Bailout Bill Unlikely to Pass

[grbeck]

And even more like myself will not buy a car made in Tennessee, Alabama, or any other state that has senators that are opposing this plan.....

 

Check out the trends in market share - like it or not, the percentage of buyers who share your view continues to shrink every year.

 

Face, the real problem is that, even before the recent sales collapse, lots of people have been turning their backs on GM, Ford and Chrysler.

 

The local paper has already run stories about prospective customers balking at buying a GM or Chrysler vehicle because they are concerned that the parent company will go bankrupt. It will be interesting to see the December sales figures...GM's and Chrysler's sales were already in the crapper BEFORE the publicity over the bailout debate. I wonder if the latest publicity has turned that into a death spiral.

 

Interestingly, despite concerns on this site that Ford is being hurt through "guilt by association" with GM and Chrysler, people I've talked to have all said that they are surprised that Ford is the one likely to survive all of this. So people are making the distinction...

Edited December 11, 2008 by grbeck

[Versa-Tech]

Thats because of the "my senator is great its all the other ones who suck" mentality.

No, it's because most people don't even know who their current senator is along with the fact that most people believe that republicans currently have the majority in both houses. Consequently, a majority of them voted democrat seeking "change"

[NickF1011]

No, it's because most people don't even know who their current senator is along with the fact that most people believe that republicans currently have the majority in both houses. Consequently, a majority of them voted democrat seeking "change"

 

More from the "Change" Department: Obama selects Tom Daschle as Health and Human Services Secretary. :rolleyes:

[Versa-Tech]

More from the "Change" Department: Obama selects Tom Daschle as Health and Human Services Secretary. :rolleyes:

I saw the press conference. The first [and most convincing] reason Obama gave for the appointment of Tom Daschle as the Secretary of Health and Human Services and Melody Barnes as Domestic Policy Advisor was that the two of them wrote a book together on healthcare

[ANTAUS]

Stock Market is taking a dive today because the bailout loan isnt enough they figure. One current proposal which looks likely is having benefits and pay cut to the same level as workers in Honda/Toyota, and make their jobs more competitive. The votes should be coming in today. Specifics have not been giving on how productive, or environmentally efficient they wish to force them to be. Of course if the automakers are not happy with this concession (or the UAW) there's nothing wrong with bankruptcy and you get the same.

[Deanh]

Stock Market is taking a dive today because the bailout loan isnt enough they figure. One current proposal which looks likely is having benefits and pay cut to the same level as workers in Honda/Toyota, and make their jobs more competitive. The votes should be coming in today. Specifics have not been giving on how productive, or environmentally efficient they wish to force them to be. Of course if the automakers are not happy with this concession (or the UAW) there's nothing wrong with bankruptcy and you get the same.

correct if I am wrong but I don't think hondas workers make any less...but figure in benefits and the OVERALL cost per employee blossoms....wonder if all the senators would like THEIR benefits and health insurance, retirement etc cut.........

Edited December 11, 2008 by Deanh

[Ron W.]

.wonder if all the senators would like THEIR benefits and health insyrance, retirement etc cut.........

 

If only the American public could vote on that as well as being able to cancel congess's self voted yearly raises.

Somebody here is a lawyer, what would it take? A class action by the American people against our so call representatives? How many signitures would it take?

[grbeck]

correct if I am wrong but I don't think hondas workers make any less...but figure in benefits and the OVERALL cost per employee blossoms....wonder if all the senators would like THEIR benefits and health insyrance, retirement etc cut.........

 

The transplant workers make comparable wages...the problem lies with work rules, healthcare benefits and retiree benefits (primarily healthcare benefits). Cutting the wages of current workers really won't solve the problem.

[Deanh]

The transplant workers make comparable wages...the problem lies with work rules, healthcare benefits and retiree benefits (primarily healthcare benefits). Cutting the wages of current workers really won't solve the problem.

what scares me is atune to food pickup at a drive thru....the person speaking struggling with english, can't understand a word i'm saying BUT is working for close to minimum wage.....would THAT make congress happy?

[Extreme4x4]

No, it's because most people don't even know who their current senator is along with the fact that most people believe that republicans currently have the majority in both houses. Consequently, a majority of them voted democrat seeking "change"

 

I am convinced that you should have to take a one question test, to prove that you are not too stupid to vote.

 

That question would be: How many states are there, in the United States??

 

Recent studies have found that appx 46% of people who are asked that question.............. get it wrong.

