President Bush ordered Rescue Money to be Loaned to GM & Chrysler but No Bailout , especially for current common stock shareholders. A $17.4 billion rescue package for the troubled Detroit auto makers allows them to temporarily avoid bankruptcy and also allows Bush to leave many of the big decisions for the incoming Obama administration. Actions Speak Louder Than Words – Like when none of the G20 Summit Members would shake Bush’s Hand.
The Bridge Loan Term is 3 Years. GM would get $4 billion by Dec 29 and $5.4 billion by Jan 16 2009. Chrysler would get $4 billion by Dec. 29 GM would get another $4 billion by Feb 17 2009 provided Congress releases the TARP funds.
Under the terms of the plan – the government’s debt would have priority over any other creditors. The automakers also must provide warrants for non-voting stock , accept limits on executive pay and give the government access to financial records. United Auto Workers [UAW] members will lose jobs or take pay cuts as part of the deal.
No dividends may be issued until the loans are repaid and the automakers must cut their debt by two-thirds in an Equity Exchange. This will Dilute the Stock perhaps Three to Five Times the number of Outstanding Shares. I’m glad I’m not a shareholder.
The deal is contingent on the companies’ showing that they are financially viable by March 31 2009. If they aren’t – the loans will be called and all funds must be returned. Chapter 11 BK or worse Financial Carnage.
From Chicago Mr Obama also added: ” The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely necessary to save this critical industry and the millions of American jobs that depend on it – while also creating the fuel efficient cars of tomorrow. ”
For Now , this prevents the collapse of one of the country’s most important industries during a time of broad economic weakness.
The UAW United Auto Workers union said it was pleased the government had acted to keep the companies out of bankruptcy But it said the deal added unfair conditions. Who said Life was Fair? The Union could have been Busted entirely with Bankruptcy. Speaking of Unfair – it’s Unfair for US Taxpayers and a Free Economy System that has Turned towards Nationalization & Socialism.
Anyway , Automakers and Auto Parts Suppliers are breathing a sigh of relief , at least for a little while. The loans give GM and Chrysler only enough money to last until early next year. After that, they’re likely to need more money to survive.
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In exchange for a Multi Billion Dollar Bailout under a plan circulating in Congress the government would order a major restructuring of GM Ford & Chrysler – Detroit’s struggling Big Three Auto Companies.
Any government aid might be ” highly conditional ” and only occur after a
- Replacement of current management
- Concessions from both the UAW and automakers
- A Wipeout of Existing Equity and Debt holders
- Nationalization of the Auto Industry to include a ” Car Czar “
A Government-run restructuring would include Massive Downsizing and Labor Givebacks.
Restructure – Reorganize – Get Rid of the Union Contracts bringing them down – A New Business Model and Move Forward
Political Power is Controlled by those who Control the Money Supply.
Filed under Abundance Wealth, American Economy, Big Business, Cars, Dead, Everything is Connected, Financial Crisis, GM Ford chrysler, News by Photos vBlog, Peter Schiff, Ron Paul Revolution, Stocks StockMarket, Survival of the Fittest, Uncategorized, Wake Up People, Wall Street DowJones
Circuit City filed for Bankruptcy Monday with Liquidation Likely. Trading of CC shares on the NYSE were halted as shares fell to 11 cents. Circuit Citys struggles intensified as consumers spend less , credit is tighter and lost market share to rivals Best Buy & Wal-Mart.
The company’s biggest creditors are Hewlett-Packard ($118.8 million) followed by Samsung ($115.9 million) Sony ($60 million) Zenith ($41.2 million) Toshiba ($17.9 million) and others.
General Motors [GM] shares plunged to a 60 Year Low of $3.02 Monday after Deutsche Bank forecast their price would fall to zero , saying that even if there is a Bailout of the Auto Giant , Shareholders would not benefit. Equity shareholders are unlikely to get anything.
GM reported steep quarterly Losses and warned it would run out of cash in the first half of next year and appealed to the US Government for help to save it from Collapse.
