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Show ALL Forums  > Off Topic  > GM threatens to pull the bankruptcy trigger if it doesn't get more mo      Home login  
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 SteelCity1981
Joined: 8/16/2005
Msg: 1
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.Page 1 of 6    (1, 2, 3, 4, 5, 6)

General Motors is teetering on the brink of financial chaos. GM says that its cash on hand is being depleted to levels where it will no longer be able to operate unless it gets $2B USD in additional loans at the end of March.

GM is pleading with the government to give it an expanded bailout, while President Obama and his staff are considering cutting GM off and letting it go bankrupt. GM has warned in the past that it cannot survive bankruptcy, and now it is "warning" the government yet again that it will go bankrupt without intervention and of the consequences that would have on the economy.

Its auditors are growing increasingly antsy as its losses pile up. They have issued a statement saying they have "substantial doubt" that GM will be able to continue to pay its debts. Initially they demanded GM repay $6B USD of credit, based on GM's announcement that it could go bankrupt and the company's growing financial problems. However, GM has brokered a deal with them to stay their hand while it seeks $30B USD in federal aid.

After losing $30.9B USD in 2008, GM's business units are in freefall. Sales have plunged by millions of units and the company is burning through billions in cash quarterly. With such a bleak outlook, it correctly warned that auditors Deloitte & Touche would question its ability to make payments, which according to its recent statements, they did.

The information was revealed in reports to U.S. Securities Regulators and a 25-page plea to the government. The plea explains GM's perspective that it is facing insurmountable hardship from tight credit, troubled suppliers, and sinking demand. GM hopes that the government will come to its aid, bailing it out once again.

GM is slashing brands left and right, but can't seem to stop its losses. Even if GM manages to muster enough cash to sustain its operations, it may still go bankrupt at the start of June, when one of its $1B USD convertible debentures matures. If it cannot find additional funds to make this payment, it will be forced into bankruptcy.

GM says that a bankruptcy would result in a liquidation of its assets -- in other words there would be no reorganization and no more GM. It insists that restructuring would be hopeless and consumers would be even less likely to buy from it and that it lacks enough assets to finance a full reorganization.

In order to even have its request for assistance considered, President Obama and his auto task force have demanded that GM convince the United Auto Workers and bondholders to reduce its debt load in order to show that it can be financially viable. GM writes in the annual Securities Regulators report, "Our future is dependent on our ability to execute our viability plan. If we fail to do so for any reason, we would not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. bankruptcy code."

GM's future is now largely in the hands of automotive debt owners. Its creditors may begin to slash the credit lines of its suppliers, which could further damage GM's sales and production. Further, the creditors are opposed to the government plan, which asks them to convert $27B USD of the company's debt -- approximately a third of it -- to equity. They say they want government guarantees on their repayment of the remaining debt or they will make no deal. Government officials thus far have refused to make this guarantee as they don't want to be forced to pay these billions out of taxpayers' pockets if GM folds.

Globally GM's sales are down 24 percent,from a peak in January 2008 and in the U.S. they are down over 40 percent from their peak in 2007. GM has lost $82B USD since 2005. It says it may lose $1B USD for its trouble Saab unit, alone. GM recently started reporting Saab's revenue separately and hopes to sell the unit, if someone wants to buy it.

http://www.dailytech.com/article.aspx?newsid=14493


Then so be it. This company should have gone bankrupt and done a total restructure in the first place, instead of continuing to waste tax payer’s money on something that was going to be inevitable.
 Sortin
Joined: 2/17/2008
Msg: 2
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 10:02:51 AM
Agreed. GM is digging a deeper hole for themselves, and they deserve what is coming to them. By threatening to declare bankruptcy, how much confidence do you have in their warranty, as compared to...Ford? Nissan? Honda? Hyundai?

