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Big Three Get Reprieve from White House, Not from Terminal Illness

Posted Dec 22, 2008 12:26pm EST by Aaron Task

The White House threw ailing U.S. automakers a lifeline on Friday, pledging $13.4 billion in TARP funds starting now, and an additional $4 billion in February if certain progress is made.

Friday's action removed the threat of an imminent collapse of GM and Chrysler, but the industry's long-term viability comes into even greater question today amid news Toyota is forecasting its first-ever operating loss. If the biggest and best-run automaker in the world can't make a profit in this environment, what hope is there for the "Big 3"?

Since Friday, the real horse-trading has begun with the UAW already lobbying the Obama administration. Meanwhile, GM is holding "preliminary discussions" with key stakeholders, according to the WSJ.

Both the UAW and existing GM bondholders are being asked to make major sacrifices, but stockholders could pay the ultimate price. GM's shares tumbled Monday after Credit Suisse cut its price target to $1 and said existing shareholders may be wiped out if the company complies with the restructuring targets laid out in the federal auto bailout.

99 Comments

Yahoo! Finance User
Yahoo! Finance User - Monday December 22, 2008 01:47PM EST

If companies can't compete, then they should fail.

Yahoo! Finance User
Yahoo! Finance User - Monday December 22, 2008 01:50PM EST

I don't know if Aaron task is just blind or have no time to get his facts straight. Putting a headline' Big Three' is just stupid. Ford has never been part of this bailout deal. They didn't ask for the money. They only asked (and did not get anyway) for a line of credit, in case of GM or Chrysler going down. They are not part of this deal on Friday. Can you guys get your head out of the sand.

JuanH
JuanH - Monday December 22, 2008 01:50PM EST

The big Three represent a basic industry and should be saved,the country needs them.of course I dont have the knowledge and information to know how, but they should be saved. Wall Street is a diferent story.In my limited understanding there is evidence of:1 conspiracy, it is inconceibable that all the CEOs of the bigest Banks made the same error while receiving tens of millions in salary and still a bonus for ruining the Company and then the Country and the World. But we rather prosecute Barry Bonds.

Terry F
Terry F - Monday December 22, 2008 01:55PM EST

Sara At least I try to buy american. Bet you drive some kind of foriegn car, shop at walmart, and I'll bet your electronics are foriegn as well as your furniture. All I was saying is make an attempt at being american. It won't hurt you to try. Everyone is blaming the last fue american companies we have for trying to stay in bussiness, while the ignorant keep buying foriegn products, We can thank the Clintons for Nafta, I will agree, Those two clowns really screwed america with that one. Now Obama has all but hired every last person that the Clinton had in office Including Hillary. What a joke , What change was he talking about. The only thing that could get any worse would be if we hired Jimmy Carter to do something again. Jimmy Carter is one hell of a nice person, Very genorous, Just not much of a polictician, OR Leader. I still say buy American, Sara I feel that you are the one without a clue. Wake Up.

jay b
jay b - Monday December 22, 2008 01:56PM EST

My retirement portfolio has dropped 50%; where is my government bailout. crappola

Yahoo! Finance User
Yahoo! Finance User - Monday December 22, 2008 02:00PM EST

Plug in your prius and try to tow a boat,camper or drive in the snow, or use camper,horse trailor, snow mobile I'Il keep my with the wife and kids safe and enjoy life. No thanks Princess? Electric sounds really nice, and will help some, but there are still too many issues with batteries. Battery life, environmental, recycling and disposal, and impact collisions,

Guykicknit
Guykicknit - Monday December 22, 2008 02:00PM EST

No job, no money, no car purchase. Doesn't matter what credit is loose ot not. Let 'em go bankrupt!!!!!!!!!!

hga143
hga143 - Monday December 22, 2008 02:01PM EST

union wages drive up prices

George
George - Monday December 22, 2008 02:07PM EST

When we get in the next big war, we'll be trying to get Toyota or Honda tanks and guns. But no amount of money will help until people feel secure enough to buy cars again.

