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Maybe they should have let the banks fail, Iceland did, they locked the bankers up and their economy seems to have recovered.
Iceland taxes are much higher in general to the US, especially on the personal and sales tax fronts. It is one of the toughest places to ink out a living in the civilized world. They do subsidize more though than we do for local economic health, such as the fishing industry.
For example: Personal income tax is 46.3% (highest ever was 46.9%). Sales tax is 24% (highest ever 25.5%). Corporate tax rate 20% (highest ever 33%).
What brought down the economy back then can be pinned to a couple of issues, but all intertwined together by one financial instrument - the credit default swap. Think of it as a delicate spider web. When one string fails, it pulls on all the others. Those suckers (also known as derivatives) were little more than a Ponzi scheme back then. At their core were the loose credit standards for mortgages. Today interest rates are far lower than back then, but the standards to get the mortgage in the first place are much higher, and leverage points are not overtly insane (except for the government subsidized products through HUD....aka...FHA mortgage, which ties back to my earlier point).
The movie "The Big Short" had it right, and is a fascinating movie to watch! Also, if anyone is interested, go to Frontline's website (PBS news) and look for two investigative reports called "Breaking the Bank", "The Warning", and "Inside the Meltdown". They're from 2009 but they're still on the website. Absolutely riveting to watch what happened behind the scenes during that time period. I certainly hope university professors are making these required viewing in today's business schools.
End of the day though, you are right, equities got nailed badly and many lost far more than they ever thought they possibly could. Can you remember when the NYSE was in the 6,000's? Today it's over 21,000 and making 1,000 increases inside of 45 days.
Train is going way too fast again folks. And fast trains always jump their tracks at some point.
I believe in the tenants of bankruptcy law which were thrown out of the window screwing a lot of banks who rely on them to do business. That was wrong; HOWEVER, I'm 100% supportive of the GM bailout and probably 80% supportive of Chrysler---just because it went to a foreign company.
The real criticism I read is the Fed Government should have negotiated for better terms for themselves. For example, more warrants....because they basically bailed them out for little compensation in return. They should have gotten more, but that's the Fed Government for you.
I'm a major populist/Trump supporter. I'm 100% America first. We had to save these jobs---once a company like GM leaves, it's never coming back. It's important for USA to have heavy manufacturing abilities. We don't want to depend on other countries like China for heavy duty goods like steel/cars/trucks, etc.
yes ford ot low interst government loans, but they DID NOT get tarp funds. the loans for ford came from the department of energy to develop electric and hybrid vehicles. these ere NOT bailout funds. only GM and chrysler took bailout monies. the article is also wrong when it said that the big three CEOs only took a one dollar salary, while that is true for gm and chrysler, and they did it to get the bailout funding, ford CEO DID NOT lower his salary to one dollar, instead he took his normal salary. why? because by that time ford had leveraged their brands to the tune of 23 billion, and had already paid back a good portion of that money, something like 5 billion.
i would also note that the article being listed is from a chevy enthusiast magazine, and thus the premise is suspect to begin with.
Anyone here actually work for the Auto or related companies that got bailed out? if so would you have preferred the government not get involved? Where do you suppose Americas auto industry would be today had it not got a major loans from the government?.
I work for General Motors. I have only been here for 1.5 years though, so I wasn't here at the time. I did work for a supplier prior to this, and it was terrible for a few years. I constantly feared for my job and saw a lot of other good folks lose theirs. Had the bailouts not occurred, a lot more people in the industry beyond just GM and Chrysler would have lost their jobs.
I don't think we will see FCA around for another 10 years. Marchionne has been clear he wants to merge with someone. They also just got out of the compact and midsize car segments. My prediction is that in the end Jeep and RAM will be sold to the highest bidder while Dodge and Chrysler will cease to exist. To throw out my educated guess as an industry analyst I would say the Chinese will buy them.
I'm typing on my phone so I can't get real detailed right now. I think this is a complicated subject, but ultimately I think it was the best move for the country.
GM has something like 200,000 employees. The companies that act as suppliers to GM may have a similar number of employees.
