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Bailout update:

GM, Chrysler To Receive $17.4B In Loans
Funds To Come From $700B Rescue Package

POSTED: 6:38 am MST December 19, 2008
UPDATED: 7:19 am MST December 19, 2008


The Bush administration came to the rescue of the troubled U.S. auto industry Friday, offering $17.4 billion in loans in exchange for concessions from carmakers and their workers.

President George W. Bush made the announcement on the auto bailout during a news conference Friday morning.

"Allowing the auto companies to collapse is not a responsible course of action," Bush said. He said that a bankruptcy was unlikely to work for the auto industry at this time and would deal "an unacceptably painful blow to hardworking Americans" across the economy.

Prior to the news conference, a senior administration official said $13.4 billion in short-term financing will be drawn from the $700 billion Wall Street rescue program, with another $4 billion to be added later.

The firms must use these funds to become financially viable, or lose the taxpayer money. The official said if the firms have not attained viability by March 31, 2009, the loan will be called and all funds returned to the Treasury.

The Detroit Three have nearly 100,000 employees at plants around Ohio.

Copyright 2008 by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
http://www.kpho.com/automotive/18315980/detail.html?treets=pho&tml=pho_natlbreak&ts=T&tmi=pho_natlbreak_-1_08150112192008
 

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Once the celebration here (in Detroit, SE Michigan and nearby Midwestern states) subsides, the harsh reality will sink in that GM, Ford and Chrysler will end up mere shadows of their former selves once they exit this Federally-mandated restructuring. Stakeholder "haircut" symbolism aside, there's going to be a lot less employment in automotive a year from now.

Nevermind that brands and dealers are going to get culled, suppliers combined or abandoned for healthier competitors (that can manage additional givebacks), or C-level execs flying (premium, you really don't believe they're going coach, do you?) commercial - it's all not sunshine and roses here in MI for "joe-(UAW)-lunchpail" or his white-collar engineer neighbor. Michigan's current unemployment rate, now at 9.6%, will easily run up into the double-digits by more than a hair, believe me.

Expect sudden and immediate "efficiencies" to be executed come January 5th on the salaried ranks, or at least before February. Dependent upon what little leverage the Union has left, blue-collar cuts will come before the end of March... it's just a matter of when, not if. Plant and facility closures will be announced in a month or so, and most will be permanent to reflect less brands/models/market share. It ain't going to be pretty folks... we can just sip our Holiday eggnog in denial a bit longer, keeping warm by the fire before it all gets snuffed out in Q1.

Oh, well - it was a good ride while it lasted. I think I'll go XK shopping next month (or February at the latest). I think the local Jeep dealer will be overjoyed to see me (or anyone, at that matter) considering the tsunami of industry pink slips that are coming, nevermind the flood of un-and-underemployment we are in the midst of right now. I don't think they're going to see a whole bunch of customers for a long while. I just hope that some loans are available, and those that are offered are closer to the benchmark rate (rather than simple usury driven by lender fear of default).

Time for the big Banks to start trickling down all that Fed money to us little guys, so the economy can actually recover. Would be in everyone's interest, wouldn't it?
 
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