Premkumar
Premkumar - Monday December 22, 2008 02:11PM EST

What is the logic in buying American cars when they lack quality? People wants quality and reliability at an acceptable cost. That is how the other auto companies succeed. The Big-3 will not be even Small-3 in the long run, if they don't rethink and reorganize. The corporations must be allowed to take care of themselves. Some of them stay, some of them go, that is the nature of the business.

Larry
Larry - Monday December 22, 2008 02:11PM EST

unicorndr does have some good points, but anyone who thinks GM has any kind of Engineering capabilities is nuts!! GM has been riding the wave of inovation and design engineering (including power trains) from CHRYSLER for the past 10 years!! GM has overpriced junk that has more recalls and TSB's than even Ford.

tommy
tommy - Monday December 22, 2008 02:13PM EST

Terry F - Where's your 1999 Ford POS? I'll tell ya its in the junk yard cause the American Auto Makers built cars that only lasted 5-7 years before they fell apart. You know why? I'll tell ya cause they wanted you to buy they're crappy cars then turn aroun & buy another one in 5 years. While Toyota & Nissian where making cars that lastest 10-20 years. The American Auto Makers did this to myselves & while I try & buy American as much as possible I'll NEVER buy American made car. They're just CRAP! Sorry but why spend $35,000 on a ford that will need to be replaced in 5 years when I can spend $30,000 on a Nissian & it will last 10years +

Terry F
Terry F - Monday December 22, 2008 02:13PM EST

I here that the side impact rating of a Toyota tank is lacking. While the honda 30 30 tends to jamb. The nice thing is my electric six by will go almost 32 miles with out being plug in again.

David
David - Monday December 22, 2008 02:14PM EST

Thank you everyone for all your support. Sometime in the very near future all automobile will be made outside the US and shipped in. This should be a great boost to the American people in their effort to pay off their debt? Standard of living should be great? Jobs, home, college etc., sure? National infrastructure, China, Japan, Europe, Asia, will all chip in so we can drive their cars on their roads in the US? A very special thanks to Tennessee and Alabama’s Senators. Who is next? America for sale?????

Yahoo! Finance User
Yahoo! Finance User - Monday December 22, 2008 02:15PM EST

We don't make any cameras. We don't make any TVs or any electronics. We don't make any toys. We don't make any shoes. How can our economy survive if we are just a country fo retail stores so we all buy things but not make anything? You guys blame the american auto companies saying their quality is bad, then how did we lose the entire Toy industry. is that becauseof quality, too? The fact is, China makes things cheaper, because they have no quality of life. Their workers live in squalor. Have you seen the pollution in chinese cities? Would you (so called free marketers) want to live in the same conditions? Do you know how many check japan does on every single car they import? Wouldn't it be free market if we impose the same checks at every port for every car we import from Japan? Open your eyes. When a Valuejet plane crashed in Florida swamps in the 90's, the Bank of Tokyo offices in U.S. switched all their travels to Valuejet, because of lower ticket prices. I bet, you free marketers would sure love to work for a company like that....

Yahoo! Finance User
Yahoo! Finance User - Monday December 22, 2008 02:16PM EST

I wouldn't drive a GM car if they paid me. If they give them money, they will just put in the furnace and burn it. Don't see how they will survive if we continue to prop up their bad business model.

Yahoo! Finance User
Yahoo! Finance User - Monday December 22, 2008 02:19PM EST

Eat mor chikin.

Premkumar
Premkumar - Monday December 22, 2008 02:20PM EST

People don't see where a specific product is made. How many of you look at where a certain item comes from? Will you stop buying if the Grapes are from Chili or the Mangoes are from Mexico? People always buy the right stuff at the right price. If certain companies couldn't deliver what the customers need, they could go. The companies need not be kept alive just because they are American.

Yahoo! Finance User
Yahoo! Finance User - Monday December 22, 2008 02:21PM EST

I'm going to buy GE at $5.00. GM at $0.00001.

Rob
Rob - Monday December 22, 2008 02:23PM EST

everyone is partially right.. but the biggest problem is if the big 3 were to go out of buisness, does everyone realize what that would do to our economy???

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