 

Oh............. and photo id. I really don't want any more dead people voting.............. or Dallas Cowboys voting in Nevada. Also, since the majority of the homless are mentally ill, I really have a problem with them being bussed to "key states," and giving the address of "park bench," and being able to vote there. People who are truly down on their luck, and are homeless due to extenuating circumstances, have id.

 

Maybe I'm harsh, but after this last election............... its time to cut down on the dirty pool.

[MGallun]

The only reason a lot of people were able to buy a brand-new vehicle - as opposed to a used one - over the past 5-6 years is because banks and other financial institutions were lending money to anyone with a pulse. Which is part of what got us into this mess in the first place.

 

In addition to the housing bubble, we've had the new-car market bubble, and both are in the process of contracting. Bailing out GM and Chrysler isn't going to change that - or ensure that they can survive in a greatly contracted market. If anything, by allowing them to avoid a painful, but necessary, restructuring, this bailout only prolongs the inevitable.

 

 

meh, i take offense to that! Iam a subpime person, lost my job and couldnt pay on medical, CC etc.. .so my credit now is like 550... i got a 06 Fusion at zero percent.. and havent missed a payment.. think maybe they would work with me still eventhou my credit sucks? lol.

[Versa-Tech]

meh, i take offense to that! Iam a subpime person, lost my job and couldnt pay on medical, CC etc.. .so my credit now is like 550... i got a 06 Fusion at zero percent.. and havent missed a payment.. think maybe they would work with me still eventhou my credit sucks? lol.

You should take offense to the majority of the sub-prime market that has given you a bad name.

[ANTAUS]

what scares me is atune to food pickup at a drive thru....the person speaking struggling with english, can't understand a word i'm saying BUT is working for close to minimum wage.....would THAT make congress happy?

 

You do know that some companies are out sourcing the person "on the mic", to Indian, and when you get to the window to pick up your order is NOT the person you spoke to on the mic? So if they mess up, "No you didnt understand me", won't work .

[Versa-Tech]

You do know that some companies are out sourcing the person "on the mic", to Indian, and when you get to the window to pick up your order is NOT the person you spoke to on the mic? So if they mess up, "No you didnt understand me", won't work .

But they'll still give you the food.... Hmmm sounds like fun :shades:

[Extreme4x4]

meh, i take offense to that! Iam a subpime person, lost my job and couldnt pay on medical, CC etc.. .so my credit now is like 550... i got a 06 Fusion at zero percent.. and havent missed a payment.. think maybe they would work with me still eventhou my credit sucks? lol.

 

Hey............... a fellow subprimer. Howdy !!!!

 

Ours was living on CC's, with a new baby, for 14 months after 9/11 killed our business. We were just eeking by, when my husband lost his job in Sept of '05, because he turned in his boss, to human resources (would scream in his face all the time). We didn't do bk, and are paying everything back (all charge-offs, judgements................ many are paid already). Perfect house and vehicle credit, so we bought our truck in July ( almost same payments as my Tribute), through Ford credit. Good rate (tier 2), and great truck. FICO 525

 

You are actually punished for doing the right thing, in the FICO system. If we would have written it all off with a BK, we would have a great score now. Cool, huh??

 

I also get tired of being blamed for everything. Once we are done paying all of this off (hopefully by the end of next year), we will have a DTI of 20%.

 

Sorry............... back to the regular scheduled "bailout musical chairs."

[packardbob]

In all honesty I don't know in great detail how Chapter 11 works and I'm not going to pretend like I do, but I just don't understand why CH11 for GM would absolutely mean CH11 for Ford. I don't understand why Ford will have problems getting parts from part suppliers that also supply parts to GM and Chrysler. If GM files for Chapter 11 to restructure, will they all of a sudden quit building cars? The same goes for the parts suppliers themselves. If they run out of money, can't they file for Chapter 11 as well? And if so, does this mean they will not build parts while they restructure? To put it another way, if GM files for bankruptcy and quits building cars, then there is a vacuum for the suppliers to fill. But how can GM file for CH11 and return to profitability without building cars? Cars that use parts. Parts that parts suppliers build. And likewise with the parts suppliers, how can they return from CH11 restructuring without building parts to sell? Parts that Ford would like to buy.

