As GM and the other US automakers rapidly crumble into insolvency, the Congress will likely move to act and pass an auto bailout bill next week. As GM’s CEO has said, the situation is so dire that if it waited until Obama takes office on January 20th, it would be too late for GM.
House speaker Nancy Pelosi after unsuccessfully getting the Fed to release funds to automakers so far intends to bring up new legislation in a lame duck session of Congress next week. The legislation will seek to amend the $700 billion Wall Street bailout plan to include automakers. No exact amount has been given but GM, Ford, and Chrysler are seeking an immediate $25 billion cash injection and $25 billion to cover union retiree healthcare, in addition to the already approved $25 billion in retooling loans.
Pelosi expressed confidence that the legislation will be passed.
She said “Congress and the Bush administration must take immediate action, in order to prevent the failure of one or more of the major American automobile manufacturers, which would have a devastating impact on our economy, particularly on the men and women who work in that industry.” She is planning to seek legislation for “emergency and limited financial assistance.”
Senate Majority leader Harry Reid also noted that senate democrats were determined to pass legislation but could only do so with the support of lame duck Republicans and the Bush administration.
The Bush administration now says they would look at and listen to any plan to help the automakers but indicated that Congress would have to take the first step.
White House spokesman Tony Fratto said “If Congress wants to change the (bailout) law, we’ll see how they intend to do it.”
Source (Reuters)
This entry was posted on Wednesday, November 12th, 2008 at 6:55 am and is filed under Financial, Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
Nov 12th, 2008 (6:59 am)Just what we need. Congress involved.
The government screws up everything they touch.
GM should file Chapter 11 and definitely fire the people who
put this company into the position it is in today.
Nov 12th, 2008 (7:04 am)From the article:
She said “Congress and the Bush administration must take immediate action, in order to prevent the failure of one or more of the major American automobile manufacturers, which would have a devastating impact on our economy, particularly on the men and women who work in that industry.” She is planning to seek legislation for “emergency and limited financial assistance.”
——-
Men and women in any industry suffer when their jobs are lost.
I feel for these people, but does this mean the US government ought to bail out every single industry that is failing?
Nov 12th, 2008 (7:09 am)Rashiiid from my post 142 on the previous thread it seems, according to Bloomberg, GM will not be able to go C11 and will have to go straight to C7.
The problem is there is no credit, these days, to finance a chapter 11 bankruptcy on this scale.
Interesting times we live in. Why not just throw another 400B at the problem. Rounds it off to a nice round one trillion. NB: Excludes exec perks.
Nov 12th, 2008 (7:14 am)It looks like a plan to rush into some politically charged but poorly thought out actions that will be very very expensive to all of us. Maybe the goal is just to kick the can on down the line to the Obama administration, but once started on a universal bailout it is going to be hard to think things through. Is there any chance of long-term success with this kind of a beginning?
Nov 12th, 2008 (7:22 am)Even the profitable parts of the empire are starting to crumble it seems.
General Motors plans to suspend production at its factories in South Korea for about two weeks starting next month, in one of the strongest signs yet that the crisis in carmaking has spread to Asia.
The shutdown will take effect from late December and affect all five of GM’s Korean plants formerly owned by Daewoo, which form one of the loss-making US carmaker’s best-performing business units.
Source: http://www.ft.com/cms/s/0/a477d6c6-b05c-11dd-a795-0000779fd18c.html?nclick_check=1
Nov 12th, 2008 (7:24 am)The auto industry needs to be restructured — not saved in its current form. If this ‘plan’ only gives them money to ‘save themselves’ it will fail.
Nov 12th, 2008 (7:29 am)Like I said yesterday, this should not be done “quickly”…..
They can’t just toss money out the door without thinking this through and putting real safeguards in place.
This sounds to me like another excuse and method to load up on pork.
It is not a good sign of things to come from Washington, D.C.
