Topic: GM...FORD... nearly out of mon mon.

[gpw11]

The UAW rejected the terms as laid out by the Senate. But as I understand it, the president of the UAW did so knowing that he had support from the White House. And the White House today came out and said that they are thinking of using some of the $700 billion to rescue the two companies.

Whaaat the fuck?!

* Union-busting tool
* Pension-stealing tool
* Encouraged by creditors, particularly banks
* Needs to be reformed if justice is at all desirable

I don't disagree with that really, but there does need to be some measure for you to jettison expensive union labour before the company slips into chapter 7 and the whole ship sinks. I suppose it could always be done by union vote.  Pensions, on the other hand, just should not be touched ever.

[Ghandi]

This is a tough spot for the UAW because they are stubborn as fuck but it's apparent that they are going to have to give up more before it's all said and done. I mean, the bill from Congress was only for $17 billion (or $14? I forget) and these companies are $50 billion in debt. This is just the tip of the iceberg.

On the one hand I feel bad for the workers, but in reality the failure of these companies is just part of the economic system that we live in. Companies fail. People get laid off. Bailing them out is literally giving them money for failure. Explain how that equates to capitalism, and I'll be all for this bullshit.

[gpw11]

The debt isn't really all that large of an issue, it's more of the cash forecasts (although too much debt CAN have a major impact on cash forecasts).  You can operate a profitable company with a large amount of debt for years as long as you have a somewhat reasonable debt-to-equity ratio , but  one negative cash forecast can mean you're totally fucked.  That said, I haven't really looked at the numbers in depth so I don't know what the specifics of the situation is for any of them. I glanced by something the other day claiming that both GM (actually maybe it was Chrysler) and Ford are fine as far as cashflow and just kind of jumping on board with the bailout. I don't know if I believe it because at one point or another I've read that each one of those companies is more fucked than the next.

As for the UAW, that's kind of a sinking ship either way you look at it. 

[Ghandi]

Well I don't know a whole lot about debt management, to be honest. All I know is that apparently GM and Chrysler have said that they will have to seek chapter 7 without a bailout, and I assume this is because of the debt. But I should note that Ford has decided to opt-out of any bailout. They think they can weather the storm.

[gpw11]

Interesting.  I wonder if that's a bluff or if they really mean it.  I personally find it a bit hard to get a firm grasp of the overall situation because it seems that different sources all seem to have completely different theories on who's fucked or not and why. 

I think what it comes down to is just poor management, lower marketshare in the most profitable categories, and retarded high prices for factors of production.  To be honest, I didn't think the main terms for the bailout were all that unreasonable (or at least the ones that I saw). 1$/year CEO, 20% paycut to management, price match Toyota and Honda domestic workers wages (I thought these actually matched or even surpassed those of the big three in many cases a few years ago, but I guess I was wrong on that), and to  make UAW take over healthcare (this is probably the biggest issue if it's even correct.  I've seen two different stats - one that this was the terms of the buyout, the other that this was the deal Ford cut in 2007.  I haven't done the legwork).  What else do they want really?  Either way you look at it the UAW is going to take a hit and it's not really beneficial to anyone to have a whole shitload of people laid off because the most stubborn private sector union in the world was typically inflexible.   I suspect that chapter 7 won't happen and it will just purely be a chapter 11 issue.  GM still has quite a bit of room to work with and is in dire need of restructuring (12 brands?).

What I haven't been able to find was the financing terms of the bailout.  Is it purely a flat loan, or do WTO regulations dictate interest actually has to be involved?

[Ghandi]

Well it's not a flat loan and the terms are obviously being negotiated. I don't know how the WTO is involved in it, though. There's no telling right now how the bailout will work, since the funds are being diverted from the $700 billion - not the Senate. And since much of that $700 billion has already been spent with little oversight, I'm a little wary of the auto industry being bailed out through the White House.   

I should note that the $1/year CEO salary was voluntary by the CEO's themselves, and was not a term of the bailout.

