What's The Story

Economic Stimulus Package- GM Bailout Plan Would Require $85Million a Day

Jerry — Fri, 27 Feb 2009 18:40:11 +0000

It seems that GM swallows bailout money faster than the fed can feed it. GM reported a loss for the three month period October 2008 to December 2008 of $9.6billion- that’s almost $85million a day. Considering GM received the first bailout payment of $13.4billion two months ago, how long will the next $18billion last? By applying simple arithmetic the money would be devoured in less than five months at the rate that GM is sucking up cash. In addition GM will lay off an additional 10,000 American workers and is currently late with payments to the UAW employee benefits fund of $20billion.

Let’s do some simple math. If you take the loss from the first quarter of this year- $10billion and add the $20billion GM currently owes in employee benefits, the total equals -$30billion. Now if the Fed writes a Stimulus Package check for an additional $18billion that means the day that Rick Wagoner (GM) accepts the bailout money, GM will be $12billion in the hole without paying any other creditors.

What’s the Story Rick? Rick Wagoner is forecasting that by 2011 GM will be able to start to make payments on this federal loan. This forecast will be included in Rick’s viability plan to apply for more bailout money. Do you believe this? GM’s- Rick Wagoner’s past business plans have not been accurate since his first application to borrow money from the TARP fund. There already have been 50,000 jobs cut and 11 factories closed which have not yet stopped GM’s daily increase of debt. The employees at GM have been through this roller coaster before and should be aware of the smoke and mirrors technique that Rick continues to stand behind.

Under Rick’s plan- GM will keep closing factories, laying off autoworkers and have no recovery plan in place to stimulate the sales of GM’s products to the consumer. Is it time for an employee takeover of GM? Experienced employees may have the best solutions to consolidate, cut costs and be viable while streamlining the manufacturing of autos. The staff and workers at GM need to face the reality that Rick is dragging the corporation to a near dead end.

To the average taxpayer, $30billion is a tremendous amount of money and it is hard to comprehend the total amount of GM’s financial problems. The facts that that never get posted in GM press releases is the total $debt GM has on the street. GM’s current cash flow is a leveraged -$10.7 billion, plus monthly losses of $3.5billion and add to that over $1trillion of other GM liabilities. It is very clear to see that the economic stimulus package or bailout money is not going save GM or its employees jobs. Unfortunately the future looks grim as daily news stories unfold about General Motors financial troubles. Once known as the “Heartbeat of America”, GM now needs a heart transplant and we are trying to treat it with an aspirin. It is time to stop prescribing the aspirin.

Ford Motor Company- Their Own Stimulus Package, No Bailout Money Needed

Jerry — Mon, 26 Jan 2009 20:04:03 +0000

Ford Motor Company, much different than GM and Chrysler, has continued to operate without applying for Bailout money from the Fed. Ford continues to strategize their way through the deep recession and tough economic times ahead. Although Ford has asked the U.S. Government for access to a line of credit for $9billion, they have not received any loans nor has the government acted on Ford’s requests to date. Ford’s management team continues to restructure and tighten its belt to survive the recession the country is in. Ford Motor has borrowed heavily in the past 2 years and has managed to leverage these loans with solid assets within the company.

As Ford’s president and CEO, Alan Mulally stated to Congress back in December, they are in a much different situation than their competition. Ford does not have to liquidate immediately and does not need short term emergency funds but rather a long term line of credit no different than they would pursue through a commercial bank.

Ford Motor Company is the best example of an “American Automaker” dealing with the global markets, reacting and restructuring to survive and profit during the recession. They have excelled the other U.S. auto companies with strategic and smart marketing plans by facing the poor economic conditions and targeting the customers that buy their products. It appears Ford executives understand in order to maintain cash flow and save jobs, the existing inventory must be moved out so the auto and truck plants can continue working to produce new products.

Maybe the biggest factor in Ford’s survival is the way their administrators implemented a plan early on and create innovative ways to deal with the recession in the year ahead. Ford took a long term approach in knowing 2009 would be a difficult year and the economic recovery may not start till the second half of 2009. For these reasons, Alan Mulally Ford CEO, is not camping out and sleeping on Congress doorstep waiting for the door to open to be handed a plate of money. Ford continues to be proactive in saving jobs and work with the autoworkers to benefit everyone for the long term. What’s The Story ?

Baby Boomers, Retirement and Spending Habits

Jerry — Mon, 26 Jan 2009 02:27:10 +0000

Baby Boomers, Retirement and Spending

Like many baby boomers preparing for retirement, your plans have most likely changed due to the current economic slowdown and decreasing values of retirement plans. It seems most of us are realizing that an early retirement plan will have to be put off and we will be working to an age older than our parents did when they retired. Remember your parents telling you to “save for a rainy day”? Well the rain is here and we have to face the reality that the “good old days” are likely gone forever.

The new game plan is get down to basics and plan for financial survival in the years ahead. The baby boomers are a generation of pacesetters that have been the marketing target in the marketplace throughout their lifetime. The upcoming 10 year period will probably be the last hoorah for our generation to have a majority spending influence in the global economy. This generation can no longer reward themselves with material things every minute they feel they deserve it. Boomers must learn to value the simpler things in life, spend less and find happiness without feeling deprived. Personal satisfaction can be achieved in many other ways rather than spending money.

