Trade War

[greybeard]

the "Great Recession" of the late 2000's was started when the government relaxed laws regarding mortgages and lending. This allowed Americans to borrow way outside of their means b/c the lenders got greedy. Unfortunately, sometimes people need to be protected from themselves.

'Allowed' but didn't force anyone to borrow outside their means.

 

[Bestoutwest]

the "Great Recession" of the late 2000's was started when the government relaxed laws regarding mortgages and lending. This allowed Americans to borrow way outside of their means b/c the lenders got greedy. Unfortunately, sometimes people need to be protected from themselves.

'Allowed' but didn't force anyone to borrow outside their means.

Yes, "allowed," but! some people don't have the self restraint, intelligence, common sense, whatever you want to call it to rein themselves in. So what if they get destroyed? Don't they deserve it for not being prudent? Fair enough, but it doesn't just stop there. As you know, because you study history, you know that there's a ripple effect. A lot of other people lost their retirements, jobs, homes, etc because of the actions of others. Then, we, the tax payer are left holding the bag while the major financial organizations were bailed out, and the CEO's given large bonuses. :bs: If that isn't government control of the economy, I don't know what is. Inaction is at times the same thing as direct action.

 

[Nesikep]

I know it from my grandparents, they were thrifty, and they saved money. At the time it made sense, you could accumulate wealth by saving it.
Now, with the current rate of inflation, you're losing value on every dollar saved... The only thing that really gains value is real estate. My cousins bought a house for $440K 6 years ago.. they sold it last year in 1 week for $900K.
Of course they needed to go into debt to buy it, the point is that if you were a dollar short of buying the house 6 years ago, you'd be $300K short of buying it now by working hard and saving every penny.
And so now you're stupid not to be in debt up to your neck.

 

[jehosofat]

And so now you're stupid not to be in debt up to your neck.

I'm stupid

 

[greybeard]

Don't forget the government bailout that saved several large corporations, and allowed them to stay in business............... (a related post) .... Then, we, the tax payer are left holding the bag while the major financial organizations were bailed out, and the CEO's given large bonuses

I suppose you are mostly referring to the auto sector and some of the financial institutions.
The usual narrative is that the lenders caused the subprime debacle, but they didn't do it all on their own. Both the borrowers and the govt itself bear a huge share of the blame, and it all began with CRA, the Community Re-investment Act of 1977. (I have edited the following slightly, but only to remove politics from it.)
"Under (that year's) Housing and Urban Development (HUD) secretary, Community Reinvestment Act regulators gave banks higher ratings for home loans made in 'credit-deprived' areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting. In addition, as part of the push to issue home loans to lower income borrowers, Fannie Mae and Freddie Mac made a common practice to virtually end credit documentation, low credit scores were disregarded, and income and job history was also thrown aside. "

The above, is the bugaboo that took down Leman Bros in Sept of '08, Bear Stearns 6 months earlier, (that fall began the long chain of events) put GM on the ropes because they could no longer find $$ to borrow, nearly took down AIG, forced Fannie Mae and Freddie Mac into chapter 11) and did take down many many banks.

I was not and am not happy with the way the GM bailout went. I will never again buy a GM product. The cash for stock plan was not orchestrated by the govt as so many believe. "In the popular version of the company's turnaround story, as GM teetered toward liquidation in 2009, an Obama-appointed SWAT team, led by financier Steven Rattner, swept in and hatched a radical plan: Through a novel use of the bankruptcy code they would save the company by segregating and spinning out its valuable assets, while Washington furnished billions in taxpayer funds to make sure the company was viable."
It was actually put together at GM in the last weeks of '08 and first months of '09 by a guy named Jay Alex. The new administration accepted it and publicly fronted it as their own. Such, is how our govt works nowadays.