 

The area where I see Ford at a disadvantage is in the cost of labor. Since GM would get to renegotiate its labor contracts under CH11, they could be poised to start a pricing war and artificially tilt the market in their favor. But, would people buy GM products from a bankrupt company even at a reduced price? I wouldn't. The only GM I would own would be an Oldsmobile, GM should have dumped Buick and Pontiac and sunk the money into Olds. Turn the core GM into Chevy Olds Cadillac like Ford Mercury Lincoln. As for Chrysler Corp. I sincerely believe they are toast. I'm not a fan of Chrysler at all, so I don't really care. GM and Ford are guilty of making some crappy cars, Chrysler is guilty of making all crappy cars. Just my opinion, but I believe it to be true.

[RichardJensen]

Ch. 11:

 

GM would not need to pay outstanding debts to suppliers. This could amount to billions of dollars.

 

Suppliers would not be able to eat those costs, as many of them are thisclose to Ch.11 themselves.

 

Any business that goes Ch. 11, and is cash flow negative (like GM) needs 'debtor in possession' financing.

 

It's a loan that provides operating funds until the business is cash flow positive.

 

Likely, you would need to find someone to provide DIP financing not just for GM, but for dozens of suppliers. And the credit market is already basically closed for business.

[Versa-Tech]

Hey............... a fellow subprimer. Howdy !!!!

 

Ours was living on CC's, with a new baby, for 14 months after 9/11 killed our business. We were just eeking by, when my husband lost his job in Sept of '05, because he turned in his boss, to human resources (would scream in his face all the time). We didn't do bk, and are paying everything back (all charge-offs, judgements................ many are paid already). Perfect house and vehicle credit, so we bought our truck in July ( almost same payments as my Tribute), through Ford credit. Good rate (tier 2), and great truck. FICO 525

 

You are actually punished for doing the right thing, in the FICO system. If we would have written it all off with a BK, we would have a great score now. Cool, huh??

 

I also get tired of being blamed for everything. Once we are done paying all of this off (hopefully by the end of next year), we will have a DTI of 20%.

 

Sorry............... back to the regular scheduled "bailout musical chairs."

I feel your pain. It's always the honorable ones that have to suffer in this day in age... You just earned a hell of a lot of respect from me...

[packardbob]

I've read a few, rather lengthy articles on CH11 in the past hour or so, and I might be more confused now than I was earlier, but I can't see where the suppliers would have to eat the costs of their parts that were taken by GM since the parts suppliers should fall under a priority as a secured or an unsecured creditor. This would mean that payments to each individual creditor of the company, from employees to parts suppliers would become a priority based on the CH11 plan that had been submitted to and approved by both the creditors and the federal bankruptcy court. This, as I understand it, means that creditors will be prioritized and paid off, but not until the creditor(s) of higher priority has been fully compensated. This is similar to compensation under Chapter 7, but the money comes from products sold rather than assets sold.

 

As for the debtor in possession financing, this seems to be the very last attempt to keep the debtor in possession of the company after exhausting all of the other facets of CH11. This includes an automatic stay on creditors which means they can't petition to collect, but will have to wait to be prioritized and repaid in the method I described above. It also includes labor negotiations, layoffs, cost cutting to the max, selling off of assets not integral to the restructure... If these efforts aren't enough to keep a good enough cash flow to creditors, the debtor files for financing to fund the restructuring. If financing cant be found, then GMs current creditors or the US Trustee will petition the Federal Bankruptcy court that it is in the best interest of GMs creditors for GM to go in to Chapter 7. I can't imagine that the government would let that happen, but rather be the financier for GMs Chapter 11 if financing can't be found elsewhere.

[RichardJensen]

I've read a few, rather lengthy articles on CH11 in the past hour or so, and I might be more confused now than I was earlier, but I can't see where the suppliers would have to eat the costs of their parts that were taken by GM since the parts suppliers should fall under a priority as a secured or an unsecured creditor. This would mean that payments to each individual creditor of the company, from employees to parts suppliers would become a priority based on the CH11 plan that had been submitted to and approved by both the creditors and the federal bankruptcy court. This, as I understand it, means that creditors will be prioritized and paid off, but not until the creditor(s) of higher priority has been fully compensated. This is similar to compensation under Chapter 7, but the money comes from products sold rather than assets sold.

 

As for the debtor in possession financing, this seems to be the very last attempt to keep the debtor in possession of the company after exhausting all of the other facets of CH11. This includes an automatic stay on creditors which means they can't petition to collect, but will have to wait to be prioritized and repaid in the method I described above. It also includes labor negotiations, layoffs, cost cutting to the max, selling off of assets not integral to the restructure... If these efforts aren't enough to keep a good enough cash flow to creditors, the debtor files for financing to fund the restructuring. If financing cant be found, then GMs current creditors or the US Trustee will petition the Federal Bankruptcy court that it is in the best interest of GMs creditors for GM to go in to Chapter 7. I can't imagine that the government would let that happen, but rather be the financier for GMs Chapter 11 if financing can't be found elsewhere.

