No help or wrong help for Detroit?

Excellent, Daniel. You nailed it right on this time.

 

A point of interest being missed here is that while the assets are, indeed,
worth money, they can't really be sold off, as it were, to pay off the loan
as they are needed to make more cars, which is what Chrysler does, in order
to create cash to pay off the loan. They have millions of dollars in
manufacturing machines and fixtures, but if they didn't have them to make
their cars, ie cash flow, then it's a moot argument.

Daniel had it right. Assets like this are only as good as the good faith
the government felt Chrysler had. And as I stated in an earlier post, there
was the aspect of keeping competition in the domestic car business at three
instead of two. That part was, and is, important too.

Another point...and I could be wrong on this, but I'm not entirely sure the
banks would have been so quick to loan this money to Chrysler if the
government was not willing to back them.

 

It makes a difference. If the initial borrower defaults, the co-signer is
required by law to pick up the payments. That's what the co-signer agreed
to in the loan contract, and is absolutely enforceable.

 

In 1972, at a meeting, the CEO of GM told the board that the American public
will buy whatever we make because they have to. T

That pretty much says it all, doesn't it?

 

Charles Deming was the guy who brought Japan out of the ashes and on the top
in car manufacturing. He stated that the management of any company, large
or small, sets policy and enforces policy. They are the only ones that do;
therefore, any problems that arise are the fault of management, period.

 

Another point to consider, Helen, is that unions are also good for a company
in certain ways. For example, when a union and company negotiate a three
year contract, prices and such remain fixed and the company can do accurate
long range forecasting. Without a contract, the company cannot always do
this reliably and may suffer for it. So it goes both ways. A contract has
to be beneficial to both parties or nobody is going to agree to it. That's
the essence of any good contract.

 

Agreed! Both are needed, but the third element that is too often overlooked
is the worker and/or the public (potential consumer). There are 'good' unions
and there are 'bad' unions just as is the case with management. But when they
both start playing the same game, it gets expensive because then the lawyers
(who really are the bottom line in all this) get in and must have their cut. And
so it goes.

 

jcr wrote:

....

Certainly you know that the word 'unencumbered' has no meaning, and
therefore it's use in any discussion/argument is pure semantics!!!

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

But that's why they loan based only on the *LOAN* value of the car,which
is much less than the retail/street value. The 'loan' value is
intentionally low so there is no difference/loss to them when they have
to possess and wholesale the car (though in reality, after all expenses,
etc., they may end up with a slight loss - I'm not in that business, so
I wouldn't know).

Bill Putney
(To reply by e-mail, replace the last letter of the alphabet in my
address with the letter 'x')

 

Well, OK, Brent, if my making the discussion relevant to today-loans in
today-dollars bothers you so, we'll go ahead and do it your way: Be sure
and let us know how it goes when you ask for a $1,200,000,000 loan without
any co-signers (that's the rounded numerical amount of the Chrysler loans
in the 1980 dollars that were sought at the time of the loans). While
you're at it, you can let us know how you make out finding the time
machine you'll need to secure a loan in 1980 dollars.

There. All better?

 

Sweet.

 

Lawyers have nothing at all to do with negotiated contracts between unions
and the company. These details are all ironed out at the bargaining table.
The companies have lawyers, of course, as any company would, but when it
comes to union issues, 99.99% of them will be settled in arbitration. It is
rare that a court would be involved in a dispute between a union and a
company. As for the consumer, he has the choice to buy from that company or
shop at their competitor, something every company is aware of far in advance
prior to agreeing to any contract.

Only about 2% of the population are union employees today.

 

And yet, they, and their contracts, are an exceedingly easy scapegoat
for the ills of the auto industry.

Here's a thought exercise - back in the early '80s, foreign makers made
what were then deemed "hot hatches", econobox hatchbacks with bigger
motors, uprated suspensions and better brakes, than the regular line.
They sold for a bit more, but not so much as to keep them from being
entry-level.

So, the exercise is this: what if car makers tried a similar thing
today? A relatively stripped model where you could add as an option
the Performance Group, in which you get engine, suspension, brake and
some sporty interior stuff but were able to give the heave-ho to crap
you may not want. Like power, leather seats, power windows, A/C, heck,
even radio/sound system. Wouldn't the younger buyers go fo that kind
of deal? Seems like Subaru is going that way with their WRX line, sort
of.

I mean, what you're trying to do is get them in early, give them a
decent car, and then as they get older and the priorities change, they
buy the models with more luxury/room/towing capacity, etc.

I can't figure out why this wouldn't work AND make money for folks who
are in desparate need for both.

E.P.

 

A basic car should sell. I agree. Get rid of the speed sentitive radio
volume control, auto headlamps, the chimes that tell you when your butt
stinks and I'd go for it.

 

Obviously, you cannot read. The assets _SECURE_ the loan. Thusly if the
borrower _defaults_ the assets are taken by the _lender_ and then, if
the lender desires sold to pay off the loan.

I have never written they were to sell off the assets to raise cash. That
is just misdirection.

 

I see you chose not to address the rest. Michael Jackson was able to
borrow considerable cash by securing loans with his assets. It was only
once his assets were already borrowed against that he needed cosigners.

 

So, how would you compete under the conditions and support those union
contracts.

You don't seem to grasp how everything is _connected_.

 

I can sell my assets today and be free clear of any and all debt. I am
not a typical american consumer.

The factories, real estate, patents, manufacturing equipment, computers,
etc and so forth are all assets. Either the assets exceeded the loan
value or they did not. If they did, what was the problem? No, what I am
seeing here is just a bunch of chrysler fans arguing that chrysler didn't
really need the government when it obviously did.

The chrysler fans were arguing the assets at that time were worth more
than the loan. That is what I was addressing. If the assets were worth
more than the loan, then no cosigner is needed, no guesswork on future
value other than making sure the value won't go down below the loan
amount is needed. You can introduce as many complications as you wish,
but if the loan was less than the assets that secured it, there was no
need for the government.

 

Thanks for agreeing with me. Obviously Chrysler corporation did not have
enough free-and-clear assets to cover the loan as the chrysler fans are
trying to tell us. That's why they needed the tax payers to secure the loans.