I do understand the neccessity of saving the auto industry, specifically GM. Their logistics train is extremely long and their falling would have taken out hundreds of companies that also provided parts for just about everything we use today. A bearing is a bearing, a wire harness is a wire harness..the same companies that provided those things to GM also provided them for household appliances, farm equipment, aircraft and just about everything else.
What I didn't/don't like about the GM bailout was the fact that both GM and the govt proudly exclaimed that GM paid back their loan in full with interest. Simply not true. Bankruptcy was filed June 1 2009, with GM being turned into two separate companies. Old GM with all the company's liabilities and debt, and New GM with a butt load of taxpayer $$ and debt backed by the stock.. newly created thru the stock-for-cash deal with the Govt, specifically Federal Reserve and US Treasury. But, GM had already received $13.4 billion thru TARP in the last days of 2008, and early in 2009. All debts/liabilities that existed prior to June 1, '09 went with Old GM in the bankruptcy, including that $13.4 billion. It was not part of the stock-for-cash swap. Both the Car Czar Steve Rattner and Larry Summers ( director of the National Economic Council 'January 09-Dec '10) stated the taxpayer would never see a dime of that $13.4B come back.
(There was a total of $17.4 billion authorized----Chrysler got the other $4B. They had to pay theirs back)

New GM came out smelling like a rose, decades of stockholders in Old Gm got hosed, and the taxpayer got skewered to the tune of $13.4 billion.

 

[hurleyjd]

Don't forget the government bailout that saved several large corporations, and allowed them to stay in business............... (a related post) .... Then, we, the tax payer are left holding the bag while the major financial organizations were bailed out, and the CEO's given large bonuses

I suppose you are mostly referring to the auto sector and some of the financial institutions.
The usual narrative is that the lenders caused the subprime debacle, but they didn't do it all on their own. Both the borrowers and the govt itself bear a huge share of the blame, and it all began with CRA, the Community Re-investment Act of 1977. (I have edited the following slightly, but only to remove politics from it.)
"Under (that year's) Housing and Urban Development (HUD) secretary, Community Reinvestment Act regulators gave banks higher ratings for home loans made in 'credit-deprived' areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting. In addition, as part of the push to issue home loans to lower income borrowers, Fannie Mae and Freddie Mac made a common practice to virtually end credit documentation, low credit scores were disregarded, and income and job history was also thrown aside. "

The above, is the bugaboo that took down Leman Bros in Sept of '08, Bear Stearns 6 months earlier, (that fall began the long chain of events) put GM on the ropes because they could no longer find $$ to borrow, nearly took down AIG, forced Fannie Mae and Freddie Mac into chapter 11) and did take down many many banks.

I was not and am not happy with the way the GM bailout went. I will never again buy a GM product. The cash for stock plan was not orchestrated by the govt as so many believe. "In the popular version of the company's turnaround story, as GM teetered toward liquidation in 2009, an Obama-appointed SWAT team, led by financier Steven Rattner, swept in and hatched a radical plan: Through a novel use of the bankruptcy code they would save the company by segregating and spinning out its valuable assets, while Washington furnished billions in taxpayer funds to make sure the company was viable."
It was actually put together at GM in the last weeks of '08 and first months of '09 by a guy named Jay Alex. The new administration accepted it and publicly fronted it as their own. Such, is how our govt works nowadays.

I do understand the neccessity of saving the auto industry, specifically GM. Their logistics train is extremely long and their falling would have taken out hundreds of companies that also provided parts for just about everything we use today. A bearing is a bearing, a wire harness is a wire harness..the same companies that provided those things to GM also provided them for household appliances, farm equipment, aircraft and just about everything else.
What I didn't/don't like about the GM bailout was the fact that both GM and the govt proudly exclaimed that GM paid back their loan in full with interest. Simply not true. Bankruptcy was filed June 1 2009, with GM being turned into two separate companies. Old GM with all the company's liabilities and debt, and New GM with a butt load of taxpayer $$ and debt backed by the stock.. newly created thru the stock-for-cash deal with the Govt, specifically Federal Reserve and US Treasury. But, GM had already received $13.4 billion thru TARP in the last days of 2008, and early in 2009. All debts/liabilities that existed prior to June 1, '09 went with Old GM in the bankruptcy, including that $13.4 billion. It was not part of the stock-for-cash swap. Both the Car Czar Steve Rattner and Larry Summers ( director of the National Economic Council 'January 09-Dec '10) stated the taxpayer would never see a dime of that $13.4B come back.
(There was a total of $17.4 billion authorized----Chrysler got the other $4B. They had to pay theirs back)

