Bill calls for loan guarantee for Big 3

[airpolgas]

I did a search for "bill" and "loan" but did not get any results, so I thought I'd put this here:

http://www.detnews.com/apps/pbcs.dll/artic...UTO01/609200373

"This isn't the dreaded bailout word. This isn't a free pass for them to avoid painful decisions or restructuring," Rogers said Tuesday. "This is a chance for the automakers to compete on a fair playing field with access to the credit markets. This is about supporting real jobs for real Americans through innovation."[/b]

I wonder if Japan did the same thing to Toyota.

[SomervillePrius]

Didn't Clinton already give them a couple of Billions to develop FE cars? With nothing coming out of it? Wasn't that the reason a scared Toyota started their own hyrbid program. I wonder what will happen if we give them 20Billion... Toyota will create a car that generates energy while cleaning the air ;-) (just kidding)

This is clearly bail out money. It might be needed to keep large american companies afloat. I'm not sure where I stand on the issue.

[NuShrike]

Then Japan should give their companies money to leap-frog the idiot US companies whom already gotten and spent ~$2B in dev money back in the '90s with the PNGV program. Did they just trash all that R&D?

Whenever these US companies get to hybrids (except for Ford), I hope Japan is already two steps already with equivalent seed money. That will maintain "parity".

Maybe a letter to Brighton of how redundant and short memoried he is. Too bad I can't opt my tax money out of stupid expenditures such as this.

[naterprius]

Why are we trying to help a German Company? (Daimler?)

Nate

[Godiva]

NO![/b]

And didn't I say this was going to happen?

[john1701a]

<div class='quotetop'>QUOTE(Godiva @ Sep 22 2006, 09:58 PM) [snapback]323722[/snapback]</div>

This is a bailout.[/b]

...as well as undeniable evidence that they failed to react to market changes, allowing history to repeat itself.

[curtissac]

<div class='quotetop'>QUOTE(SomervillePrius @ Sep 22 2006, 03:44 PM) [snapback]323565[/snapback]</div>

Didn't Clinton already give them a couple of Billions to develop FE cars? With nothing coming out of it? Wasn't that the reason a scared Toyota started their own hyrbid program. I wonder what will happen if we give them 20Billion... Toyota will create a car that generates energy while cleaning the air ;-) (just kidding)

This is clearly bail out money. It might be needed to keep large american companies afloat. I'm not sure where I stand on the issue.
[/b]

Loan guarantees are not grants or giveaways. It is the governement essentially cosigning for loans. They did this before in the Chrysler "bailout" a couple or three decades ago. The government didn't pay out anything because Chrylser made good on the loans.

<div class='quotetop'>QUOTE(NuShrike @ Sep 22 2006, 04:18 PM) [snapback]323585[/snapback]</div>

Then Japan should give their companies money to leap-frog the idiot US companies whom already gotten and spent ~$2B in dev money back in the '90s with the PNGV program. Did they just trash all that R&D?

Whenever these US companies get to hybrids (except for Ford), I hope Japan is already two steps already with equivalent seed money. That will maintain "parity".

Maybe a letter to Brighton of how redundant and short memoried he is. Too bad I can't opt my tax money out of stupid expenditures such as this.
[/b]

Repeat after me: The US government is not giving these companies any money in this arrangement. The US government is not giving these companies any money in this arrangement. The US government is not giving these companies any money in this arrangement.

[Godiva]

<div class='quotetop'>QUOTE(Curtis SAC @ Sep 22 2006, 11:11 PM) [snapback]323745[/snapback]</div>

The US government is not giving these companies any money in this arrangement.
[/b]

Until they fail to repay the loans.

They had a chance to compete in a fair market. They decided to pass and continue to build SUVs. Bad decision. Now we're supposed to subsidize them with low interest rates because they were greedy and stupid.

I don't think so.

"If adopted, the bill could dramatically reduce borrowing costs for the Big Three, potentially saving them hundreds of millions of dollars."

I read that as the government giving them money. They're getting a huge loan at a low interest rate because they were STUPID. We should not reward stupidity. They should suffer the consequences of stupid decisions with "marketing Darwinism".

[curtissac]

<div class='quotetop'>QUOTE(Godiva @ Sep 23 2006, 12:13 AM) [snapback]323779[/snapback]</div>

Until they fail to repay the loans.[/b]

Same thing was said about Chrysler but they paid it all back.

They had a chance to compete in a fair market. They decided to pass and continue to build SUVs. Bad decision. Now we're supposed to subsidize them with low interest rates because they were greedy and stupid.[/b]

It is not a subsidy, they government is notgiving them any money. The government is guaranteeing loans that will be made by others.

I don't think so.[/b]

The first three quarters of that sentence may be accurate. :P

"If adopted, the bill could dramatically reduce borrowing costs for the Big Three, potentially saving them hundreds of millions of dollars."

I read that as the government giving them money. They're getting a huge loan at a low interest rate because they were STUPID. We should not reward stupidity. They should suffer the consequences of stupid decisions with "marketing Darwinism".
[/b]

This doesn't amount to the government giving the big three any money. Without the guarantees, the companies would simply pay more money in the form of higher interest to lenders. Show me where the government writes a check.

And why not? These are just loan guarnatees. The US government has provided subsidies to Toyota and Honda for their hybrids. They call it a tax credit. The government gives you $3150 to buy a $25000 Prius - Why isn't the Prius just priced $3150 less?

And figure in this trivial, but never discussed nugget - If you financed your Prius, you are paying interest on that tax credit. If you have a 5 year 5.75%, you will give your lender about $500 of that tax credit. So not only do you facilitate getting a subsidy from the US government to Toyota, you pay to do it.

[SoopahMan]

Here's my problem with this bailout plan.

First - it is a bailout plan. Although the US isn't giving money to the auto manufacturers, they are improving their crap credit ratings to golden status, for nothing. That's still a bailout.

Second - they don't deserve it. The way that these companies got into this position is that their investors wanted absolutely, completely stable profit margins year after year, the coming quarter always being the most important. That short-sighted attitude lead them to avoid legitimate Research and Development and CERTAINLY not take the massive risk of introducing a new technology to the general consumer.

So - it was a long time ago that these car companies let themselves be so beholden to these investors that they chose this short-sighted attitude every quarter over sensible decision-making. They deserve no rewards for that broken attitude.

And above all, the investors that demand a stable quarter, every single quarter, do not deserve to be rewarded for causing this awful scenario. They deserve to see their stocks plummet, and to reconsider their investment strategies. This is a problem that's bigger than the auto industry; it's a problem that will keep holding American companies back until investors start paying for it. If this bailout happens, they learn the wrong lesson: Choose the short-sighted, stable strategy that feels comfortable, and if it screws you, expect the government to bail you out as usual.

Don't do it.