The first thing that happens with a Ch. 11 filing is a freeze on all creditor's claims. That includes outstanding balances at parts suppliers.

 

During the bankruptcy the trustee has to approve any payments made to any creditor (as well as payroll, etc.) until the final plan is adopted.

 

Given the 'hand to mouth' existence of many of these suppliers, the time delay likely to occur between the Ch. 11 filing and the moment that the bankruptcy trustee allows any payment on an outstanding balance could prove fatal (especially since the suppliers don't have senior standing).

 

---

 

DIP financing is almost always -secured- before a filing, but as you mention, it may not be drawn on immediately.

 

However, in GM's case, they are significantly cash flow negative, and it would be very difficult to sustain operations without tapping the DIP financing almost immediately.

 

------------------------------

 

What you have to understand is this:

 

If GM were to go dark on Jan 1, they would put suppliers in a bind because they would idle a significant portion of the US supplier network and there would still be the matter of the amount they owe their suppliers.

 

If GM stays up and running under Ch. 11 their suppliers are still in a bind because they have little hope of recovering outstanding debts--much of which these suppliers owe to their suppliers, etc.

 

What's more, they are likely to face extreme pricing pressure from GM's DIP financiers, who will want GM's suppliers to provide work at, basically, charity rates.

 

--------------------------------

 

But hey, congrats for reading up on the subject! My hat's off to you for being curious and learning something.

[RangerM]

The first thing that happens with a Ch. 11 filing is a freeze on all creditor's claims. That includes outstanding balances at parts suppliers.

 

--------------------------------

 

But hey, congrats for reading up on the subject! My hat's off to you for being curious and learning something.

 

It actually can get worse than that. Here's what happened to my company.

 

We performed work for a client, but weren't paid for it for about nine months. (keep in mind that usually 2-3 months is the turnaround on invoices, with 6 months an outlier)

 

Within 3 months of us cashing the check, the client went into bankruptcy. Because we were paid we cashed the check within the 90 days prior to the bankruptcy filing, we had to give the money back!

 

Money that was paid for services rendered almost a year prior had to be paid back, because in some States this is the law.

 

So, not only do some suppliers not get their money, some will actually have to give back what they have received no matter how legitimately they got it.

Edited December 12, 2008 by RangerM

[NickF1011]

You do know that some companies are out sourcing the person "on the mic", to Indian, and when you get to the window to pick up your order is NOT the person you spoke to on the mic? So if they mess up, "No you didnt understand me", won't work .

 

While McDonalds tested this idea, I don't think it was ever implemented on any widescale basis, as the costs were found to outweigh the benefits.

[RichardJensen]

While McDonalds tested this idea, I don't think it was ever implemented on any widescale basis, as the costs were found to outweigh the benefits.

Yeah. I remember hearing about that and thinking, "how on EARTH will that save money?" I mean the guy taking your order is getting paid next to nothing and he's doing other work at the same time. What's the average cost of the 'order taking' section of a drive thru transaction? Ten cents? Gee. That's sure worth routing a call halfway around the world......

[jafo]

Yeah. I remember hearing about that and thinking, "how on EARTH will that save money?" I mean the guy taking your order is getting paid next to nothing and he's doing other work at the same time. What's the average cost of the 'order taking' section of a drive thru transaction? Ten cents? Gee. That's sure worth routing a call halfway around the world......

 

 

The question is, how many times do you have to save a dime, before it makes sense. If you save a dime on 1000 transactions day, the savings become not so trivial. Also this is supposed to increase drive-through, so you customers can be handled. And person what was taking orders part time, can now be cooking burgers full time. IF they work the kinds out of this system, I am sure it will get adopted everywhere.

 

 

And these folks were not outsourced to India, I dont even think they were outsourced out of state. I also think that companies have figured out that outsourcing CSRs is bad idea if their english is very poor. A lot of Call centers have come back for that reason.

[Deanh]

You do know that some companies are out sourcing the person "on the mic", to Indian, and when you get to the window to pick up your order is NOT the person you spoke to on the mic? So if they mess up, "No you didnt understand me", won't work .

man...is there ANYTHING TATA doesn't have their hands in?