Look at it as an investment. If you are the government, letting GM fail and close the doors means that not only do you lose billions of dollars of tax money coming in, but also you will also have an outgo of billions in unemployment insurance, food stamps, and so on.
GM has something like 200,000 employees. The companies that act as suppliers to GM may have a similar number of employees.
Look at it as an investment. If you are the government, letting GM fail and close the doors means that not only do you lose billions of dollars of tax money coming in, but also you will also have an outgo of billions in unemployment insurance, food stamps, and so on.
but you see GMwasnt going to fail, in fact when they filed fro bankruptcy, it was for reorganization, not liquidation. GM should have been allowed to go through the process and be forced by the courts to reorganize their management structure, and been allowed to reorganize their debt to make manageable payments of that debt. same with chrysler. had that been done, GM and chrysler would have come out of bankruptcy in much better shape than they are even now.
and even if GM and chrysler would have filed for liquidation, both companies would have been bought up at auction, even piecemeal, and they would still be operating today, just under new management. for instance, even though they were having issues, ford would veyr likely have bought jeep, and perhaps one of GMs divisions.
you can bet that chevrolet, and cadillac both would have been snapped up by someone, probably toyota, and teh chinese would have bought buick, and perhaps even saab. oenske would have bought saturn, in fact they almost did except that a deal to build the cars fell through. hummer was the only wildcard there as no one really wanted it, not even the chinese.
but you see GMwasnt going to fail, in fact when they filed fro bankruptcy, it was for reorganization, not liquidation. GM should have been allowed to go through the process and be forced by the courts to reorganize their management structure, and been allowed to reorganize their debt to make manageable payments of that debt. same with chrysler. had that been done, GM and chrysler would have come out of bankruptcy in much better shape than they are even now.
and even if GM and chrysler would have filed for liquidation, both companies would have been bought up at auction, even piecemeal, and they would still be operating today, just under new management. for instance, even though they were having issues, ford would veyr likely have bought jeep, and perhaps one of GMs divisions.
you can bet that chevrolet, and cadillac both would have been snapped up by someone, probably toyota, and teh chinese would have bought buick, and perhaps even saab. oenske would have bought saturn, in fact they almost did except that a deal to build the cars fell through. hummer was the only wildcard there as no one really wanted it, not even the chinese.
In a normal reorg/bankruptcy, there would have been a need for banks to loan them or investors money. The big banks were going through their own problems and didn't have or weren't willing to put money into those companies.
As for other companies swooping in, it would have been difficult. I don't know why Toyota would want Chevy or Cadillac as they have their own brands in the same segments. Penske couldn't find anyone to make new Saturns for him. As for the Chinese buying Buick and Saab, maybe that was a possibility but anyone else looking at any of the other brands would've have issues with that as all the brands were sharing the new Episilon and Episilon II platforms. Even when GM had the chance to sell Saab numerous times to Chinese investors, it was either for the old platforms and a no go if licensing the new platforms was included.
As for Ford, Jeep was the only thing of interest to them. Any GM brand was of no interest IMHO. They already had vehicles in all the same segments.
ford would very likely have bought jeep, and perhaps one of GMs divisions.
Ford barely had enough money to save themselves, much less buy anything.
The result of a liquidation would've been a Chinese takeover of 2/3's of the U.S. auto industry, maybe the entire U.S. auto industry if supplier issues interrupt Ford production. It only takes one part to stop a car from being produced.
Easy to see how that happens. GM stops paying suppliers that are also Ford suppliers, suppliers go bankrupt, Ford can't get parts, assembly lines shut down, Ford goes bankrupt because it can't build cars.
We should've left both GM and Chrysler die at that time and take with them the outdated cancer tumor like union mentality.
Our billions was just an encouragement to let them continue with same proven failing ways, it is a matter of time before their unions are back asking for another bailout.
Their failure would've mean new US based companies would've dumped the union tumorous contracts and the money sucking unions (aka termites of businesses).
Make no mistake car manufacturing by USA companies will always be present USA - who cares under what name?
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