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Possibly but the big problem is that the auto business requires lots of capital most of which has to be borrowed. Who will loan money to a company which just declared bankruptcy?
-Arrian
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I don't know. What I do know is that the only entity stupid enough to loan them money now is the US government. If they go bankrupt and their moronic management is cleaned out and/or the labor deals are revisited, I think you might be able to find some capitalists willing to roll the dice...
-Arriangrog want tank...Grog Want Tank... GROG WANT TANK!
The trick isn't to break some eggs to make an omelette, it's convincing the eggs to break themselves in order to aspire to omelettehood. -
Not even Kerkorian will touch any of the auto companies anymore.I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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Usually, that's not a problem because the Debtor in Possession loan is secured with the assets of the bankrupt company. The lender gets absolute first dibs on the bankrupt company's assets, ahead of all pre-bankruptcy lenders.Originally posted by Oerdin
Possibly but the big problem is that the auto business requires lots of capital most of which has to be borrowed. Who will loan money to a company which just declared bankruptcy?
Bankruptcy will make money available to GM. The company has no access to money now.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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God, let's hope GM crashes before Obama gets a chance to give them any money.12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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who needs markets when you are too big to fail
House Speaker Nancy Pelosi has thrown her support behind the premise that General Motors Corp., the largest U.S. automaker, is too big to be allowed to fail.Socrates: "Good is That at which all things aim, If one knows what the good is, one will always do what is good." Brian: "Romanes eunt domus"
GW 2013: "and juistin bieber is gay with me and we have 10 kids we live in u.s.a in the white house with obama"Comment
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"Too big to fail" just doesn't mean anything anymore. They're just handing out money as fast as they can.I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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Alright, let's consider two car companies:Originally posted by Oerdin
Jesus man, we're comparing auto makers on a per unit cost. If one car maker takes an average of 25 man-hours to make a car and the other one takes an average of 19 man-hours to make a car then we'd say they are more efficient. Just as if one car maker can make a certain car at an in house cost of $17,000 while it's competitor makes a nearly identical car for a cost of $15,000 then we would say the second is more efficient then the first. They're building the same (or largely similar) car for less money and thus has a larger profit margin.
Fnord Motors is an old-line car company. It makes all its own parts and assembles them into cars. Basically, rock comes in one end of the factory and cars roll out the other.
Using this vertically integrated method of production, Fnord Motors takes 1000 man-hours to make each car.
Next we have Roboto Motors. Instead of producing their own parts, Roboto buys all their parts from other companies. So they buy an engine from Enginewa Corp., they buy a chassis from Chassito and they buy an interior from Interbishi. They then assemble these parts into a car using their advanced assembly plant.
It takes Roboto Motors only 10 man-hours to assemble each car in this manner. Does this mean that they are 100 times as efficient as Fnord Motors?
No. It simply means that most of the man-hours used to build Roboto cars are shifted to other companies.
This is how Japanese companies built cars "more efficiently" than American car companies. While they didn't do anything as extreme as this example, they did shift much of the costs of building autos to smaller companies. These companies in turn were supported by borrowing against rising land prices, which rose because the profits made by Japanese car companies were invested in real estate.
Eventually the whole mess collapsed. Which is why Japan now has huge national debt and still has economic malaise.VANGUARDComment
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It may be very close...Originally posted by KrazyHorse
God, let's hope GM crashes before Obama gets a chance to give them any money.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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Maybe Toyota can afford to buy GM out if the share price keeps dropping?
<Reverend> IRC is just multiplayer notepad.
I like your SNOOPY POSTER! - While you Wait quote.Comment
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Again, why would Toyota want GM? GM is a tarbaby.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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The same reasons a lot of companies aquire their competitors.Originally posted by DanS
Again, why would Toyota want GM? GM is a tarbaby.I drank beer. I like beer. I still like beer. ... Do you like beer Senator?
- Justice Brett KavanaughComment
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Do you really think they're wholly insolvent (even if Toyota just broke GM up for parts)? Why is the share price greater than 0? Are they a zombie firm?Originally posted by DanS
Again, why would Toyota want GM? GM is a tarbaby.12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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Yes, I think it's wholly insolvent. Massively underwater. I don't believe its asset figures are real, while its obligation figures are all too real. This is reflected in GM's bond prices. GM's long-term bonds are selling for 23 to 30 cents on the dollar, even with the prospect of Uncle Sam's pockets becoming GM's pockets.
Yes, you can earn over 30% per annum on a GM bond. That is, until GM defaults.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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I've been hoping for this for a week now.Originally posted by KrazyHorse
God, let's hope GM crashes before Obama gets a chance to give them any money.
-Arriangrog want tank...Grog Want Tank... GROG WANT TANK!
The trick isn't to break some eggs to make an omelette, it's convincing the eggs to break themselves in order to aspire to omelettehood.Comment
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Originally posted by DanS
Yes, I think it's wholly insolvent. Massively underwater. I don't believe its asset figures are real, while its obligation figures are all too real. This is reflected in GM's bond prices. GM's long-term bonds are selling for 23 to 30 cents on the dollar, even with the prospect of Uncle Sam's pockets becoming GM's pockets.
Yes, you can earn over 30% per annum on a GM bond. That is, until GM defaults.Why is the share price greater than 0? Are they a zombie firm?12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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