If GM isn't making cars, someone else will.
 Spitfire1956
Joined: 3/9/2008
Msg: 3
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 10:30:52 AM
Let them file..I'm tired of bailing others out. But what makes me angry is even if they do file, they can go right back into something else with no problem..If the consumer files bankruptcy because of them we get screwed for 10 yrs or more. I think if businesses file bankruptcy they should suffer the same recourse as the consumer does. Maybe the next time they do business they will get a little smarter hiring a CEO that won't cost them billions every year, pay their employees a little bit better wage, and don't rape the consumer with their high prices just so the CEO can take his million dollar vacations. (Not that I'm ticked at everything that happening in the world)
 sequoyah61
Joined: 12/8/2008
Msg: 4
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 10:31:33 AM

GMthreatens to pull the bankruptcy trigger if it doesn't get more money.

Me, too!


The information was revealed in reports to U.S. Securities Regulators and a 25-page plea to the government.

Maybe we should write our own 25-page plea!!


Where were the "big three" when they were gouging the Hell outta consumers and making rank profits year over year?

And why weren't they using that money to develop eco-friendly vehicles that ran on alternate fuels, be it electric power, biodiesel fuels, solar energy, etc. They should have started down that path in the 1970s.


Or has the Government stepped up and said "We're going to give every citizen $25,000 to help them ease some credit pains they may have"?

I, for one, could sure use it!!!


Let them die. It's the only way we're gonna learn anything.

AMEN!


Sequoyah
 SAguy_06
Joined: 12/29/2005
Msg: 5
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 10:34:45 AM
Im not an econimic genius, but I think I enough to know that GM is not an entity onto itself. Bankruptcy is an option, restructuring is also an option; But I think what fail to realize is that restructuring is not an overnight endevour. If GM closes down production and lays-off workers...That will have a ripple effect through out the whole economy. Your talking about companies and employees that sevice GM. Companies that make OEM parts, Supplies and Dealers that sell the cars all being effected.

With the GM workers out of work All the companies that provided a service to those workers see a cut back in money being spent. Just look at your own paycheck...Look at all the places you spend some of your paycheck on a weekely basis...now remove your money from the equation and multiply that by 200 other workers in your community, and soon you see economic slow down...like we're seeing now. If we just keep adding more and more to the unemployment rolls, then you will see an real Socialist society were the very rich are gonna be paying for alot of pissed-off people.

What ever happens, wether GM restructures or closes it doors, or comes back stronger than ever...its gonna take time...there are no magic wands. This is a real life situation, the likes we have never seen before, I just hope we all come together to make an outcome that doesnt Fuc kthis country up.
 maxxoccupancy
Joined: 2/5/2007
Msg: 6
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 10:54:10 AM
Under capitalism, badly run, mismanaged companies eventually have to go out of business, and no one shows more contempt for the American consumer that Detroit management, especially GM. Americans have been asking them for decades to produce the same high quality cars that Honda, Toyota, BMW, and Nissan are producing right here in America. GM's management has repeatedly refused to allow their engineers to make good cars, and they've spent millions in research to figure out how to make powertrains that start to fail after just 80,000 miles.

The Clinton administration gave them $1 billion to create an 80 mpg car that they never built. The Bush administration gave them $1.8 billion to produce a hydrogen car that they never built. They just kept the money. The feds have floated over $2 trillion in bonds to pay for all of these bailouts. Investors have had to sell $2 trillion in stocks and other investments in order to buy those bonds, pulling money out of the private sector. Now the Asians (especially China and Japan) are angry that they are having to continuously prop up our economy by holding our dollars and buying US treasuries.

You cannot spend your way out of a recession.
 Sortin
Joined: 2/17/2008
Msg: 7
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 11:20:39 AM
SAGuy...that's the only argument against cutting them off that I've heard. The supply companies will suffer.

But how?