Boomers should take the time to discover new ways to gain personal gratification as they curb their spending. Take a count of the many material things you have purchased in the past 20 years and make a list of those items in the priority of your enjoyment. You will probably discover that after you bought the items you never had time to enjoy them or didn’t need them at all. Make another list of activities, recreation, crafts or hobbies that you truly enjoy doing but wish you had more time to do them. Analyze and evaluate both lists to see if you are satisfied with what your hard earned dollars bought in the past.

Now is the time to adjust your financial goals, be realistic about retirement plans and try to find personal satisfaction and happiness in alternate activities you love to do. Recognize your spending weaknesses and convert them to savings plans as you reach your final working years before retirement. Instead of just tweaking your spending budget, make a complete savings and retirement plan with goals that are reachable. Explain to others in your household that this adjustment must be made for a happier and healthier future for the whole family.

It is ok to tell the kids certain material things aren’t affordable right now. From your experience, teach them what the word affordable really means and that buying today and paying for tomorrow is not the way to happiness. It is up to you to show them that personal gratification can be attained many other ways like physically doing something you enjoy or helping others that are less fortunate.

What’s The Story

GM Bailout, Stimulus Package

Jerry — Sat, 24 Jan 2009 22:49:20 +0000

It has only been a little over a month since GM’s- Rick Wagoner stood in front of the U.S. government and every American taxpayer begging for government emergency funds to bailout his company and convinced the fed to give him $13.4billion. He promised to stimulate the sale of GM’s stagnant inventory, save jobs and reorganize to be competitive in the way they do business. Since the first payment made last month for $4billion, Rick is now changing the tune of his story saying “the U.S. economy and global economies have faced an unprecedented series of challenges over the past year”. What Rick is telling us is that in his first forecast given to convince the fed for the bailout money, that he planned to sell 12 million autos in 2009 and now one month later he must lower the estimate to 10 million autos. Rick Wagoner made the announcement at an auto conference in Detroit last week and this will be in his updated report to give to the government next month.

My fellow Americans, we have been buffaloed- big time. GM continues to use the bailout money for interests other than focusing on clearing out existing inventory to allow plants to build more autos to save autoworkers jobs. Rick will be back in the money line by midwinter begging for more bailout cash hoping to receive more of the $350billion balance. And don’t be surprised if shortly after GM receives the last payment, Rick announces in the spring that GM must go into bankruptcy as his plan failed.

The stimulus funding for GM should stop immediately and GM should be mandated into bankruptcy now as to protect our money and try to secure jobs. Just as in any traditional bankruptcy procedure, the first thing GM should do is clear out and liquidate every auto GM has in its inventory at it dealers and stockyards to recoup the cash now. Take all GM auto products to its dealer’s lots and have a public auction with no reserve pricing. If GM is left on its own to decide how to fix the problem and continues the way they are there will be more jobs lost every day and inventory will not reduce and plants will close. The Fed has the power to call back the first portion of this bailout loan at the end of February and stop funding GM, do think they will?

Circuit City announced recently they will be closing their doors as negotiations for an acquisition fell thru. Every one of their stores will close and liquidation will start within days. Is the Fed bailing out Circuit City?? Of course not. What’s The Story

Economy Stimulus Package – save Jobs?

Jerry — Sat, 24 Jan 2009 13:43:17 +0000

Government Bailout or First National Bank of Uncle Sam????

There are many different opinions about our government subsidizing private corporations’ debt and which of they should qualify for these large sums of tax payers dollars. Believe me, I am the first to support American companies and products made in America, but this bailout idea just doesn’t feel right to me. Many large corporations are using the recession as an excuse to beg the government for funds to pay for their hangover blues from mismanagement and lavish corporate habits. Since the major banks have slowed lending to corporations, they have to go elsewhere for operating loans and what better place to go to than the U.S. government which has the deepest pockets of all. I think we are between a rock and a hard place, I understand the impact on unemployment if we don’t lend to corporations like GM. It seems like the large defaulting businesses are holding their employees hostage and putting them on display on Main Street for America to see.

Companies like GM have made promises in the past to streamline their production and stay focused on improving the autos fuel economy, they have done neither. It is time for a change and the only way it will happen is to let the ceo’s repair their own problems and figure out how to survive in this recession as the rest of us are forced to. Handing out money to corporations like GM only prolongs the current problems for the employees and gives the executives more tee time on the golf course to decide what to spend it on. Money given to companies like this will not get America out of this recession. Think of the current scenario- sales of housing, autos, and many consumer products are way down. How does loaning a corporation funds improve their sales?… it doesn’t. So how do you increase sales and regain consumer confidence? Simple, give the consumer the means (money) and incentive to start buying again.

To me it is very clear why GM can’t survive in this economy, they need to face the reality that the old days are gone. GM manufactures over 8 brands of autos; Buick, Cadillac, GMC, Hummer, Pontiac, Saab and Saturn in addition to GM’s own foreign imports. Combined, these brands offer over 95 models of vehicles in the marketplace, a bit excessive don’t you think. GM can’t even compete within itself let alone competing with all the other car companies. Would you lend GM your hard earned money to buy yet another auto manufacturer like Chrysler? I don’t think so. If GM was given the bailout money, where do you think it would go- to the consumer, employees or back in executives’ pockets?

It doesn’t take a marketing genius to realize the fact that there is no room in the market place for all of those models, considering how much of the market share has gone to foreign automakers. I say let happen what will happen and let all the American automakers swallow each other until they are full and whoever is left in the end might realize the answer. These are the companies that sat back, watched and some even invited the sale of imported autos in America as the car market was deteriorating.

What’s The Story