Nov 12th, 2008 (7:39 am)I think DHL, Dominos Pizza , Circuit City, OSH Home Supply, Maytag, Pep Boys Auto, Robinson’s Stores, and (your company here) should get a piece of the pie.
OK, we give GM another big chunk of money with the understanding of GM paying it back. In a few months they will say, “We don’t have a payment for you”. So now we are faced with dumping more money into the hole in which we have invested.
Too much has been given already. No bail outs for anyone. The remaining auto manufacturers will do just fine.
=D~
Nov 12th, 2008 (7:43 am)Dave K #8. My favorite dessert is pie. I want a piece too. (waah, crying, whining, tears streaming down my face)
Nov 12th, 2008 (7:56 am)NZDavid # Thanks for pointing out your 142 comment from yesterday.
Here are my thoughts.
Although I favor Chapter 11, I don’t like Chapter 7. Having said that,
if the government is determined to bail them out, then let GM file Chapter 11 and then the government can provide the credit for reorganization.
Nov 12th, 2008 (8:07 am)I can see the headlines now:
Nancy Pelosi Saves GM
Can all you macho gearheads live with that? Might have snip a ball or two to ease the pain.
Nov 12th, 2008 (8:10 am)I think the Gov’t should just take over all of GM rather than piecemeal loans. Reorganize all labor and cardealer agreements. Nobody is going to happy about any of it, but it will be resolved far quicker. This can’t happen till after Jan 20, so float one last loan till than.
Nov 12th, 2008 (8:12 am)#6 Hal said “The auto industry needs to be restructured — not saved in its current form. If this ‘plan’ only gives them money to ’save themselves’ it will fail.”
========================================
Those in agreement (like me) are then in a hard spot, because one can only save the company that exists now. To me the only realistic goal is to acknowledge that some or all of these companies may go bankrupt but to try to put that off for 2 years. If that were the plan (and who knows if it will be or even if there will be a plan) one hopes that the time between now and then allows the companies to restructure themselves, or at least gives some time for bankruptcy to be more of a controlled landing than an abrupt crash at this particular moment.
One sharply negative aspect is that GM finances are now so much worse than what GM forecast just 3 months ago that one has no confidence in any of the numbers that GM provides for any time period. It is more of a “just give us this today” kind of scenario.
Nov 12th, 2008 (8:15 am)The US government allowed Toyota and Honda to compete unfairly decades ago. Using just one reason, the legacy cost, we’ve allowed the Japanese to assemble cars in this country w/o any thoughts about that unfair advantage. Even to this day they have this unfair advantage. How do you expect the domestic to compete for decades with this disadvantage? They are many other reasons why it’s been unfair. Check this link below and find how our competition gets their advantages. You’ll be
shock.
http://www.uwsa.com/issues/trade/japanyes.html
Yes, our government has failed us! Pay now or pay later. If GM goes bankrupt the retirees will collect more than half their pensions from the Federal pension guarantee funds. Do think our government wants to pay that? Heck no!! That would cost at least one hundred billions. Do not forget, it is a loan GM wants, not a hand out. If GM can last two more years, they will be able to make it because the GM workers wages have been cut in half and GM has many superior products down the line.
Nov 12th, 2008 (8:21 am)#12 jan says “I think the Gov’t should just take over all of GM rather than piecemeal loans.”
========================================
It sounds satisfying, but there may be no one in government who can run GM any better than its current management, or even as well. A bankruptcy court probably would do a better job, as there are established rules and procedures.
Nov 12th, 2008 (8:24 am)#11 texas says
“I can see the headlines now:
Nancy Pelosi Saves GM
Can all you macho gearheads live with that?”
======================================
The question is what the headline will be 6 months after that, when GM’s situation is even worse than today. Does Pelosi do it again?
How many times?
Nov 12th, 2008 (8:25 am)It is time for the US people and the US government to show some of the restraint that the Big 3 did not.
