GM Denied $10 Billion for Merger Assistance

[Matt Herring]

Today, the Treasury Dept. told GM it will not help them with $10 Billion to merge with Chrysler. Instead, the Treasury Dept. told GM they would speed up the process to provide government assistance to develop fuel-efficient vehicles (whether or not that means electric is up for debate)!

Of course, with the changing of prez in a day...this could all go directly down the drain...

Story below...

U.S. rejects GM's call for help in a merger - International Herald Tribune

[tjts1]

How exactly is does the gov think it can control how GM will spend its bailout money? The banks are already using their bail out money to buy other banks instead of lending. GM and Chrysler need to go bankrupt. Why are we rewarding failure?

[Matt Herring]

Do you have a source that banks are using the bailout money to buy other banks? I'm not disagreeing with you...just would be surprised if that is printed anywhere.

I do agree that by bailing out failing companies we are rewarding failure...unfortunately, when 10,000 jobs and the American economy is at stake the game changes a little bit.

[trebuchet03]

Originally Posted by Matt Herring

Do you have a source that banks are using the bailout money to buy other banks? I'm not disagreeing with you...just would be surprised if that is printed anywhere.

http://www.nytimes.com/2008/10/25/bu.../25nocera.html

Not sure if that's an opinion article or not - so interpret at will

Originally Posted by Matt Herring

I do agree that by bailing out failing companies we are rewarding failure...unfortunately, when 10,000 jobs and the American economy is at stake the game changes a little bit.

Part of that 10B was to be used as equity for layoffs, plant closing, integrating the two companies and then giving them a bit of liquidity. It costs money to lay someone off - assuming you, as the employee, want your severance pay :/

General Motors and Chrysler on the brink? - MSN Money

I imagine that's on top of the layoffs already scheduled before the 10B deal was shot down. I remember NPR reporting something about an SUV plant in WI that will kill at least 1K jobs when it closes next year - and that was reported a few weeks ago.

So how many of their 398,130 combined employees will be laid off now versus before? iono. No doubt they're hurting.

[Matt Herring]

That's source enough for me...the New York Times seems credible and they do quote an executive speaking of acquisitions. I guess time will tell.

It's a very sticky subject and as I said before when thousands of jobs are at stake it gets even stickier.

[Duffman]

Theres a difference, the public interest is served when a failing bank is bought out. There is no interest served when a car company buys another and the government does get a say when companies that big try to merge with one another.

[Matt Herring]

More doomsday news from GM and Ford...

Love this paragraph in the article..."immediate problems are not of its own making"...I'm sure the credit crunch isn't helping things at GM and Ford but it didn't start the problem either!

"In coming weeks, companies and their lobbyists plan to "dial up" their urgency. Industry plans to underscore its belief that its immediate problems are not of its own making -- that the dire predicament is closely linked to the global credit crunch and survival depends on federal intervention."

http://www.reuters.com/article/rbssC...35669920081105

[azraelswrd]

Wait... what happened to the $20BILLION aid package to the Big Three? They want more?

[Big Dave]

First problem the next President faces.

Chrysler in Chapter Seven
GM & Ford in Chapter Eleven

A complete liquidation of the US auto industry is quite possible. The last "from the ground up" was Billy Durant starting Chevrolet in 1915.

What does he do?

[jamesqf]

There's a difference between bankruptcy and complete liquidation. Maybe a bankruptcy would A) get rid of some of the navel-gazing "Americans still want big cars" management types; and B) get the government to change regulations so US automakers can start first importing the cars they build (and sell!) in Europe, then begin building the same models here.

Alternatively, maybe Aptera would be interested in some factory space at a bargain price :-)