[gpw11]

The WTO gets involved if enough members raise question as to whether or not it's an unfair advantage/illegal state aid.

[Ghandi]

I'm going to act like I didn't take a course with heavy emphasis on the WTO last year. And we totally didn't have a mock WTO.

So my ignorance is well set.

[gpw11]

Just out of curiosity, how gay was your fake WTO?  Wait a second...did you even go?

[Ghandi]

It was highly amusing.

The class itself was actually one of my favorite in college thus far, minus the mock WTO. It was highly informative.

But let me explain the mock WTO: We were assigned to groups, each representing a country. And we had to come to a consensus on trade and what have you. Well, at one spectrum you had the little blonde girls who didn't know a damn thing and were just saying stuff to make the teacher happy. Then you had the kids who took shit seriously and were trying to impress the teacher, who were the most amusing. Then you had the kids who weren't there the past few weeks and didn't know what the hell was going on. Then you had me and a few others who were making deals purely to fuck over the countries that we were supposed to represent.

All in all, it was quite representative of the real world, I'm afraid.

[gpw11]

 Then you had the kids who took shit seriously and were trying to impress the teacher, who were the most amusing. Then you had the kids who weren't there the past few weeks and didn't know what the hell was going on. Then you had me and a few others who were making deals purely to fuck over the countries that we were supposed to represent.

All in all, it was quite representative of the real world, I'm afraid.

Ahaha.  Sounds exactly like a model UN I had to do in first year.  I was China with two other guys who I always did these projects with in this class. For whatever reason, we were all really 'hungover' (at the time I didn't know what a real hang over was) for the the first presentation we did and we kind of just  kept up with that.  Our model UN consisted entirely of us passing little notes to people trying to get major countries to let us bomb the shit out of their allies.  We convinced most all the important NATO and security council members that North Korea for Taiwan was a wicked deal through stickmen diagrams and fake Chinese letters.   

This was not part of the project at all, but it went much better than the project on the implications of German reunification on the standard of living...which I completely made up on the spot and got away with until the very end.

[Ghandi]

Haha, the stickmen diagrams I would be quite impressed with. My threats mainly dealt with veiled threats about destroying a particular banana crop.

In reality, I'm pretty sure that our actions only highlight the fact that we are the only sane people amongst them. 

[scottws]

I went to a UAW local to work on their computer system a few weeks back.  While I was waiting for the local president to get out of a meeting, I was reading a sign in their reception area.  It basically listed the benefits that unions gave its workers.  The list started out saying things like:

Without the UAW...

• There were no job tiers
• There was no chance for promotion
• There were no benefits
• There was no pension
• People worked overtime without compensation

I'm like... "Hm. Okay these are all fine."  Then I keep reading:

• There was no double time for overtime
• There was no triple time on holidays

I stopped reading shortly after that but they all became ridiculous.  Triple time?!  Who even gets double time anymore?

[Pugnate]

Maybe they put the list together 50 years ago?

[gpw11]

When was the UAW formed by the way?  I'm just wondering because of the "People worked overtime without compensation".  I don't doubt that in the least, but it's been strictly illegal to force that on wage slaves for at least 50 years, probably longer.

[Ghandi]

When was the UAW formed by the way? 

1935

....I'm bored.

[gpw11]

1935-2012?

[Ghandi]

They've got members in Canada as well. And that's where all the plants are going.

[gpw11]

I read the stats on that.  CAW workers in Canada cost an estimated $6/hr less than UAW workers.  Interestingly enough, it's not because of wages (which on average are much higher in Canada), but because they don't have to throw as much money into health care and pensions.   As for the plants all moving up here, I don't know about that.  Most of the ones operating are old branch plants, and recently the truck manufacturing plants have been given close-down or scale back notice.  Honda and Toyota workers here definitely make more than domestic workers as well.

Foreign producers are opening more plants here than in the states though.

[Cobra951]

Fred Thompson's good news on the economy.