New GM came out smelling like a rose, decades of stockholders in Old Gm got hosed, and the taxpayer got skewered to the tune of $13.4 billion.

Don't forget the government bailout that saved several large corporations, and allowed them to stay in business............... (a related post) .... Then, we, the tax payer are left holding the bag while the major financial organizations were bailed out, and the CEO's given large bonuses

I suppose you are mostly referring to the auto sector and some of the financial institutions.
The usual narrative is that the lenders caused the subprime debacle, but they didn't do it all on their own. Both the borrowers and the govt itself bear a huge share of the blame, and it all began with CRA, the Community Re-investment Act of 1977. (I have edited the following slightly, but only to remove politics from it.)
"Under (that year's) Housing and Urban Development (HUD) secretary, Community Reinvestment Act regulators gave banks higher ratings for home loans made in 'credit-deprived' areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting. In addition, as part of the push to issue home loans to lower income borrowers, Fannie Mae and Freddie Mac made a common practice to virtually end credit documentation, low credit scores were disregarded, and income and job history was also thrown aside. "

The above, is the bugaboo that took down Leman Bros in Sept of '08, Bear Stearns 6 months earlier, (that fall began the long chain of events) put GM on the ropes because they could no longer find $$ to borrow, nearly took down AIG, forced Fannie Mae and Freddie Mac into chapter 11) and did take down many many banks.

I was not and am not happy with the way the GM bailout went. I will never again buy a GM product. The cash for stock plan was not orchestrated by the govt as so many believe. "In the popular version of the company's turnaround story, as GM teetered toward liquidation in 2009, an Obama-appointed SWAT team, led by financier Steven Rattner, swept in and hatched a radical plan: Through a novel use of the bankruptcy code they would save the company by segregating and spinning out its valuable assets, while Washington furnished billions in taxpayer funds to make sure the company was viable."
It was actually put together at GM in the last weeks of '08 and first months of '09 by a guy named Jay Alex. The new administration accepted it and publicly fronted it as their own. Such, is how our govt works nowadays.

I do understand the neccessity of saving the auto industry, specifically GM. Their logistics train is extremely long and their falling would have taken out hundreds of companies that also provided parts for just about everything we use today. A bearing is a bearing, a wire harness is a wire harness..the same companies that provided those things to GM also provided them for household appliances, farm equipment, aircraft and just about everything else.
What I didn't/don't like about the GM bailout was the fact that both GM and the govt proudly exclaimed that GM paid back their loan in full with interest. Simply not true. Bankruptcy was filed June 1 2009, with GM being turned into two separate companies. Old GM with all the company's liabilities and debt, and New GM with a butt load of taxpayer $$ and debt backed by the stock.. newly created thru the stock-for-cash deal with the Govt, specifically Federal Reserve and US Treasury. But, GM had already received $13.4 billion thru TARP in the last days of 2008, and early in 2009. All debts/liabilities that existed prior to June 1, '09 went with Old GM in the bankruptcy, including that $13.4 billion. It was not part of the stock-for-cash swap. Both the Car Czar Steve Rattner and Larry Summers ( director of the National Economic Council 'January 09-Dec '10) stated the taxpayer would never see a dime of that $13.4B come back.
(There was a total of $17.4 billion authorized----Chrysler got the other $4B. They had to pay theirs back)

New GM came out smelling like a rose, decades of stockholders in Old Gm got hosed, and the taxpayer got skewered to the tune of $13.4 billion.

