Obama Wants $50 Billion For U.S. Auto Makers
Convinced that U.S. Automakers are in big trouble, President Elect Obama is seeking a $50 Billion bailout that could inject enough money to get the automakers through their current crisis. If approved, the measure would need the support of President Bush, a Czar would be placed in charge of the automakers to oversee the companies receiving aid.
While this cash infusion would indeed give the companies time to get things running more smoothly, there are many issues in the auto sector that need to be addressed. With pensions and jobs on the line, this is a political obstacle course that will be hard to navigate. Unions will want their piece of the pie, as well as certain guarantees. However, if the problems that caused this instability are not remedied, it is possible that we could simply be throwing good money after bad.
In 1979, the government stepped in to help bail out Chrysler. The bail-out was a success because Chrysler developed decent cars at decent prices. The bailout trickled down to the consumer level. If this $50 Billion does not trickle down, then the ultimate success of such a bailout may not carry the same level of success. With auto sales down, there needs to be a stimulus for consumers to have the confidence to buy. Tight credit markets do not help the situation, and short term 0% promotions leave consumers with too large a payment.
For investors in satellite radio, the prospects of a bailout for the auto sector is something to watch closely. Should sales pick up, it will mean more installations, more exposure to consumers, and eventually more self paying subscribers. Because the OEM channel is such a big factor to satellite radio, watch for reaction in price for SIRI on any bailout news.
Position: Long SIRI.
Stupid obama and dems wants to bail out..Oops i mean give the uaw payoff for election..
Let gm go bankrupt and restructer its debt and come back stronger a year from now..And stop making cars nobody is buying new cars..
More damn fools taking my tax money…
While i understand that if these companies get no bailout alot of people are going to lose jobs, The economy is going to be even worse and noone will really benefit from it I still have to ask some key questions here.
1) Why should we bail out companies that spend millions on top of millions so that their ceos and top brass can live the life of luxury?
2) Why should we have to bail out these companies when clearly when the shops in my town are being shut down and people are being sent home and told good luck? Where is the governments bleeding hearts for them? They are basically saying to the small companies its ok that you fail but a big company cant.
3)I feel this is the fairest question of all. If they are having such a hard time selling cars why wouldnt they lower the prices to move the autos? If i try and sell something and noone is buying the first thing im going to do is look at price and adjust accourdingly. I know it cost money to make these cars but I also believe they are marked up quite a bit too.
Im a shareholder of siriusXm and i know that if we dont have cars our stock is screwed but It just makes me wonder if its right for all of these companies to get this help
Hay apex what about the great potential it will have for XM Sirius, if you respond negatively I will assume you are a Sirius basher, and hate to see any progress for this company,
do you people realize the amount of people the big 3 affects? How many jobs we are talking? Think of all the mom and pop auto part stores across the country that will go belly up if the big 3 go down. All of the manufacturs and employees of those parts. So for all you union bashers they wouldnt be just saving the unions. Remember this union bashers. The Unions gave us the 5 day work week and prevailing wage so dumb people like yourself could make a decent living. Its the unions who stood up to these big execs who live high on the hog that all you talk about and said “we want our fair share”. They can give the crooks at JPM,GS,AIG bail outs but not a group that affects hundreds of thousands of jobs?!?!?!?
SIRIUS XM is only showing increased sales because of increased penetration rates. When, not if, the auto industry picks up, won’t that give SIRIUS XM a huge boost? If their is help for the auto industry wouldn’t that include their suppliers, like SIRIUS XM. The long merger process was a big part of the current troubles for SIRIUS XM. It would seem ironic, but fair, that the government be part of the solution.
Dave,
I think its more like Millions of jobs instead of hundreds of thousands and Ill be the first to say the crooks at aig should NEVER have been bailed out. Its a shame when a company like Aig spends millions on luxury vacations for its Top brass and then the american people have to bail them out. I really think a policy should be put in place to limit Ceos salaries to something that resembles reasonable. Im not a basher of the union i just want some of my questions answered.
These guys, meaning the big 3, definitely need to change their business model. If we’re are going to bail them out we need to hold them accountable for some changes.
Bailing people out isn’t how a true capitalist society works. I understand that we are and have been moving towards socialistic ways for many years now but to allow people to solely keep profits and then not solely take losses is wrong.
Tyler…
Actually the Chrysler K car was a piece of junk. But they paid back the loan.
imho
vaporgold
As long as they pay the money back who cares still wont help sell cars, it pays employees beneys and uaw pensions..
And mat do your homework..
Synister it was Apex’s opening sentence not you. Obviously he wanted 4 more years of Bush policies. I agree the bailouts should come with stipulations. Like manditory mpg increases within 2 years. Also the biggest stipulation should be when bailing out all these banks is to mandate the money be lent out not horde OUR money.
PS Hey APEX YOUR LAME ASS ADMIN BAILED OUT THE GOLDEN BOYS AT GS and JPM. FLEECING WAMU FROM ITS SHAREHOLDERS. SO GO LICK A NUT
If you want to see an impact, and the bailout is going to happen, then one stipulation should be:
– Every car sold in the U.S. should be required to be flex fuel capable.
This would invigorate an ecoonomic boom of work in making flex fuel available at filling stations across the nation, as well as provide a solution for corn, etc.
Ironically, there are countries where every Ford and GM are flex fuel capable. The additional cost is less than $100 per car.
People need to consider MPPG (miles per petroleum gallon) rather than MPG (miles per gallon)
A car that gets 25 Miles Per Gallon will get 50 Miles Per Petroleum Gallon if the consumer fills up half of the tank with ethanol.
This type of stipulation would stimulate more than simply the auto industry. It would stimulate several industies.
Pie in the sky? maybe, but if the bailout is going to happen anyway, we need to make it as effective as possible.
Heard a line on CNBC this a.m., from a guest host.
“The auto industry is thriving in America. Just not for GM, Chrysler and Ford”.
Me I’m for a bailout. If AIG can hang out at the Squaw peak Hilton for a week.
Keep the workers working.
Plus. I’m 200% certain. 100% the bailout will happen. 100% that helping these car companies helps Sirius/XM.
Tyler is absolutely right about flex fuels.
1.) The American Auto Industry employs 10 million people. It can not be allowed to fail.
2.) Bailout is a lousy word and a bad idea. A LOAN that is paid back to taxpayers OR the purchase of stock needs to be the way to go.
3.) Automotive executives are not the same kind of gluttons as are financial CEO’s. Auto execs typically earn salaries in the 3 million a year range. Not like the Home Depot guy who failed the company and made off with 70 million or the AIG pigs at the trough.
4.) Obama is beholden to the Union workers who helped elect him. This is not necessarily a bad thing.
A National Healthcare System is cheaper that the system we have now. It would save automakers a lot of money. Our current for profit system benefits Insurance companies which drive up costs.
Hey Dylan.
Interesting that you write regarding health care.
Todays guest on CNBC, noted the same. Saying that under Obama. The next industry to “short” would be health care.
Good observation.
sirius needs a bail out thats why everyone is crying poor and why we can make the stock go above a penny,everyone in bed for the handout is going to cry poor……..wouldnt you