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Politics : Formerly About Advanced Micro Devices
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To: Taro who wrote (438033)12/4/2008 11:02:33 AM
From: rich evans2 Recommendations  Read Replies (3) of 1573689
 
The auto industry is one big cash machine. They build and ship cars on credit from their suppliers, get paid by the dealers with their bank flooring and then wait another 45 days or so to pay the suppliers. We are talking billions of dollars needed to operate. So in Chapter 11, they will need financing as the suppliers won't ship on credit. They will need DIP financing (debtor in possession) of huge amounts. The banks can't do it, they don't have the ability especially now.So the governement would have to step in just like they are being asked to now. The auto companies have no assets to secure any financing so it is only a priority thing for DIP and the secured bond holders would command. The judge could break the union contracts but then unions could go on strike and you end up with nothing. The auto companies have already negotiated out of their legacy costs for retirement and post retirement health care. But they do have some more big payments to make to the new union trusts which are taking over. So these payments would be negated. The pensions would end up the oblligation of the Pension guarantee board. This is unfunded and we the taxpapers would end up paying them anyway. The healthcare obligations for retirees would end up on medicare anyway and we would pay for that as well.
Conclusion , pay me now or pay me later even more.
Rich
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