GM to temporarily close 21 factories to cut 250,000 vehicles

[kentuck]

Please be aware that when the White House taps into the TARP fund to bailout the auto companies, it will set a precedent. It will give them authority to to tap into the rest of it. Congress should not surrender their authority in this matter. Just saying. As usual, the White House is up to no good.
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http://www.talkingpointsmemo.com/news/2008/12/gm_to_cut_250000_vehicles_from.php

<snip>
General Motors Corp. says it will cut another 250,000 vehicles from its first-quarter production schedule by temporarily closing 21 factories across North America.

The move affects most plants in the U.S., Canada and Mexico. Many will be shut down for the whole month of January.

Spokesman Tony Sapienza said normal production would be around 750,000 cars and trucks for the quarter.

GM and nearly all automakers who sell in the U.S. are mired in the worst sales slump in 26 years.

Cash-strapped GM is seeking government loans to stay in operation beyond the end of the year. The White House says it may tap the $700 billion Wall Street bailout fund to help GM and Chrysler stay in business after the Senate blocked a measure to provide $14 billion in immediate loans

[notadmblnd]

1. Please, tell me what good will come of letting them fail?

Be very specific in your answer please.

On edit, if that TARP money had been used like it was supposed to have been; that is freeing up the credit market, the auto makers wouldn't be asking the government for funds because loans would be available via normal channels.

[kentuck]

2. It will be catastrophic...

in my opinion. If the President has hinted that he would agree to using the TARP money, then why doesn't the Congress simply vote to use some of the remaining funds to do that, rather than jump thru hoops and play political games? They have the authority - they just don't know how to use it.

[notadmblnd]

7. I can't answer that question. I doubt if the little mionkey has seen the error of his ways

All I know is that; the republican in congress are traitors and criminals, looking out for foreign interests ahead of America's. Why they are allowed to and go unpunished is truly beyond me.

[FarCenter]

4. The credit market is not going to "free up"

The problem was that they were giving auto loans to consumers with poor credit.

Losses on auto loans are up.

Creditworthiness of consumers continues to deteriorate.

There is no way that they can sell 17 million cars per year to creditworthy consumers.

The fleet size is about 250,000,000 vehicles. Scrappage is at about 5.6% per year, or 14 million per yar.

But if the fleet size also drops 1% per year (and there are more vehicles than drivers today), that would cut the demand by 2.5 million which drops the demand to 11.5 million. And with tough times, maybe a 1% per year shrinkage in the fleet is too small.

[notadmblnd]

8. yep they were giving out loans to the homeless on the streets were they?

Your number one reason is ass backwards. Most of the loans given were to gainfully employed people. many who have lost their jobs. Just as with the housing market, I don't believe for one minute that all these people took out loans for cars or houses with no intention of paying them off. I think job loss is the number one reason people default, not that they're inherently crooked.

[FarCenter]

9. FICO credt scores required by lenders have gone up; FICO scores of consumers have gone down

Lenders weren't requiring as high FICO scores, since they could package the auto loans up into bonds, dress them up with credit default swap insurance, and sell them off to gullible investors. That racket has stopped, since the investors now realize that the securitized auto loans aren't creditworthy and the insurance companies behind the CDS (think AIG) aren't solvent.

FICO scores of consumers have gone down for a variety of reasons. Job loss is one. Small business owners may be struggling. High prices for gas and heating caused others to increas balances on credit cards or draw on home equity lines of credit. Equity in homes has decreases, so that's a problem with creditworthiness.

It's not just job losses, and the job losses are not isolated to the auto industry. Lots of people in residential construction, real estate, mortgage lending, financial services of all types, etc. have lost jobs.

There are only 70+ thousand UAW employees at GM. Far more financial services employees have lost jobs in the last few months.

[notadmblnd]

10. You think this will only effect 70 thousand?

Try 4 million. And if you think your job won't be effected, you better think again. What ever industry you work in, you can bet your butt yours will be too.

[Vinca]

3. Here's an idea. Close the Mexican and Canadian plants permanently

and move the jobs back to the United States.

[kentuck]

5. Bingo!

Why couldn't GM think of that??

[Telly Savalas]

12. The Canadian plants are unionized.

Why do you advocate firing union workers?

[1gobluedem]

6. The coldest month of the year -- perfect

Can they humiliate autoworkers any more?

[sarcasmo]

11. Thanks, Republicans.