It is not worth further mortgaging your kids’ future to save several mediocre auto makers.
All GM has to do to be in the black is to charge about $2,000 more per vehicle. They could just over halve their incentives to accomplish that.
If they aren’t willing to do that, and if the consumer isn’t willing to pay that, then the tax payer shouldn’t either.
Nov 12th, 2008 (8:28 am)#1 Rashiid – “The government screws up everything they touch.”
Not trying to pick on you, but this is crazy. Travel to the vast majority of the world and you’ll figure out that our government has done a pretty good job. The mindless shots at our government are uncalled for and totally devoid of truth. Go to Africa or South America or many parts of Asia (or India) and you’ll be amazed at the good job our government does.
What is actually the danger here is not that the government will get involved but that it won’t get involved enough. Giving blank checks to the companies and the unions will doubtless give us the same result we’ve had in the past which would simply be a waste of money. The rescue money needs to come with both strings and oversight. The Obama transition team has suggested a non-political business team with oversight power over the restructuring. Making sure there are limits on pay for both management and the unions and that the companies are restructured so they can deliver the fuel efficient and alternative vehicles we need seems like a good and necessary part of any bailout.
If that happens, and the government gets temporary power to set the development path for new vehicles, then the bailout may end up being fortuitous. It will get us to where we need to be much faster than we’d get there otherwise and Statik will get his Volt much sooner.
Nov 12th, 2008 (8:28 am)14. Joe
Re: “legacy cost”
Here’s an idea… if the US wants to engage in socialism and apparently has billions of dollars to do so, how about universal healthcare?
It would bring the US into the 20th century, it would eliminate a lot of GM’s legacy costs, and you would have something to show for your billions of tax dollars as opposed to just funnelling it foreigners.
Nov 12th, 2008 (8:41 am)Don C @ 18, I agree that government screws up everything….Pick an area, and private sector does much better. Government simply throws money at problems and is going the way of the Soviet Union–broke.
Rashiid, I know you meant it in jest, but you are dead on.
Nov 12th, 2008 (8:42 am)Considering that it is the federal government that failed to provide a sound energy policy for the last few decades, the burden to maintain the solvency of the auto industry SHOULD be on the federal government.
Nov 12th, 2008 (8:49 am)I find it interesting that the Bush Administration is reluctant to help the car companies; it joined them in their efforts to stop California’s Zero Emission Mandate which briefly gave us the EV1.
Then again, Bush is like the plague right now…he wants to write a book but he has’nt found any takers among the publishing houses.
Please God, don’t let them kill the Volt.
Nov 12th, 2008 (8:57 am)#18 DonC says “The Obama transition team has suggested a non-political business team with oversight power over the restructuring.”
========================================
It sounds great, but I do not think it is possible.
1) Obama will be President, a political office. He cannot pick “a non-political business team” as just his involvement makes it political. And, there are real limits, among them that any such group wouldl have to be sensitive to the UAW, Obama’s core supporters.
2) It makes restructuring sound so easy. But automotive is such a hard, competitive business. If it was easy, GM would have done it. Being trapped in between politically popular “clean and green”, what actual customers want to buy (who knows, right now), and the limits of technology (cannot have 100mpg gas cars) is not easy, and no government committee is going to make it so.
Nov 12th, 2008 (9:06 am)This economic crisis is manufactured by excess government spending and manipulation of the economy.
The solution being proposed — more government handouts and manipulation of the economy — will make the problem worse, not better, although it may appear to solve *some* of the exigencies in the short term.
The following article pertains to the $700 billion bailout of AIG, Fannie, and Freddie (which we see has worked such marvels for the economy), but is even more true of bailing out GM:
http://www.lewrockwell.com/rockwell/stop-the-bailout.html
Best regards,
D’Artagnon
Nov 12th, 2008 (9:08 am)The long line of private companies lining up at the public trough like pigs is simply a sign that the USA is collapsing of the same socialist & financial corruption that collapsed the USSR. Fiat currency, global empire, endless undeclared and unconstitutional wars and socialist programs for EVERYTHING are bankrupting this country.