How did Ford survive. Also how much government help did Fiat get for taking Chrysler on. Also when a foreign billionaire offers to fund and start a steel mill in the USA to avoid tariff. How many dollars in tax breaks will he demand to open the business. Will his profits remain here or go to his home country.

 

[haase]

Ford seen it coming, I'm sure the others did too, but they made cutbacks before it happened, not sure about Chrysler, fiat bought them before it happened, and then pretty much drained them.

 

[greybeard]

Ford had, around 2005, 2006, gotten on good financial footing by basically mortgaging the entire company assets, down to even the blue oval logo..did it thru private (non-govt) lenders. They had a great CEO Alan Mullaly that led them thru that tough period. The CEOs of all 3 automakers went to Washington together to plead for the bailout but Ford went only because all 3 shared so many parts suppliers and Ford knew if those parts suppliers went down the tubes if GM failed, it would cause extreme problems for Ford as well.
Fiat had been looking for a way to get more US market share for several years, the old Fiat brand had done very poorly here from the start. Their technology in the 1st decade of the new century was way behind the times.
In early Jan '09, Chrysler got it's $4 billion emergency loan that was discussed in the post above, but they burned thru that quickly, and Fiat had offered to buy a stake of Chrysler in late January.
When the US Govt told Chrysler it's plan for re-structuring was unsound and wouldn't work in March '09, it also told Chrysler to find a buyer within 30 days or it would be cut off from any further govt $$$$, but they did give Chrysler another $500 million to get thru those 30 days so they could look for outside buyer. Chrylser was in such bad shape, that Geithner and the rest of the economic team firmly believed it could never survive even with a Ch 11 bankruptcy unless it had outside resources, and.......the kicker, even with big bridge loans, their debt was so extensive that lenders would have forced a sale long before the company could get back on it's financial footing.

Marrichione of Fiat, offered to buy that 35% stake in Chrysler in January, but had been in talks with Chrysler since Sept '08. The reason it only offered to buy 35% was because the deal was already in the works for UAW to receive 55% of the company to fund their pension plan, a retiree health care trust called VEBA. That 55% was untouchable. The other % was owned by secured creditors. Fiat has since then, bought the remaining part of Chrysler from UAW in a cash deal.

The US Govt's only role in the Chrysler/Fiat deal was a promise to fast track anti-trust approval, working with financial debt holders agreeing to not try to stop the merger (they tried anyway and it went to SCOTUS) and facilitate the SEC end of the deal and to pressure Europe/Italy to also approve the deal, since any merger between companies from different nations has to be approved by both nations. AFAIR, Fiat didn't get any cash payment to buy into Chrysler.

All 3 automakers did receive some significant loans but not from TARP, but from Energy Department's Advanced Technology Vehicles Manufacturing program to do research and development relating to more energy efficient automobiles.In return (as well as repaying the loan), it promised to expand it's foray into battery powered and multi fuel cars and to sell off Volvo. Ford did not need the BIG Money because it had already retooled for smaller more efficient vehicles using the $$ it had gotten in 2006 from hocking the company's assets to private lenders.

GM had approached Ford in 2006 and again in July 2008 about a merger. Ford wasn't interested and told GM to take a hike.

 

[haase]

Could never imagine Ford mergerin with GM.

 

[hurleyjd]

Marrichione of Fiat has been trying to sell off the truck brand. I think I read it somewhere. Fiat also has the case- ih and new Holland equipment line I believe and also I am not sure. Also does Italy have a large government stake in Fiat.

 

[Bright Raven]

And so now you're stupid not to be in debt up to your neck.

I'm stupid

The only post you got right.

 

[jehosofat]

And so now you're stupid not to be in debt up to your neck.

I'm stupid

The only post you got right.

Time will tell Ol' Crow :lol2:

 

[Bright Raven]

I'm stupid

The only post you got right.

Time will tell Ol' Crow :lol2:

Ok

 

[greybeard]

Marrichione of Fiat has been trying to sell off the truck brand. I think I read it somewhere. Fiat also has the case- ih and new Holland equipment line I believe and also I am not sure. Also does Italy have a large government stake in Fiat.

