Bill calls for loan guarantee for Big 3

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.

 

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.

 

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

Nate

 

NO![/b]

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

 

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

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

 

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

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>

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.

 

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

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".

 

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

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

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

The first three quarters of that sentence may be accurate.

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.

 

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.

 

<div class='quotetop'>QUOTE(SomervillePrius @ Sep 22 2006, 05:44 PM) [snapback]323565[/snapback]</div>

Isn't that money what went into the car technology programs? These programs resulted in the U.S. NREL "Advisor" hybrid car system design program, which I believe was used to design the Prius (The Prius that Shook the World), and is freely available to anybody on the internet. Its also went into the U.S. Natioanal Laboraties work on hybrid and electric propulsion for cars. Some of that work resulted in the 2nd Genertion Prius electric motor (MG2), which is a combo permanent and induction magnet motor. I believe it was Argonne National Labs that showed by theoretical means the efficiency cost and power advantages of that concept after evaluating the first generation Prius. This information was freely available to all the car makers. It can be downloaded by anybody now.

Toyota of course is a US car manufacturer. It makes cars in the US, it most likely has to pay taxes in the US. As a US tax payer it is funding and benefiting from the work the US Government does on the research of more efficient cars.

We as Prius users are benefiting from this money spent by the US Government, and the results of the research, although car companies head-quartered in the U.S. have not put anything on the road that comprehensively implements these results. The Prius is as much an American invention, as it is a Japanese car. NiMH Batteries and VLSI Computers are other examples of this.

Toyota did not do the Prius in a vacuum. It took advantage of the change in the state-of-the-art, and all the money governments were throwing at this problem, and did something with it. Why GM did not do this, only Rick Wagoner can say.

 

Why isn't that $20 BILLION dollars being given to the alternative energy industry to develop more efficient, lower cost solar, wind etc energies?

Because it's a subsidy to the greedy, shortsighted Auto Industry. They *could* have done what Toyota did on their own dime. Now they're getting a ride on someone else's dime.

Lower interest rates (they don't deserve) ARE a bailout. The banks are losing money by loaning money below interest rates to companies that do not have a sterling credit rating (or a history of good management choices). Where would that money go? I'm thinking....shareholders. That would be you and me.

Don't tell me this doesn't cost anything. Whether it's loss in dividends due to lower interest rates or my tax money going directly to the Auto Industry, the people are paying. It's a bailout. It's rewarding them for short sighted and poor planning and resistance to chance.

And after they spend that $20 BILLION dollars, do you really think there will be any cars in production for $20,000 or less?

 

<div class='quotetop'>QUOTE(donee @ Sep 23 2006, 10:37 AM) [snapback]323881[/snapback]</div>

Toyota managed to do it without $20 billion in loan guarantees. Wagoner chased short term profits.

A serious response to Detroit's difficulties would involve taking over their pension funds and changing the law to let automakers sell direct to consumers.

 

<div class='quotetop'>QUOTE(richard schumacher @ Sep 23 2006, 09:22 AM) [snapback]323898[/snapback]</div>

Bravo to that!

Richard for Senator.