In the USSA, IF you’re connected or can afford a lobbyist, then you can screw-up all you want and the Democrat-Socialists and NeoCon-Fascists will force someone ELSE to pay the price. This means faceless, helpless, ignorant taxpayers known as SHEEPLE.
Their (yes their) pundits simply have to tell us on TV that it’s for our own good. Most of us would hurl ourselves off a cliff for them like lemmings if they told us to. Once TV stops working (due to the internet), they will monitor (doing that ) and activate the military for operations inside the US boarders (DONE), make a national police force like Nazi Germany (Nazis came to power under general election) disarm us (in the works) and all bets are off.
Georgia Rep. Issues Warning on National Security Force, Gun Ban
http://www.infowars.com/?p=5891
When did they repeal the benefits of real & free competition and OUR rights guaranteed by the Constitution? Oh, that’s right. They simply ignore it (for our own good) and we let them because we act like drooling, toothless babies who NEED a big brother to take care of us.
Since gov’t regulation, poor management and socialism (gov’t central planning & union corruption) caused GM’s problem, I’m sure the MORE of the SAME (code named CHANGE) will make it all better… NOT!
The market hates a vacuum. Let GM and other poorly run companies die and others (maybe better and definitely more competitive) will step up to take their place. If the Gov’t took this stance during the FIRST depression, then Amercian innovatation would have stagnaged there and then.
Sometimes you have to let the forest burn and clear out the old, sick and dying growth so new growth can take its place. BURN BABY, BURN! We may even get freedom and our beloved Constitution back.
Nov 12th, 2008 (9:14 am)I think they should bail out GM but make them produce the volt at a minimumm of 100,000 units a year starting now, force them to make mpg increases now, force them to make at least 50% flex fuel now not 2010 or 2011 or 2012 and beyond. I just saw a new camaro at a trade show.They started talking about 3 years ago. They are so slow, they produced it so slowly that now with gas prices, and everyoone knows they will go back up, that no one will want it. Had they made it 3 years ago, it would have sold like the Mustang. GM is just so slow, they need to be forced to change.
Nov 12th, 2008 (9:15 am)No bail outs for anyone.
If an interest from China or Japan wants to buy a part of the former GM, then so be it.
________________________________
Why didn’t Big Oil, with all their profits, simply offer GM a few billion to keep the SUV plants open? This wouldn’t cost Big Oil a dime long term. This action would probably end up creating surplus profits for Big Oil.
I will say it again. Something is wrong with this picture. The whole thing just doesn’t look right.
Just 2 months ago it appeared that GM had enough money to carry them to 2011. And now it’s February 09?
GM is talking with China about increasing an interest?
The Camaro and plug-in Vue have been delayed?
GM says that the Volt is the highest priority, yet they “don’t want to rush it”?
This whole thing really smells bad. Be careful Pelosi and Obama. Still waters run deep.
___________________________
We may be driving an EREV Ford Escape before the plug-in Vue is available.
=D~
Nov 12th, 2008 (9:29 am)When you realize you’re in a hole…STOP DIGGING. If a company can’t compete, it needs to die. That’s the American way, and the reason we have many of the most competitive companies in the world. Businesses must deal with reality, not pander for gov’t handouts. Just imagine the signal this is sending Boeing, 3M, GE, and other large companies. If you screw yourself, that’s OK. We’ll save you.
Bankruptcy of GM is not doom & gloom like the UAW claims. Yeah it’s going to hurt, but lets get the surgery over with already. Keeping the patient on life-support isn’t helping anyone. The Volt will survive, you can’t kill a good idea. It may have some hiccups, but lets not flush billions and billions of dollars just to get this technology 6 months earlier.