Not that I've heard about Hurley. Dodge Ram was reorganized as a standalone part of FCA (Fiat Chrysler Automobiles) but selling it would take a huge slice out of Fiat's revenue. That would be equivalent to Ford selling off it's very successful F series truck sector.....ain't gonnna happen.

I've never read anything that said Italy has any ownership in Fiat, tho I believe Italy may have loaned Fiat some funding to help take on Chrysler in 2009. Everything I've seen indicates Fiat is moving traditional FCA brands out of Italy and will be re-focusing on Jeep and Ram products there.
That group is big, with several different corporate sectors. FCA, FCAI, it has it's own financing institution and made the same move with Masserati that it did with Ram.

 

[Aaron]

And so now you're stupid not to be in debt up to your neck.

I'm stupid

I'm borderline retarded. :dunce:

 

[Nesikep]

I am as well.. I'm talking about amassing cash. Having real assets is good, but if you need cash at any point and there are no buyers for anything, you're up shyte creek once again.. there's just no winning

 

[Aaron]

I am as well.. I'm talking about amassing cash. Having real assets is good, but if you need cash at any point and there are no buyers for anything, you're up shyte creek once again.. there's just no winning

There are always buyers for something. Heck the world could go in the shyter and horse women will still shell out big bucks for square bales for their horses. They may have to kill their husband to collect life insurance money to pay for the hay, but they will do it. I know one young couple in town, hubby told wifey to get rid of horses, too expensive. Wifey told hubby never to suggest such a thing again or the horses would be living well on his alimony check.

 

[hurleyjd]

Ford seen it coming, I'm sure the others did too, but they made cutbacks before it happened, not sure about Chrysler, fiat bought them before it happened, and then pretty much drained them.

Are you referring to the time that Mercedes Benz bought Chrysler. Chrysler had enough money in the bank to make the deal not cost Mercedes anything. In 1979 Chrysler was bailed out with government help. Think it might have been when Lee Ioccoa was in charge.

 

[haase]

Yes I am Hurley, I'm sure some of Chrysler money went back to help Mercedes.

 

[greybeard]

Yes I am Hurley, I'm sure some of Chrysler money went back to help Mercedes.

I think yall may be getting your bailouts intertwined and the timelines mixed. The original bailout of Chrysler thru congress and Lee Iacocca happened in 1979 and was paid fully with interest by 1983. It was 15 years later that the DaimlerBenz/Chrysler merger happened, and it's purpose was exact opposite what the Fiat deal is. Chrysler made lots and lots of money on the K cars and minivans (it's what got them out of bailout debt) but they hung on that horse too long and didn't move forward with technology. Daimler wanted Chrysler so they could integrate Mercedes modern rtech and quality and tech into American made Chrysler products and make money at it, but..as one auto analyst put it, ""The American volume customer is not willing and is probably not able to pay premium prices for premium technologies," and he was correct.

(and of course, just as Chrysler and AMC did before, Daimler wanted the Jeep brand, specifically Grand Cherokee.)

Some of Chrslyer's profits did go to Mercedes. About $11 billion over the course of the 9 years Daimler Benz had controlling interest in Chrysler. But, overall, Mercedes, even with the $11 billion Chrysler added to in profits, lost heavily on the deal. Daimler had to put so much $$$$$$ into Chrysler to make/keep it profitable and to move into better technology, that at the end of the 9 years, they lost about $25 billion. (Daimler paid $36 billion for Chrysler in '98 and in '07 had to agree to pay nearly another billion $ to pay off Chrysler debt before Cerberus Capital would agree to take Chrysler over, with Cerbrus paying Chrysler direct about $7 billion. Chrysler was in the midst of restructuring because it had lost over $1 billion in 2006.

Most auto analysts believe DaimlerBenz lost a whole lot more than that..maybe as much as $60billion altogether.