GM bailout rant

I think you are misinformed and didn't follow the congressional hearings.

The hearings were all about oversight and an appointed board with the ability to rewrite contracts to make all the stakeholders give what is need of them in a reorganization.

I also think it is absolutely vital to keep our manufacturing base. Banks sell debt, automakers sell real products.

 

Hmmm. Bail out the white collars; throw out the blue collars? Hey--if it works for you . . . .

 

I agree. Medium and large businesses have gone through Chapter 11 before.I'm willing to bet you've flown on an airline while it was in Chapter 11

The smart corp's are those that use Chapter 11 to emerge leaner, stronger, and smarter. I have no doubt the Big Three could emerge leaner, stronger, and smarter

IF THEY WANTED TO

I see the United States going down the slippery slope of corporate welfare/socialism to end up with the legacy mess that Canada has with Crown Corporations. Billions of taxpayer dollars were squandered up here trying to pick winners in the economy, which absolutely does not work

If an individual or a corp has a good idea, they generally succeed in the market. If they don't they vanish.

I'm sick and tired of watching Crown Corps up here be legally exempt from audit and investigation, pissing away billions into some black hole. Especially Hibernia Management and Development Corp: that sure benefited Exxon/Mobil

 

There is a BIG difference between buying a $250 ticket with the expectation of flying next week and buying a $25,000 car with the expectation that a 5yr/50,00 warranty will go the distance. Not many would take that risk. Bankruptcy (Ch. 11) will lead to liquidation (Ch. 7) . The widespread effects will be disastrous for an untold number of families (family values?) and for the economy in general.

 

Really?

That was true of a Ponzi Scheme like Enron. However, if the Big Three prove so inflexible, so stuck in the past, that they cannot find a clear path to future performance in light of a crippling global recession, then they are doomed to failure

Let's consider the track record of Canadian Crown Corporations that keep trying to prop up obsolete industries. In the end, it doesn't work, and the only thing the taxpayers have to show for it is a billion dollar writedown. The success rate of Crown Corps picking "winners" in the economy is dismal

In the case of Canadian taxpayer funds used to invest in "successful" Canadian companies, like Bombardier or Research In Motion (Maker of the BlackBerry), it's difficult to determine that the public investment alone helped at all

That is, these companies make highly successful products and/or services that are world-class in their respective industries. As there is no repayment required from Crown Corps, in effect the "investment" becomes free money to be used as perks.

So where does this Corporate Socialism end? Do we also provide loans to companies like Tesla? How about to dealerships who overleaveraged? Should we also bailout the folks who build poor quality McMansions?

Considering the current market value of a corp like GM, this proposed bailout/loan/bribe will - essentially - nationalize the company. Well, that works for me, we might as well nationalize every failing business.

 

I don't see a problem with giving the big 3 some cash, so long as they use it wisely and reshape their business model after the fact.

I mean seriously what's another 25-50 billions when every single week Bernake and paulson are throwing BILLIONS at banks and lending companies, buying toxic stocks and mortgages. They just spent 306bn for citi. The cost for the financial bailout is going to be in the 8 trillion ball park when all is said and done..and that's just the stuff they tell you about.

 

Looks like Congress and Mr. Bush have found a palatable compromise to keep GM & Chrysler alive (albeit on life support) until Dr Obama has a chance to put on his gloves and try to save this gravely ill patient.

What we don't need at this very moment is another shock to the economy in the form of massive job losses. That would surely pull everybody down, and the rest of the world with us (the auto companies are global enterprises, don't forget.)

The question to be asked now is what kind of conditions need to be placed on these loans (not giveaways) in order to ensure that not only taxpayers get their money back but these companies can turnaround and become strong and viable again. After all, it is in our vital national interest to have a healthy and competitive auto industry.

Myself, I would love to see Chrysler come through with their REV Town & Country.

 

They want billions for bailouts Banks and the auto companies included. Here is an answer to the whole mess. Give everyone that pays taxes a 250,000 stimulus check. It must be used to pay off any existing debt first. Anything leftover is yours to do with as you please. Want to buy a new car with the leftover; Fine; go for it. New house in mind; well now you have a down payment to put on it. Credit card debt wiped out in six month or less. HEY it's OUR money. Lets bail out the banks by allowing us to use it to pay off our debts. This way not only are the major banks and auto companies etc. paid off we also have the advantage of people keeping their houses, paying off their credit cards and getting rid of the old rust bucket if needed. For those who were intelligent enough to keep from being a burden to society by their poor fiscal habits; well Merry Christmas you get to keep all that money and not have to worry about your retirement anymore. Congratulations to you and enjoy your bonus!. Here is the biggest advantage to the whole idea- It won't cost near 300 billion!!!!!! Everyone is happy and we save money too. Write your representatives (yeah sure they are) today and tell them to do this. Can you imagine the knashing of teeth and wailing that it would bring about in Washington! Worth the effort right there to see them bluster over it!!!