Nov 12th, 2008 (9:36 am)We all know that Pelosi and crew could care less about General Motors – they care about the UAW workers who are puming tens of millions of dollars into th Dems campaign funds. Those are the folks Pelosi the Fool and other Dems are looking to pay off. Don’t you just love the way the thoroughly unionized media somehow misses the point and motivations of all this? Gee, I wonder why? Can’t imagine.
Nov 12th, 2008 (9:38 am)#20 DaveB – “Pick an area, and private sector does much better.”
Yeah, you’re right. The private sector won WWII so much faster than the government could have. And obviously the private sector is truly terrific, which is why the government sector doesn’t have to bail out all those incredibly successful investors and bankers who have done such a terrific job. Not to mention all the private sector US auto makers who have managed to create a booming US auto industry.
Get a grip. The simple facts are that the success of the private sector rests on the shoulders of the public sector and that the private sector contributes little or nothing on the critical infrastructure front.
Just to give you a few examples: I don’t know where you live, but where I live when I get up in the morning I turn on the spigot and clean drinkable water comes out. That doesn’t happen in 95%+ of the world. Then I flush the toilet and the waste goes to a treatment plant. That’s highly unusual throughout the world. Then I drive to work on a eight lane divided highway, which doesn’t exist in 95%+ of the world while all the neighbor kids go to school with actual textbooks and pencils and teachers. That doesn’t happen in most of the world.
The problem is that most Americans have absolutely no idea how the world works because they live in the NA cocoon. If they got out more they’d figure out in a hurry just how well our government works and they’d be more balanced about the government’s successes as well as its failures. And they’d stop penning nonsense about the private sector always being the answer.
What’s astonishing about your comments is that they’re being made in the middle of the biggest private sector failure in a hundred years. Have you looked out the window? In case you’ve missed it, the private sector, which was responsible for the Great Depression, is now doing more than its part to create another one. We’re in this mess because people like you drank the kool-aid about how everything will work out if only the private sector was allowed to do its thing. Well it did its thing, it failed miserably, and now the public sector is going to have to bail it out.
Nov 12th, 2008 (9:39 am)DonC # 18 says,
Not trying to pick on you, but this is crazy.
No problem.
Medicare is not run efficiently
Social Security is in trouble.
The defense department overpays for items.
The government wastes a ton of money every year.
Do we need government? Sure.
But we need an efficient one. I personally don’t have any faith that they can do anything right, without wasting a ton of money doing it.
But I don’t have a problem with you being supportive of their efforts.
Nov 12th, 2008 (9:42 am)Alright everybody, now it’s time to WRITE YOUR REPRESENTATIVE!
https://writerep.house.gov/writerep/welcome.shtml
http://www.senate.gov/general/contact_information/senators_cfm.cfm
Our views need to extend beyond this forum.
Nov 12th, 2008 (9:45 am)Sweetness! Another GM finance/government bailout thread! Another good day for us Don C! I will now step in and throw cold water on the party, by throwing out all the problems that will be encountered here.
Let me outline the problems, without congressional double talk:
A) We are talking about a lame duck congress doing ‘something’ extraordinary.
B) Pelosi and the gang are always saying ‘we have to do it’ and trying to get ‘Bush onboard’ right? That this has measure to be pushed through quick next week. But have you noticed something missing? What are they pushing through? Exactly. They don’t even have the guts to say the plan or give a number out loud. That doesn’t exactly inspire confidence.
They originally went to Bush and tried to get him to put a deal together and therefore take the responsibility off of them, and he basically said, “you put it together and we’ll go from there.” They have yet to even author this ‘emergency action’ (ar at least it is sitting on a burner somewhere).
C) The easy road of, “lets just get 50 billion or so out of TARP” has been shot down. TARP is already at the point where it has to go back to get approval to spend the other half of the 700 billion.
D) If they do get something drawn up and tabled, they need still the full support of the Republicans. So Obama went to Bush yesturday to talk about this right? We had all that spin about how good the meeting was, how they love each other, and how they agree that the auto industry is vital. Total BS.
