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What should we do about the troubled auto makers in the US?

There is a lot of talk about GM and Ford these days. With their stock prices plummeting and new car sales acting as the driving force behind their demise I’ve heard a few different ideas as to what we should do. Here is my idea.

Let me start off by saying that if you are one of the people who says ‘let them go bankrupt’ then you honestly don’t understand the ripple effect that would have on this country and the entire world. So to me this is not an option.

From: Automakers’ $25 Billion Fast-Track Bailout

The incoming Obama Administration is determined to help the U.S. auto industry survive the deepening recession. And with General Motors, Ford, and Chrysler hanging on by threads, there is little pressure so far to have auto executives give something in return, except perhaps a promise to preserve jobs. The only questions that remain, say those close to and on the President-elect’s transition team, is how the help materializes—and when.

I added this article excerpt to show that the new administration is taking this problem very seriously. Here is a little more from this article.

Obama’s remarks came a day after a highly publicized meeting between executives including GM CEO G. Richard Wagoner Jr., Chrysler CEO Bob Nardelli, and Mulally, and House Speaker Pelosi and Senate Majority Leader Reid. There, the Detroit execs specifically requested a bridge loan of $25 billion to help get their companies, as well as some of their suppliers, through the recession. The requested loans would have few strings attached, unlike $25 billion in loans coming from the Energy Dept., which are targeted specifically toward retooling plants and offsetting companies’ investments in more fuel-efficient vehicles.

This is where the debate can start. I think giving them a loan as the primary rescue measure is like putting bubble gum over a hole in a damn. This of course is how most of TARP’s money has been being spent (that’s an issue for another time).

Here is my idea. First, I know the automakers need money. I would prefer that the US Sovereign Fund (known somewhat as TARP) buy preferred shares in these companies. If we are going to bail out companies whose stocks are at 65 year lows then we should be able to get a bargain on the acquisition.

If the US Government was to invest $25B dollars into a program with the automakers it should take $2B to buy preferred shares in both GM and Ford. It should then guarantee a low interest loan to Ford so that they can buy Chrysler. The loan amount will need to be based on current market prices and not on what Cerberus paid for it. This would stabilize stock prices and give us a bottom or base to build from.

Here is where my idea differs from most. I will say that I was an avid support of the Republican Party in the 2008 election and that I do not support Government Sponsored Health Care as our incumbent proposes it. With that being said I believe the government should step in and put a $10B package together whereby they take over responsibility for the automakers pensions. With the focus being primarily offering to subsidize the capital payments to retirees while completely taking over the cost of healthcare. The legacy cost (or the cost per vehicle to fund pensions) is about $2500-$4000 for US Auto Makers. This is a burden that has slowed the US Big Three down for almost two decades.

Next, the US Government should take $5B and sponsor the development of more fuel efficient cars. Companies will be able to submit research assistance requests so that they can free up their current capital supplies while continuing to work on developing better vehicles. This is a long term program that will help to secure the future of these companies.

Finally, the last $8B should be used to grant low interest operational loans to each of the auto makers. This would shore up mounting losses and allow the companies to continue operations. I believe this money would give the auto makers about a years worth of breathing room. This should be long enough depending on other economic conditions for each company to restructure their organizations. To the best of my knowledge both Ford and GM were already working on moving into smaller vehicles and refurbishing or restructuring many of their plants.

In my mind this is a plan to address all aspects of their problems and not just a plan to throw money at them with the hopes they can survive. Yes, they need money but more so they need a new direction. They need to be lean and nimble to compete in a modern economy. Now is the time to act.

Disclaimer- Roger Bryan does own GM Options and/or Stock

Goodwill of Greater Washington Opens a New Book Store in Arlington, VA

Goodwill of Greater Washington Opens a New Book Store in Arlington, VA

Some of the most popular items at Goodwill Retail Stores are books and books on tape. By opening a new bookstore within a store, Goodwill of Greater Washington believes it will be providing a service to its book customers who will now have a store dedicated to their shopping needs and will no longer have to bounce from store to store looking for inexpensive hard to find books.

The Book Nook will be located at the basement of the Goodwill Retail Store at 4717 Columbia Pike Arlington, VA.

To Read the full article:
http://www.dcgoodwill.org/news/bookstoremediarelease.pdf

To donate a vehicle to Goodwill of Greater Washington click here:
http://www.cars4goodwill.com  or call 1-877-gwcars-9

Charlotte Business Journal's Article about Goodwill's " Wish Program "

The Wish Program helps place working families in vacant apartments. This article talks about how the program works.

You can get more information about this program by visiting:
http://www.wishprogram.org/

To donate your vehicle to Goodwill of the Southern Piedmont in support of their “Wish Program” you can do so by calling 1-877-gwcars-9 or by visiting:
http://www.cars4goodwill.com

Read the article by visiting
http://www.wishprogram.org/busijournal.pdf

Goodwill of The Southern Piedmont's "Wish Program"

When you donate a car to Goodwill of the Southern Piedmont you are helping to fund their ‘Wish Program” empowering working poor families from homelessness to self-sufficiency.

WISH – Workforce Initiative for Supportive Housing
A Practical Solution to Charlotte’s Homeless Crisis
The WISH Program is a faith-led permanent supportive housing solution whereby selected families are given a defined set of “steps” which can empower them from homelessness to self-sufficiency. Highly-screened working families selected for WISH receive intensive life-skills support from social workers, a connection to local faith groups (through volunteers called Hope Teams,) a monthly rent subsidy for an affordable apartment, transportation assistance, etc.

You can get more information about this program by visiting:
http://www.wishprogram.org/  

To donate your vehicle to Goodwill of the Southern Piedmont in support of their “Wish Program” you can do so by calling 1-877-gwcars-9 or by visiting:
http://www.cars4goodwill.com  

test 6

Google has released several plug-in and bug fixes to the Chrome browser.   They have also fixed some of the issues that users were experiencing when trying to view videos and pdf files.

test for roger

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This is from the Wall Street Journal about Vehicle Donations. Please watch the video by following this link below.

http://online.wsj.com/article/SB122100165129316945.html

TAX REPORT
By TOM HERMAN

Used-Car Donations Take a Hit
September 10, 2008; Page D3
If you’re thinking about donating your gas-guzzling sport-utility vehicle to charity and driving away with a hefty tax deduction, think again.

About 900,000 people donated their cars in 2004, but that number dropped to about 300,000 by 2005. As tax columnist Tom Herman explains, a new law changed the amount you can deduct for your d