 

Rick Wagoner has made many good decisions since he became CEO in 2000.

GM is profitable in all of their markets excluding the US and western Europe. They are also gaining market share in other markets specifically in Russia, Asia, and Latin America. (Russian sales were up 95% in 2007)

The Chinese market is specifically important as it is the second largest market and is expected to overtake the US market to become the #1 auto market by 2020. GM has the largest market share with sales of 1.1 million vehicles in 2007, a 17% increase over 2006.

GM has been significantly improving their financial position as a whole. Back in 2005 they lost 8.6%, 3.7% in 2006, and down to 1.1% in 2007. Wagoner was executing a recovery plan that was working. What he didn't plan for was auto sales dropping from 16 M in 2007 to ~14.5 M in 2008 and a projected 11 M in 2009.

It is easy to put all the blame on Wagoner. I don't see kicking him out and slapping someone else in is suddenly going to fix GM.

 

Agree that selecting one person as the entire problem is meaningless, but over the last 10 years, the GM decisions have been a lot poorer than the Toyota decisions. (Making better decisions than ones in the past is good, but useless, PR. Making better decisions than your competitors is what is needed.) Losing overall market share for 10 straight years means company death in a couple more decades. Something has to change at GM to avoid this.

I may be way out of line on this, but Ford selecting a former engineer for CEO seems to be having an effect, whereas the GM CEO (finance guru) is not working out as well.

 

Corporations likedfinance gurus for their CEOs as their actions have instant effect. Like outsourcing to China, cutting some overheads and so on. Finance gurus do not think about long term future of the company. They think about stock prices next day and next month, that's it. What they should care is long term performance. How todays decisions impact future of the company in 15 years. Like making short term big profits by producing and selling big gas guzzlers, which are cheap to make and expensive to sell. Of course, until economy is booming and oil prices are low. When economy starts to die out and oil prices sky rocket, big gas guzzlers are not the cars of choice any more.
But to tell the truth, the problem is not only in car makers making bad decisions. Even worse is, that governments and tens of millions of people made very bad decisions. Spending money on something which they can not afford and so on. Everybody was living on credit and no one was saving money. Basically it is about unsustainable economy. And US Car makers are at least part of primary industrial production economy. Their products are real. What is way worse is the financial industry with fictional products. And it is sad to see, even though GM is full of morons, that financial industry of fictional products is being helped, while the real production sector is not. I think that GM should be helped, but not for free and not without strict conditions. Fictional financial industry should basically die. They sell air and bubble burst is mainly about air escaping out.

 

The truth of the matter is that corporate America keeps the economy going. But on the other hand if a company can't keep expenses in line then they either go under or restructure. We the people should not pay for their mistakes, it should be the oil companies since they have a direct relationship.

The U.S. auto industry missed the boat on hybrid technology and promised us them long ago and yet here we are still waiting, while other countries have steamed ahead. This is not our fault, it is theirs. They didn't listen to what we wanted, so why should we bail them out?

 

Just a quick math check:

According to Treasury Stats for 2007 there were approximately 139 millon individual tax returns filed and $1.37 trillion collected. If you multiply 139 million times $250 thousand you get $34.8 trillion. When discussing billions and trillions its easy to lose the real scale and how it relates to other government revenues and spending. If we say there are 200 million workers then every billion dollars costs each worker $5 which has to be paid back or inflated out eventually.

ref: Tax Stats at a Glance

 

It's vital for US national security that 2/3 Detroit companies vanish. The US is not rich enough to prop us these companies for any length of time, not to mention the drain of petrodollars that their products result in.

 

How did the US get rich to begin with?

 

As long as shareholders demand to see short-term profit the CEOs will have no choice but to deliver (or be dismissed).

 

give them money? heck no.

maybe replace every government owned car older than 3-5 years with a new one.
include ambulances, school buses, police cars, etc.
buy cars from them to prop up their sales.

but give $ away? no.
if the government wants to prop up the auto makers, let them buy cars. simply giving them money will have unfortunate side effects on our economy.