Second Push To Stop Auto Bailout Madness
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This is a second push to prevent Congress from throwing more money down a bottomless hole. In case you missed the first push, please read Stop The Auto Bailout Campaign.
Please call and fax now. A vote may be coming up soon!
We are reacting to the Auto Makers begging Congress for a bailout on Tuesday. Please consider Auto Makers Warn of Collapse, Press for Urgent Aid.
Two of Detroit's Big Three auto makers are on the verge of collapse, industry executives told a Senate panel Tuesday, urging emergency assistance from the government to avert what they said would be an economic catastrophe.Stop The Auto Bailout
General Motors Corp. said it would seek $10 billion to $12 billion in loans if Congress makes $25 billion available to help the three Detroit auto makers.
Ford Motor Co. said it would ask for $7 billion to $8 billion, and Chrysler said it would seek about $7 billion.
The three companies, testifying before the Senate committee, said they would use the money to pay employees and cover current operating costs as well as for development of new products.
GM Chief Executive Rick Wagoner said GM has had to put some vehicles in development "on the back burner" because of its current financial troubles.
Chrysler, which has virtually halted new-vehicle development to save cash, would use the funds for a "major cash infusion in product development," Chief Executive Robert Nardelli said.
The dismal outlook of the domestic automobile industry became gloomier as Mr. Nardelli disclosed that his company was in danger of running out of money without financial help. Mr. Nardelli told the committee the auto maker burned about $3 billion in cash in the third quarter and ended the quarter with about $6.1 billion in cash.
GM burned $6.9 billion in the third quarter, and Ford $7.7 billion.
Until Tuesday, the focus in Washington has largely been on the troubles of GM, which is facing increasing speculation that it will be forced to seek bankruptcy protection as early as next year.
"Without immediate bridge financing support, Chrysler's liquidity could fall below the level necessary to sustain operations in the ordinary course," Mr. Nardelli said in prepared testimony before the Senate Banking Committee.
Joining the Big Three CEOs, Ron Gettelfinger, president of the United Auto Workers union, said the emergency loans were important for the survival of union jobs. He said the UAW recognized that "in order for these companies to be competitive, we had to make tough calls" in labor concessions.
"We've moved aggressively in recent years to position GM for long-term success, and we were well on the road to turning our North American business around" before the economic crisis, Mr. Wagoner said.
We need to Call, write, and Fax Congress and tell them we are tired of GM's fear mongering tactics.
Congressional Phone And Fax Numbers
Click Here For Congressional Phone And Fax Numbers
Click Here For MetroFax Compatible Fax List For All Congress
Message For Congress
Fax Title: Stop The Madness - No Auto Bailout
Dear senator/congressional repMike "Mish" Shedlock
GM CEO Wagoner and other auto executives are now pleading for more cash.
Wagoner stated "We've moved aggressively in recent years to position GM for long-term success, and we were well on the road to turning our North American business around before the economic crisis."
The reality is that Wagoner is in fantasy land.
- GM continued to build massive numbers of SUVs and trucks long after consumers turned their backs on them.
- GM continued to pay a dividend long after it was prudent to do so.
- GM had a golden opportunity to sell all of GMAC and failed to do so.
- GM got involved in subprime mortgages with Ditech at the worst possible time.
- On April 2, 2008 GM sales analyst Mike DiGiovanni, speaking to reporters and analysts on a conference call, said he saw "early signs" that the U.S. market was steadying. That shows you just how far in fantasy land GM is.
- GM is a company that makes mistake after mistake after mistake.
GM cannot build cars that people want at a price people can afford. That is the bottom line.
From GM's latest 10-Q
Short-term borrowings and current portion of long-term debt.
September 2008: $7.21 Billion
September 2007: $5.26 Billion
In one year's time, short term borrowing and interest on long term debt has gone up by $2 billion per quarter, $8 billion per year!
If Congress loans GM money, interest on its debt will rise yet again.
GM has $36 billion in long term debt and has a negative net worth of $60 billion.
Is $25 Billion The Beginning Or The End?
One look at the above numbers answers the question "Is a $25 billion bailout the end, or just the beginning?"
I am tired of my hard earned dollars being used to bailout industries that deserve to fail.
Congress passed the $700 billion bailout on Friday October 3.
Since $700 Billion Bailout PassedThere was not a single positive result out of the money that was spent.
- The S&P collapsed from 1114 on October 3rd to 848 on November 17th. This is a drop of 24%.
- Paulson did not use the funds as requested.
- Bernanke promised to disclose how taxpayer money would be used but has refused to do so.
- Bloomberg has filed a lawsuit against the Fed under the Freedom of Information Act to find out just how Paulson has used the money.
- Not a single job was created with the money.
- Fannie Mae has announced it may need another $100 billion.
- Freddie Mac proclaimed it had negative net worth.
- AIG received another $37 billion.
- Cities and Auto companies now want a share of the $700 Billion.
The Paulson plan was poorly thought out and poorly executed which is exactly what one would expect when Congress rushes to pass bills without considering alternatives.
Stop The Madness!
Consumers are tapped out. They are not going to buy autos no matter how much money Congress throws at the sector.
World Will Not End If GM Goes Bankrupt
The very best thing that can happen to GM and Ford is they go bankrupt. The sooner the better. Congress will then see that the world will not end. Both companies will reorganize. Both companies will keep making cars.
The airline industry did not stop flying when it went bankrupt and the auto companies will not stop producing cars if they go bankrupt. In fact, bankruptcies will eliminate the debt on the books decrease interest payments and make the companies more competitive, if and when they ever get around to producing autos that consumers want instead of what the manufactures want to produce.
Coming out of bankruptcy debt levels and interest on debt will be lower. GM and Ford will be more cost competitive.
Not a single job will be saved by propping up GM. In fact, jobs will be lost and money will be wasted if money is thrown at the problem. GM and Ford are suffering under a burden of debt and interest on debt with no conceivable way of paying that debt back.
Bankruptcy Is The Best Option
Bankruptcy is the best option for the Auto industry. If the union disagrees, let it pledge its pension money as collateral, and let Wagoner pledge his personal wealth as collateral for a loan.
Remember ...
In one year's time, short term borrowing and interest on long term debt has gone up by $2 billion per quarter, $8 billion per year!
In addition, GM's burn rate is $2 billion per month. GM loses money on every car and truck it makes.
There is no hope for GM other than bankruptcy and a restructuring of that debt!
I urge you to vote against any bailout for the Auto companies. To do so would be a further waste of my hard earned money.
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