and interior parts as well as other chassis parts, 23 plants
Visteon makes driveline components

Ford directly employs close to 350,000 people.
That does not include the subsidiaries, and I have no idea how many they employ.
Many people, many states, many countries would be affected if Ford folded.

Multipy that by three.

 

You scared yet? These companies are the backbone of the brick and mortar economy, meaning they have a real address and build/sell real products, not just some clever way to handle money and get paid for it.

The auto industry has run on a razor's edge for a long time. Very narrow profit margins and moving huge amounts of money, but not making very much by percentage. This is how most big corperations operate and its only possible through stability and consistency in the market.

From what I understand, ford has sold its 30% share of mazda for quick cash, so that one is out.

Just a little update on the chevy volt. It was trucked to washington and driven the last few miles to the cameras. As of right now I maintain the car is not highway capable and cannot perform as claimed.

 

How about a 100% tax deduction on the purchase of a new big three car/truck?
Even if it's bought over time, every payment is 100% deductible for up to 72 months depending on the cost of the vehicle.
We gave the import makers big incentives to come to the US to build cars.

I'm not going to buy one but it might get some people to do so.

 

Still listed as of last night, the article I was reading was current.

They were unloading several of the glass plants from Automotive Component Holdings and restructuring several of the chassis parts plants to raise cash though.

 

Here's my thought: Yes we do need the big 3 for obvious economic reasons. NO, we DO NOT need this bailout. I am only 18 and I seem to understand this better than a lot of people (especially our government). The bailout will only add billions of more dollars to our National debt, which is not what we need in tough economic times. Second, LET the big 3 go under if they can't manage their money. I am the son of a business man so I know my fair share of how business works. If they go bank rupt, yes it will suck, but then they have the chance of a fresh start. If a business fails and restarts, they will be MUCH more wise (at least I hope) with operations than the first time around. Third, I honestly think this whole bailout is so the governemnt can control the big 3. The government wants to regualte (imagine that, lol) how the vehicles are made, their efficiency, and the overall auto industry. So why is the MAIN reason I am against this bailout? the answer: The governemnt will have more control, and if any of you have looked at history, that is the LAST thing we need right now. So, anyway, that is just my thought on this mess-of-a bailout.

 

7.3PSDFanatic, I can relate to your situation. In age and job description we are close. I'm 23 and work with my dad who is self employed (not a bad arrangement).

The problem is that instead of having large bank accounts of cash on standby, large companies like GM rely on a line of credit instead, but the function is exactly the same. Its used for day do day operation of the company and its been like that for years. The reasoning being that its better to have the money invested instead of having it sit in bank accounts. In the end, the banks have decided that they don't want to lend money anymore because they may not have it, so the thread begins to unravel.

Your dad may use a business credit card or bank account for day to day operations of the business (as we also do), but big corporations like automakers have not worked like that for a long time. The economy is VERY integrated, and when it works it works well, but as we see here, having money for a rainy day can have its merits even if until that rainy day it just sits idle. Now that its a hurricane, banks are sitting on most of the remaining cash that the economy has left.

This is why they are begging washington (or ottawa in my case) for "low interest loans, because the banks are not lending.

As I said before, its a mess. Welcome to the discussion.

 

David85: I can clearly see your viewpoint as well. The company should have had a fail-safe fund in the first place, I can't see how they missed that one, I doubt you'll ever see even a small business without one. Honestly though, the one thing that is truely concerning me more than anything is more governemnt control. It may be bad now, but if the feds get their hands on the Auto Industry, it's only gonna go down hill from here. The big 3 should have managed mone more carefully in the first place, but the best thing we can do right now is let the free-makret (gov't seems to forget the "FREE" part sometimes) take its course. I can agree with everyone who has posted in this thread.

 

Just at a guess, but I bet Ford and it's subsidiaries pay more than 50 billion a year into the government every year in taxes right now.

The entire business plan today works on cash flow.
Money in the bank, is dead cash that is not making more money.
Yes you need a small amount to carry you across small dry periods, but not years of drought.
Since the housing market started colapsing early this year, banks tightened up on loans.
No loans meant no car sales.
No car sales with factories still working, cash out none in.

Now picture writing payroll for 350,000 people every week.
If you figure 40 hours a week and a per hour cost of 50 dollars each you are looking at a payroll of 700 million dollars a week.
In 6 months that number turns into 18.2 billion dollars just in payroll.

 

Ford SAID in front of the finance commitee they are paying ZERO in taxes (no liability) as they are/have been loosing money.

 

700 million a week payroll, that is a chunk of change in payroll taxes .
That is 129.6 million a week in social security and medicare alone.
1/2 out of Fords pocket and 1/2 out of the employee's pocket.
Run that out to a year, 6.74 billion just into social security and medicare.

Then you can figure about 154 million a week in federal income tax on top of that.
Another 8 billion a year.

Then let's not forget highway use taxes moving parts, cars and such between plants.
Property taxes
B&O tax
Utility taxes
Sales taxes
Business Licenses

They might not be paying any taxes on profits, but they sure are paying a lot of taxes as part of the regular business operating expenses.

 

True but the vast majority of those are employee paid taxes in reality because the employees are making a "profit".

I'm not sure if this is your point but giving companies B-ILLIONS of dollars to pay back M-ILLIONS in taxes doesn't make too much sense to me.

 

Well, in theory, the bailout is supposed to be a LOAN from the government that gets paid back over time.
Though how our government can loan anybody anything when they are themselves in debt up to their eyeballs is beyond me.
It is just starting to sound like a spiralling mess of robbing Peter to pay Paul.
All of this is pretend money. Do we have that much gold in the treasury? I think not. That was the original premise of paper money, that it was backed by gold, so based on something real. Now it is no longer real.
If we keep this up, our money will be worth exactly what it is....nothing more than a piece of paper.
I suppose it would make acceptable TP......

 

It would make crappy TP (pun intended) too, not big enough and no absorbancy.