Off Shore Drilling Ban Lifted..

[Desx]

Eastern Gulf is still off limits.. Atlantic and Pacific are being opened.

Another part of the bill:
I can see GM and Fords stock price increase due to this too.

Senate sends big spending bill to Bush to sign: Financial News - Yahoo! Finance

WASHINGTON (AP) -- Automakers gained $25 billion in taxpayer-subsidized loans and oil companies won elimination of a long-standing ban on drilling off the Atlantic and Pacific coasts as the Senate passed a sprawling spending bill Saturday.
The 78-12 vote sent the $634 billion measure to President Bush, who was expected to sign it even though it spends more money and contains more pet projects than he would have liked.

The measure is needed to keep the government operating beyond the current budget year, which ends Tuesday. As a result, the legislation is one of the few bills this election year that simply must pass. Bush's signature would mean Congress could avoid a lame-duck session after the Nov. 4 election.

White House spokesman Tony Fratto said the bill "stands as a reminder of the failure of the Democratic Congress to fund the government in regular order." But, he said, it "puts the United States one step closer to ending our dependence on foreign sources of energy" by lifting the offshore drilling ban and opening up huge reserves of oil shale in the West.

The Pentagon is in line for a record budget. In addition to $70 billion approved this summer for operations in Iraq and Afghanistan, the Defense Department would receive $488 billion, a 6 percent increase. The spending bill also offers aid to victims of flooding in the Midwest and recent hurricanes across the Gulf Coast.

Such a huge bill usually would dominate the end-of-session agenda on Capitol Hill. But it went below the radar screen because attention focused on the congressional bailout of Wall Street.

The measure settles dozens of battles that have brewed for months between the Democrats who run Congress and the White House and its GOP allies.

The administration won approval of the defense budget. Democrats wrested concessions from the White House on $23 billion for disaster-ravaged states, a doubling of low-income heating subsidies, and smaller spending items such as $24 million more for food shipments to the elderly.

The loan package for automakers would reward them with $25 billion in below-market loans, costing taxpayers $7.5 billion to subsidize the retooling of plants and development of technologies to help U.S. carmakers to build cleaner, more fuel efficient cars. Companies would not have to begin repaying the loans for five years, drawing objections from Sen. Jon Kyl, R-Ariz., who predicted they would return for more help when the money is due.

Republicans made ending the coastal drilling ban a central campaign issue this summer as $4-plus per gallon gasoline stoked voter anger and turned public opinion in favor of more exploration.

The action does not mean drilling is imminent and still leaves the oil-rich eastern Gulf of Mexico off limits. But it could set the stage for the government to offer leases in some Atlantic federal waters as early as 2011.

Also in the bill is money to avert a shortfall in Pell college aid grants and solve problems in the Women, Infants and Children program delivering healthy foods to the poor.

In addition to the Pentagon's budget, there is $40 billion for the Homeland Security Department and $73 billion for veterans' programs and military base construction projects. Combined with the Defense Department's spending, that amounts to about 60 percent of the budget work Congress must pass each year.

Democrats came under criticism from the GOP for short-circuiting the normal process for a spending bill after it became clear that Republicans would force difficult votes on the drilling ban.

Democrats also wanted to avoid an election-year clash with Bush that would have played in his favor. They are willing to take their chances that Democrat Barack Obama will be elected president in November and permit increases for scores of programs squeezed by Bush each year.

Bush had threatened to veto bills that did not cut the number and cost of pet projects in half or cause agency operating budgets to exceed his request. Democrats ignored the edict as they drafted the plan and the White House has apparently backed down.

Taxpayers for Common Sense, a watchdog group, discovered 2,322 pet projects totaling $6.6 billion. That included 2,025 in the defense portion alone that cost a total of $4.9 billion. Critics of such projects are likely to discover numerous examples of links to lobbyists and campaign contributions.

[AladainAF]

discovered 2,322 pet projects totaling $6.6 billion

lawl.

[Lyrical]

I would not touch an automaker right now.

1- They are having the worst year in 20 years. I worked in the industry as a District Manager for 12 years, and I have to tell you, that there were times when we thought we were going to have to shut the doors of the automaker. The industry is pretty cyclical, and when its down, its tough to eat. And this year is worse then those years? Yuck.

2- You have dealers that are going "belly up." This never happens, dealers always get bought out. Dealers used to be able to sell out for 8 times earnings (its called blue sky), compared to a typical business getting bought out for 2-3 times earnings. That is how much dealerships used to be seen as being "heads and shoulders" better than other small businesses. But now they can't even get people to buy them for the value of their real estate! Part of this reason is that no one wants to pay high dollar for a dealer when the automaker is not doing well.

3- Both stocks are junk bonds, and have been at this rating for awhile. As a professor I know who ran a mutual fund once lectured, companies that have reached junk bond status and have been that way for years have an almost 100% chance of going bankrupt.

4- The debt of these companies is almost sky-high. IF you subtract the outstanding debt from the market cap of the companies, what is the remainder? And what is this amount compared to sales?

5- These companies are so bad fundamental wise, they don't even put out guidance to the street.

6- There is still the albatross that is union related. They are overpaid, and as soon as the company does better, they go on strike to take all the profits.

7- Market share continues to shrink every year for the traditional Big Three at an alarming rate.

8- There is significant data to show that these companies may not have enough cash to last another 12 months, and $10B is a drop in the bucket compared to what they spend. Unless gas prices drop significantly, people won't be buying the vehicles that the Big Three make money on (gas guzzlers with an MSRP of 30K+).