DHL announced Monday that it is Cutting 9500 Jobs and Closing its US Service Centers.
In a record bailout of a private company , the Federal Reserve & US Treasury provided another $150 billion in financial aid to former insurance giant AIG. No Banker Left Behind.
The DJIA closed Down 73 points at 8870.
Filed under American Economy, Big Business, Cars, Dead, Financial Crisis, GM Ford chrysler, Investing, Money, Stocks StockMarket, Uncategorized, Wall Street DowJones
General Motors Corp and Ford Motor Co reported far deeper than expected quarterly losses on Friday. GM , the largest US automaker , reported a $4.2 billion quarterly loss while Ford posted a nearly $3 billion quarterly operating loss. General Motors Cash Burn was $6.9 BILLION – Fords $7.7 BILLION. Unless something changes soon – BANKRUPTCY EMINENT
The Price of GM $4.33[GM] Stock is Down 82% and Ford $1.97 [F] is Down 71% on the Year.
Demand for cars is collapsing around the world. Fears of Deep Recessions in the United States and Europe have consumers putting off Big Ticket Purchases and a worldwide Credit Crunch makes it harder for those who want to buy cars to get loans.
The US AutoMakers Are Running Out of Cash. It’s a Disaster. Chapter 11 Bankruptcy is Coming.
Filed under American Economy, Big Business, Cars, Dead, Financial Crisis, GM Ford chrysler, Stocks StockMarket, Uncategorized, Wake Up People, Wall Street DowJones, World Events
The recent Free-Fall Stock Plunge has put Both Ford & GM on DEATH WATCH. I suppose they’ll be handed over on silver platters to JPMorgan too. How about RothschildGM , CentralBankChrysler or RockefellerFord ? The CEO of Chrysler Fears the Collapse of the US auto industry amid the Credit Crisis and Wall Street Meltdown.
World’s Largest Chevrolet dealer files Bankruptcy. Bill Heard Enterprises has filed for Chapter 11 bankruptcy protection. Bill Heard Chevy had grown into the world’s largest Chevrolet dealer with more than $2 billion in sales a year , but now just another casualty of an easy-credit economy that relied on a sub-prime consumer base to keep sales churning. The company simply does not have the resources needed to continue to operate.
As many as 600 new-vehicle retailers in the US may fold or consolidate with other dealers this year. Capital One will stop financing auto dealers inventories in New Jersey and New York this month.
Auto finance companies were as guilty as mortgage lenders in providing loans to subprime borrowers and the nightmare is going to ravage them too. The car business depends on the availability of credit at every level. GM will have to obtain new financing from the government or private debt/equity to remain in business in North America.
Billionaire investor Kirk Kerkorian announced he has sold 7.3 million shares in Ford for an average price of 2.43 dollars per share and plans to divest his whole stake – 133,500,000 shares 6 percent of ALL Outstanding Ford Shares. Wouldn’t that mean Ford shares are going to plummet Below $2 a share?
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GM proudly debuted to the public the Chevy Volt Plug-In Electric Vehicle – a Car that is NOT powered by a gasoline-fueled internal combustion engine, nor is it a hybrid. The Volt is electric, powered by a 400 pound lithium ion battery nestled beneath the floorboard, an energy source that is both silent, and entirely emission-free. GM, and it’s commitment to the future, is hoping to roll out the Volt with the 2011 Year Model.
The Volt will have only one electric motor, powered by its new battery, and will go up to 40 miles without using a drop of gas – effectively eliminating gasoline from the majority of American lives. This will reduce the current $700 BILLION USD spent on Importing Oil to America, Help the Environment and Help GM and US Business and Economy recover from the Bush-Cheney Nightmare. A Win-Win.
The Volt should cost less than 2 cents per mile to drive on electricity, compared to 13 cents a mile on gasoline at a price of $3.90 a gallon. The retail price may be in the USD $40,000 range.
GM is expecting to produce at least 10,000 Volts in the car’s first year and higher numbers after that.