$25 Billion Government Loan for American Automakers Set to Pass Congress

Discussion in 'OT Driven' started by TriShield, Sep 25, 2008.

  1. TriShield

    TriShield Super Moderator® Super Moderator

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    House clears $25bn for carmakers

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    The upcoming Chevrolet Volt electric car will recieve $7,500 in consumer incentives from the US Government.

    By Bernard Simon in Toronto

    Published: September 25 2008 00:36 | Last updated: September 25 2008 00:36

    The House of Representatives on Wednesday approved a $25bn package of low-cost loans to help hard-pressed carmakers and their suppliers finance plant modernisation at a time of restricted access to public capital *markets.

    The automotive loans are separate from the proposed $700bn bail-out for the banking sector, which is still being debated in Congress. The House approved the measure 370-58, setting the stage for Senate approval within days.

    The industry’s case has been helped by the fact that Michigan and Ohio, the two states most dependent on the car industry, are key swing states in the November 4 presidential election.

    Executives of General Motors, Ford Motor and Chrysler and their suppliers have lobbied heavily for the loans. Both presidential *candidates, John McCain and Barack Obama, have expressed support.

    Shelly Lombard, analyst at Gimme Credit, a corporate bond research company, told clients this week that “blue collar workers are more sympathetic victims than ‘rich’ investment bankers. So it’s easier to defend loans designed to save close to 100,000 jobs in the shrinking US manufacturing industry.”

    The go-ahead for the car industry loans has been written into a stop-gap spending bill, known as a continuing resolution, which must be passed to keep the federal government running beyond the end of the fiscal year on September 30. Congress and the White House have yet to agree on details of the fiscal 2009 budget.

    The loans were originally authorised in an energy bill passed last December to finance the retooling of plants for more fuel-efficient vehicles, especially hybrid and electric cars. But they have become a crucial prop for Detroit carmakers.

    The continuing resolution provides funding for $7.5bn, which is the estimated subsidy on the loans – in other words, the cost to the government of providing them at well below market rates.

    The loans will not take effect until the energy department has written detailed regulations dealing with, among other issues, which investments will qualify and conditions for repayment. Congress has directed the department to begin writing the regulations quickly and will provide any extra staff required to do so. One lobbyist said he hoped the regulations would be completed by early 2009.

    All carmakers and suppliers with operations in the US are theoretically eligible. However, the energy bill restricts benefits to plants that have been in operation for at least 20 years, thereby excluding most foreign carmakers.

    A Toyota spokesman said his company was agnostic on whether it derived any benefits. It has kept a low profile in the debate on the loans.

    The Detroit-based car*makers have insisted that the loans, known as the Advanced Technology Vehicles Manufacturing Incentive Programme, are not a bail-out because they must be repaid.

    But critics have questioned the wisdom of supporting the motor industry with taxpayers’ money, especially in the wake of the huge amounts being provided to Fannie Mae, Freddie Mac, AIG and Wall Street investment banks.

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  2. deusexaethera

    deusexaethera OT Supporter

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    A year or two ago I would've said fuck 'em, instead of giving them a loan take the rest of their money away instead, but they are actually trying to cater to customers now, and besides, the Volt really needs to make it to market.
     
  3. CJPA

    CJPA New Member

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    that's cool, I hate take-home pay
     
  4. vudoodoodoo

    vudoodoodoo New Member

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    yay? fuck!
     
  5. you know me

    you know me OT where the douchbags play

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    don't worry, you won't have a home after all this is done
     
  6. CJPA

    CJPA New Member

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    nicccccccccccccccccccccccce
     
  7. deusexaethera

    deusexaethera OT Supporter

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    Right, because helping companies stay in business is bad for the economy.

    Dumbfuck.
     
  8. deusexaethera

    deusexaethera OT Supporter

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    Maybe it's just because I live in a major metropolitan area, and so I'm actually affected by the welfare of the other people I interact with, but I honestly have a hard time comprehending that there are vast stretches of America where people are as self-absorbed as this -- and that it's considered good to be that way, no less!

    Me first, yeah. Me only, hell no. Same goes for you.
     
  9. you know me

    you know me OT where the douchbags play

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    no cockstain I meant that even after we bail out everyone who fucked up, people are still going to have their house taken from them. jesus fuck
     
  10. you know me

    you know me OT where the douchbags play

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    no, it's because you're not old enough to know better. liberal at 20 conservative at 30
     
  11. Quog

    Quog YOU!!!

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    ICE BURN!
     
  12. deusexaethera

    deusexaethera OT Supporter

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    I'm well aware that if you give the government as much power/control/money as it wants, it will use it all and still ask for more. The funny thing is, though, that individual people (which the government is composed of) fit that same mold. I'm not basing my opinion on how much power/control/money I think the government should have, I'm basing my opinion on the fact that we're in so much debt that it's a wonder China hasn't foreclosed on the whole fucking country, and we're involved in two wars, and a bunch of people with a great plan to get incredibly rich from it all have managed to fuck over millions more who made the mistake of trusting them -- which was stupid, but one can hardly accuse humans of being sensible in large groups.

    So, since the people have largely dug a nice big pit for themselves to stand in, it's time to take power/control/money away from the people and give it to the society for a while, until we're back on level ground. Then we can take back what's ours again.

    - - -

    Anyway, back on topic, the USA needs GM, or at least needs the tens of thousands of people employed by GM to remain employed. If someone else comes up with a great idea and needs tens of thousands of employees to help them with it, then let GM go out of business -- until that happens, though, it's probably a bad idea to put all those people on the dole when the federal budget is already in the shitter.
     
  13. art_VW_shark

    art_VW_shark OT Supporter

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    this is an egregious violation of the principles this nation was founded under
     
  14. SilverTurtle

    SilverTurtle New Member

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    I'd give $75billion to GM, Ford and Chrysler before I'd give $750billion to a bunch of banks... at least with the auto makers, you'll have a chance of getting it back (e.g., Chrylser's bailout that they paid back)... when those banks get ahold of the $250billion that is available immediately, its gone... their CEOs and VPs will be taking it to the Bahamas for their second and third vacations of the year.
     
  15. deusexaethera

    deusexaethera OT Supporter

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    Corporations are an egregious violation of the principles this nation was founded under. Corporations were illegal in the USA, or at least they were before the 14th Amendment was interpreted by the Supreme Court to guarantee the "life, liberty, and pursuit of happiness" for corporate entities as well as Negroes and women. You could own a business, but you couldn't absolve yourself of the risks associated with it, unless you could demonstrate that the business served a public good that justified separating it from any one person's oversight.

    So technically speaking, this whole thing is one huge clusterfuck that never should've been possible in the first place, but as long as these companies employ tens of thousands of people (which I consider to be a public good), the government is kinda obligated by the "providing for the public welfare" clause in the Preamble to make sure that corporations don't leave their former employees and customers high and dry.

    Besides, a stock-for-cash exchange would put the Treasury in a great position of being able to buy stock at low prices and sell it back at high prices, which might just be a reasonable way to pay off the phenomenal debt we're running right now.
     

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