The cars GM is making, people aren't buying, correct? So those companies are getting by based on supplying for a demand that really, doesn't exist.
The supply companies will have to find other companies to supply. If they can't, then there is not a demand for their business, and they should cease to exist. That's capitalism.
 SAguy_06
Joined: 12/29/2005
Msg: 8
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 11:54:36 AM
Sortin...
My point is that those that call for GM to restucture, close, or fail...seem to me- to not take into accout the ripple effect this has through out our economy. Suppliers are just one section of companies that sevice GM or their Employees. Think of all the parts produced for GM, all thoses satalite companies need raw materials to make the parts...and how many companies branches off from there. These satalite companies may not close down, but may lay-off workers...workers that have a job now, that spend part of there paychecks to stores and services in their community. Look at your own paycheck and all the places you spend part of the paycheck on a weekly basis.

Capitaism is not a theroy written in stone...The type of Capitalism America practiced in the 1730 was different from the type practiced in the 1830's or 1930's. Let hope we get to 2030 to see the type of Capitalism being practiced then.
 daynadaze
Joined: 2/11/2008
Msg: 9
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 12:03:20 PM
frankster, how many other countries are parts for American-made autos produced? I worked in the auto mechanism field and most car parts come from all over the world, and I've make parts for American auto makers as well as for others like Honda...it's diversity, they will go where the profits are highest and the labor is cheapest. Your auto may be assembled in the USA but it probably has parts made elsewhere. This has been going on for years, it's nothing new.
 Sortin
Joined: 2/17/2008
Msg: 10
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 12:26:47 PM
I have assumed already that because of their actions, GM WILL FAIL. Now, with that assumption in mind, what can be done to help? Help the supply companies. Give THEM loans to assist them with re-tooling for other production. Don't keep handing money to a failing company. When GM stops producing cars, there will be a SHIFT in demand. The demand won't disappear. Other car companies will make the cars to fill the demand. Give assistance to the suppliers to catch on with supplying the other companies.

There are other ways to avoid the lost jobs. The easiest short-term solution is to keep handing GM money, so they can keep making cars that people don't want. The long-term solution is to let GM go under. Sell off the assets to the other car companies. Let the GM employees live off of their retirement.
 Vancer
Joined: 10/29/2006
Msg: 11
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 12:35:14 PM
I'm trying to figure out what mental illness the state of the economy parallels right now.
It would be a disorder that has become so dependent on reinforcing a foundation of illusion support, that it is starting to panic over the possibility of losing everything it never was really entitled to.
It is necessary to lose attachment to any standard that is forcing our direction further towards rabbit hole digging. Acceptance is only painful in the short term. We'll have to be resilient soon.
 SAguy_06
Joined: 12/29/2005
Msg: 12
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 12:45:36 PM

Let the GM employees live off of their retirement.


If GM goes under, and closes down...Who's gonna pay out retirement?...
Retirees and stock holders have to get inline with all the other creditors seeking payment from GM for non payment for Services and equipment sold to GM.
 Sortin
Joined: 2/17/2008
Msg: 13
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 1:06:48 PM
I think everyone that has any form of retirement needs to remind themselves that it is dependent on the success of the company they work for. A warranty is only good as long as there is a company to honor that warranty. When you buy stock in a company, there is the chance that the value will go down, or be eliminated altogether. It's called risk. Some accept it, others whine to the government when things don't go their way.

GM is either in the final stages before it goes under, or they're exaggerating how badly they need bailed out. Either way, they should not get any more money. It's time for the genius executives that get paid so handsomely to earn their pay by figuring out how to survive.

I don't think threatening bankruptcy is going to make investors any more confident in them. If that's their strategy, it's time to start thinking...

What Would Sparta Do?
 Wildcard74
Joined: 12/1/2005
Msg: 14
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 1:35:18 PM
I like this thread..... So much has been said already that I couldn't agree more with.

GM needs more money? Who didn't see this coming? I sure did...... Give them more money and it is back in the private jets for their CEOs and corporate elites and back to building gas guzzling trucks and SUVs.

And WTF is up with Saturn? This division is the division that should never have been. This supposed import fighter is fighting imports with "other imports" (Opel anyone?).