$25 Billion is nothing compared to the problems of these companies - and definitely not the expenses. Any of these companies could blow through $10B faster than Bill Clinton blows through one dollar bills at Booty-Land. I wouldn't suggest holding them long term. GM is one of the worst performing stocks in history and Ford isn't that much behind it.

You'd be better off shorting them.

[Snugglebear]

In America, we bail out automakers, lawl.

I have to say, I can't wait until gas drops $0.08 per gallon in 25 years because of this amazing drilling opportunity. What the fuck. Talk about Democrats scared shitless of Republicans.

[Desx]

I'm trying to do some research to see who will reap the benefits from this.

[Lefazz]

Originally Posted by Lyrical

8- There is significant data to show that these companies may not have enough cash to last another 12 months, and $10B is a drop in the bucket compared to what they spend. Unless gas prices drop significantly, people won't be buying the vehicles that the Big Three make money on (gas guzzlers with an MSRP of 30K+).

Say if Ford and/or GM went bankrupt...kupit...out of business, wouldn't one of the other automakers (i.e. Toyota) purchase their assets and possibly keep the brandname? If that were to happen, union contacts that were made would be void at this point, right?

It's clear that the union is what's killing the American automakers. From what I understand, $4000 is added to the cost of a vehicle just because of these contracts. How can they possibly complete with that kind of overhead?

[Zarcath]

So why is the area banned for drilling? environmental concerns or is it our "oh shit" honey pot?

[chaos]

Environmental concerns and industrial concerns. Fishing and tourism industry HATE off shore drilling. Aesthetics to some.

[Gurgeh]

Originally Posted by Lefazz

It's clear that the union is what's killing the American automakers. From what I understand, $4000 is added to the cost of a vehicle just because of these contracts. How can they possibly complete with that kind of overhead?

Isn't most of the cost retirement pension ? Automakers have to pay the pensions of former employees, and that's what is fucking them at the moment, not really the current unions. So I guess that the government will... bail out automakers at some point by taking over the pensions. Blaming unions for this is a bit short sightened I think, automakers were employing tons of people 20-40 years ago, and now they're employing many less people but still carry the burden of a whole generation of retirement pension, while it's the opposite in say, the IT. Retirement pensions burden should be carried either by individuals or by the state, never by corporations for this very reason.

[Eomer]

One absolutely HUGE thing that people don't think of when talking about how uncompetitive American labor has become is health care. Stop and think about it. How much are Ford and GM (and yes Toyota and BMW and whoever else who has factories in the US) paying per employee for health care coverage? In Japan, Canada, and numerous other countries that shit is not a concern. They might have supplemental insurance on top of the country's universal health care, but that's pennies on the dollar compared to what American laborers require due to the lack of universal care in the US.

This of course is not unique to car manufacturers at all, but every facet of the American economy.

[Lyrical]

Originally Posted by Lefazz

Say if Ford and/or GM went bankrupt...kupit...out of business, wouldn't one of the other automakers (i.e. Toyota) purchase their assets and possibly keep the brandname? If that were to happen, union contacts that were made would be void at this point, right?

It's clear that the union is what's killing the American automakers. From what I understand, $4000 is added to the cost of a vehicle just because of these contracts. How can they possibly complete with that kind of overhead?

Unfortunately, given the political environment and the laws on the "rights to organize", a trip to bankruptcy or even a sale doesn't mean you can wipe out union contracts.

[Lyrical]

Originally Posted by Gurgeh

Isn't most of the cost retirement pension ? Automakers have to pay the pensions of former employees, and that's what is fucking them at the moment, not really the current unions. So I guess that the government will... bail out automakers at some point by taking over the pensions. Blaming unions for this is a bit short sightened I think, automakers were employing tons of people 20-40 years ago, and now they're employing many less people but still carry the burden of a whole generation of retirement pension, while it's the opposite in say, the IT. Retirement pensions burden should be carried either by individuals or by the state, never by corporations for this very reason.

Pensions are one issue, but pay has also been another issue. Older UAW employees still make bank, and in Detroit, if one made it to the union, they used to call it "winning the lottery." Newer wages of the younger guys are more in line, but anyone under the old rules (which is the majority of them) are paid way over market wage.

And the dirty little secret is that the UAW has so much leverage that the laborers only work half days, but get paid full wage. GM and Ford are paying people 60-80K a year that are only working half days. And the way the laws are written, the automakers can't change this.

[Gurgeh]

Originally Posted by Lyrical

And the dirty little secret is that the UAW has so much leverage that the laborers only work half days, but get paid full wage. GM and Ford are paying people 60-80K a year that are only working half days. And the way the laws are written, the automakers can't change this.

60-80k for what kind of job ? In France a guy working on an assembly line will cost roughly 45K (dollars) per year to the company. 60-80k is the cost for the company or just the gross / net salary of the employee ?

[Lyrical]

Originally Posted by Gurgeh

60-80k for what kind of job ? In France a guy working on an assembly line will cost roughly 45K (dollars) per year to the company. 60-80k is the cost for the company or just the gross / net salary of the employee ?

60-80K in gross pay to the employee. It wasn't too long ago that you had people making six figures, wearing rolexes and driving around 50K+ brand new BMW's (with overtime pay back when the plants were running full steam). And these were people on the line. Like I said, in Michigan, becoming union employed is called "hitting the lottery."

In the last few years, the starting pay isn't the same, but you have a ton of people still making this pay at the Big Three, and they work only until noon every day.

The UAW has so much more leverage against the automakers than other unions. My father-in-law has worked his whole life to make 50K in a labor union in the railroad. He thinks its criminal what the UAW does to the automakers. It really is.