On Mon, 17 Nov 2008 14:55:48 -0500, Boater
wrote:


"Tom Francis - SWSports" wrote in
message ...
On Mon, 17 Nov 2008 07:54:09 -0500, "Eisboch"
wrote:

"Tom Francis - SWSports" wrote in
message ...
On Mon, 17 Nov 2008 06:59:56 -0500, "Eisboch"
wrote:

Here's an idea for the bailout versus bankruptcy debate as options for
GM
(and possibly Ford and Chrysler)


Do both.

Agree to a government (taxpayer) financed cash infusion as part of the
reorganization plan in Chapter 11 bankruptcy.
On the other hand...

http://www.nytimes.com/2008/11/17/bu...hp&oref=slogin
That's an option and it does away with unions for the most part.

I'd like to see the American auto industry survive, even if it still
includes union contracts and workers.
But, the whole structure including products, management and union
relationships/contracts needs to be rewritten, using a blank sheet. The
bailout plus Chapter 11 concept takes those decisions out of the hands of
existing management and BOD's and puts them in the hands of the bankrupcy
court.
Here's a couple of things I can't get my admittedly slow and aging
brain to accept.

1 - What the auto makers are asking for is more than their current net
worth. The current market cap as of 11 AM today for General Motors is
about $1.9 billion, Ford about 4.3 billion, Chrysler is less than $2
billion - being privately held, it's difficult to tell. For a lousy
$7 billion the government could simply BUY the entire U.S. auto
"industry".

2 - The companies, as they stand now, can't pay their creditors - what
makes anybody think they will repay the US taxpayer? As of 11 AM today
Ford has $160 billion in debt (with negative book value equity) and
GM has about $60 billion in debt (with a negative book value equity
of$56 billion). How is $50 billion more from the taxpayer going to
help?

Now - tell me where I'm wrong. Tell me why the taxpayer should dump
what could reach 120 Billion into two companies that have, combined, a
negative net worth of 220 Billion dollars.

Come on - tell me - I'm waiting to hear. Harry? Anybody?

I didn't think so.

Maybe it has something to do with the 3 million manufacturing and
ancillary jobs that will be lost if the Big Three fail, and of course
the almost total collapse of U.S. manufacturing capability.

Well, for one thing, there wouldn't be a three million job loss -
probably less than half that. Bankruptcy under Chapter 11 is a
reorganization procedure - which means they keep operating while
restructuring and reorganizing.

Secondly, as the NYT pointed out in a very well written article, there
is no reason to believe that Toyota, Nissan, BMW, Volkswagen, yada,
yada, yada wouldn't pick up the slack and actually ADD jobs to the
industry.

Third, how is GM going under going to destroy a manufacturing base
that is already mostly overseas anyway. There aren't any heavy
industrial companies still in business in the US - or at least none
that have any sort of world wide presence. GM's success in the
Eurozone is mostly because they build in Europe and not in the US.

Fourth, restructuring GM would, and this is a fact, make them a
leaner, meaner and much more responsive to market conditions than the
bloated corporate machine they are now.

There's no guarantee that if the Big Three go under or declare
bankruptcy anyone will move in to fill the vacuum.

No - that's true, but it would be an incredibly rich target for any
number of other businesses to pick up and run with. The opportunities
would be tremendous for other companies to pick up.

I know massive unemployment and the resulting tragedies mean nothing to
you Big Time Republicans, but those of us who actually care about
families and family values think otherwise. And so does the incoming
president.

Bull****. What I'm against is bloated manufacturing, cars that won't
sell even in good times. I know you've never been in a down cycle
before because of your skill set and Union contacts, but I have - two
of them. And it hurt everytime I had to let people go, but that's
life. There aren't any quarentees - never have been, never will be.

That kind of thinking is what got us into this mess.