We've been keeping GM alive long enough and it's time to pull the plug.
 SAguy_06
Joined: 12/29/2005
Msg: 15
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 1:53:32 PM
What if GM was asking for a loan...Under the conditions that the restructure and accept sactions to re-tool and start selling smaller family cars with higher CAFE(sp) standards...more mpg. RND for more Hybrid type cars...Electric or where ever technology leads us.

What if GM accepted sactions to restructure employee pay, benifits and retirement. What if GM accepted that the top Executives could not recieve 20x pay above their median hourly worker...Gone are the 100 million dollar contract buy-outs...Gone are the golden parachute-benifits till death packages.

What if GM pays back there loans with intrest...Would you be for such a bail-out?
..............................
PS----- a median pay for a GM worker w/benifits and retirement is about 40-70 dollars an hour; so under restructuring you could see a hourly wage w/ benfits at about 45 an hour...20x 45= 900K a year...he pays for his own retirement and medical with no stock options...can you live with that?
 Sortin
Joined: 2/17/2008
Msg: 16
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/7/2009 2:27:52 PM
There wouldn't be inflated prices, they'd be deflated prices.
Who wants to buy a brand new car with no viable warranty, and no service department to take it to for repairs? Nobody.

I don't care where the money goes. Why do people always think that matters to the consumer? I don't buy a car to drive the economy, or to help the car company, or put the car dealer's kids through school. I buy a car, to get a car. ME. The consumer. That's my ONLY concern.

That is a free market. I can buy from any company. It's up to them to entice me by a combination of price, quality, and service. GM has failed to meet those expectations.
 SAguy_06
Joined: 12/29/2005
Msg: 17
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/8/2009 3:06:42 PM

GM being closed would have a huge impact on who I work for, but that would free up machines for new business from new areas that would open.


Wolf, I have a feeing thosenew businessare going to be far off int he future. In this economy, I cant see business ready to move in give your company business right off the bat...After layoffs, retooling, and contract negotiations...your company may reopen after 12 to 16 months if they make it.

Good luck my friend...We are all in a TEST TUBE and the the experiment is over yet...
 SteelCity1981
Joined: 8/16/2005
Msg: 18
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/8/2009 7:59:10 PM
GM really has no one to blame but themselves, oh wait never mind. They are blaming us for not giving them more money.

GM had how many years to get their act in gear and what have they done since then? Nothing. They could have sold off or killed their dead weight brands like Ford did in recent years, but for some reason maybe it was ego or pride, I’m sure it was prob a little of both they held onto those dead weight brands that were doing nothing for them, but costing them a lot of money and they want us to feel sympathy and then try to make us feel guilty that many people could be laid off if we don’t' give them more money so that they can continue to do what they have been doing for years? HA. I'll be sure to mail GM my sympathy card asap........
 wisguyingb
Joined: 1/5/2008
Msg: 19
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/9/2009 5:16:39 AM
Let GM fail!! That just frees up more room and opportunity for Ford.

On a light note, I say we (The USA) pull out of NAFTA and Bring the jobs back to the USA and out of Canada and Mexico.

There's plenty of people on here that are fast to mock Americans and the American Economy. Then tought how great they have it in their country. If I remember right, plenty of American jobs moved up and down there and helped build those economies. They just don't realize they are "cheaper" labor then us in the USA and that's why the jobs went there. Plus they have social Health care, again another benefit for the company.(Cheap labor and no health care costs! Awesome)

Sure is funny when I see how Paranoid Canadians get when talk of "Pulling out of NAFTA" comes out.

I wonder if GM cars or parts are made in Canada or Mexico? Perhaps that's why non-Amercian's want American Taxpayers to bail out GM. To save their butts and paychecks......

 Samurai41
Joined: 4/29/2008
Msg: 20
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/9/2009 10:41:56 AM
let them go bankrupt, then they can get out from under the UAW

really, the car makers are doing the right thing,t he REASON they are losing money is the redicu-stupid concessions they have given the unions over the years.

get rid of the unions and detroit will turn a profit very, very fast
 Samurai41
Joined: 4/29/2008
Msg: 21
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/9/2009 11:39:53 AM
well, the car makers wouldnt be broke at least.

the put out the financials, most of the money the car makers are losing are directly because of union contracts, lifetime health benefits, 100% retirements, etc

it's the facts, unions have outlived thier purpose, for the most part, and the bigger the union, the worse the abuse becomes.

and the UAW is full of abuse.
 d0rene
Joined: 6/7/2008
Msg: 22
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/9/2009 3:32:11 PM

I think the real story is that GM doesn't really care if it keeps making cars or not. Their huge global business in financial services is what they seem to focus on. Carmaking has become little more than a hobby with hot buttons to them.

You think they are still holding their hand out for the stimulus money for the bank? HAA!! At least you can't say they don't change tactics when the situation calls for it. I have always been Chevrolet/GM, I like their products. But I am really disgusted that the Ford CEO has agreed to work for a dollar a year to try to pull through this thing. I haven't heard GM is willing to make concessions like that. I may have to switch.


POSSIBLE ANSWER: Maybe because it was the other way around. Maybe it was the auto industry that convinced the IRS to implement that tax policy because they knew they screwed up in their long-range planning. Why else would the IRS encourage vehicles they knew would over-consume an increasingly expensive commodity? They didn't give the same breaks for business purchases of passenger vehicles, or energy-efficient vehicles - just Big-Assed Vehicles. I bet the car execs had a great laugh over that one. Yeah, they finally were able to move their stale inventory, yet they still didn't tool down in size.

I think it could be the government was excited about the idea of all the tax dollars that would be made off of all the gas these vehicles would need. Look at how much tax is on one gallon of gas that you buy. Why would the government be interested in manufacturing vehicles that would deprive them of that tax????


Do I want to see something like that, no not on your life. However I have been on this side long enough to know Production lines close. It happens all the time.

Magna went into a company that I worked for and ultimately shut it down. There wasn't a bail out with us. They sended up moving it to Mexica where (snicker) I think they are having a lot of problems down there too. A lot of countries do not believe in a 40 hour work week or putting your job above everything like the Americans have. But then they also are not as spoiled as we are.... they don't expect everything that we do.


So it would be a tough loss yes, but not one that would cripple auto makers/ and their suppliers. It would make the ones left become a little more hungry for any business that is available.

Don't forget that GM has hung onto its service industry. Not only the parts, but also the access to the computer diagnostics. They still try to retain the car that they sell to you by holding the key to fixing it. I still think I should be able to buy a vehicle that I own and can have access to how to fix it - not have someone hold their hand up and say I have to pay them to do it.
 SteelCity1981
Joined: 8/16/2005
Msg: 23
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/9/2009 5:18:59 PM

But I am really disgusted that the Ford CEO has agreed to work for a dollar a year to try to pull through this thing.


Why are you disgusted with that?
 CerebralRomantic
Joined: 3/2/2009
Msg: 24
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GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/9/2009 6:13:02 PM
Booyah, booyah, booyah. Ding dong the overproducing, underselling, R&D resistant witch is dead.

Now more progressive companies like Toyota with hybrid technologies, and Tesla Motorcorp, with it's 100% electric car that drives faster and more reliably than any sports car manufactured by GM or the big 3, can have a little bit more market room and a TON more federal funding.

It's high time we started funding what works, not just what happens to be there.
 SAguy_06
Joined: 12/29/2005
Msg: 25
GM threatens to pull the bankruptcy trigger if it doesn't get more money.
Posted: 3/9/2009 6:26:36 PM

the put out the financials, most of the money the car makers are losing are directly because of union contracts, lifetime health benefits, 100% retirements, etc


Remember, if all the retirees lose benifits and medical...Someone is going to have to pick up the slack...Why cant we work to figure out how to fix problems.

What if everybody gives up something to keep things working...If we just shoot ourselves in the foot...that solves nothing.
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