Here is how it went:
Obama “I need to bailout out the auto industry or my job is really going to suck, you think you could give me a hand here?”
Bush: “I could have a look at it…and by that I mean, I’ll rubber stamp it, if you drop your opposition to a Colombia free trade agreement. I still want to get some of my agenda done here too”
——————————-
It can get done, but it is not going to be easy…or cheap. This thing is probably going to turn really ugly as well.
/exciting days we live in
Nov 12th, 2008 (9:50 am)The new business model for the Economic textbooks…”Too Big Too Fail”. Well…maybe it is not a new concept…but it being used more often lately. Maybe an entire textbook could be wrttien on this business model. If you are part of the educational system with some background in Ecomincs, you better start writing before someone else “beats you to the punch”.
A title suggestion: “The Pail & Bucket Company”…with a picture of the US Treasury building on the cover.
Nov 12th, 2008 (9:51 am)#29 Kent – “We all know that Pelosi and crew could care less about General Motors – they care about the UAW workers”
I’m trying to get my head around what type of warped view interprets concern about American workers as a BAD THING. Next you’ll be saying that concern about Veterans and crippled children makes one a piece of human excrement.
Personally I could care less about GM since, in case you don’t understand, GM is a legal fiction. On the other hand, I do care about the national security and health of my real and actual fellow citizens and I do care about the welfare of real and actual American workers. Sorry if that offends you.
Nov 12th, 2008 (9:52 am)DonC # 30,
I just read #30. Okay, I will concede a few points.
I will retract my comment about government screwing everything up.
How about this? Government screws many things up.
Nov 12th, 2008 (9:53 am)Without reading all of the fine, I’m sure, comments that have been posted on this subject, let me say that this may be the quickest solution to an automaker bail-out. Not saying I am for a bail-out or against one. But, if they waited for a full bill to be passed and the congress to make the funds available to the treasury, it would be at least 45 days. The 700 billion is already in place so, just carve out a portion for the automakers and it is done. One problem is that the congress watchdogs inside and outside congress should watch out for special interest attachments to the bill. If this bill is to pass congress it should not have any other spending on it but for the automakers. But, just watch what will be on it. Plenty of pork for special interest parties.
Nov 12th, 2008 (9:54 am)@DonC #30
How about you get a Grip. It appears you have no idea how the world works and think that our government hasn’t been interfering and creating every crisis in the “private” sector that you point out.
The government create the Great Depression by creating the Fed and the Income tax in 1913 and devaluing the currency.
The government created the rules and framework in which the financial sector operated for the last 95 years. The government has been implicitly or explicitly involved in every financial crisis depression or recession since that time.
By abdicating it’s authority to create and control the money supply (unconstitutionally so) to a private entity, the government has set us all up for major failure and we see it occurring today.
The private sector is not perfect. However, there is one essential difference between the private sector and the government. The private sector can not, without the assistance of the government, force anyone to patronize it’s establishments or buy it’s products or use it’s services. When government becomes involved in the private sector, the playing field becomes unbalanced and unnatural. The cycles of business, just like those of life, occur no matter how much we attempt to delay them.
Nov 12th, 2008 (9:55 am)In 6 months they will be back for more. This is a black hole that makes money vaporize. The US taxpayers get screwed again.
Nov 12th, 2008 (10:01 am)Rashiid,
You have to remember that the democrats’ primary interest is not in saving GM because they are a major auto company in the world market but it is because they employ many, many thousands of union workers. If those workers lose their jobs it would be a real problem for the workers but a bigger problem for the unions. The unions would lose a large chunk of union dues and be unable to support liberal causes around the world. Their influence would be reduced and along with it the democrats would lose favor in some sectors. This financial crisis we are faced with is primarily a democrat problem and more and more people are beginning to realize it. The democrats in congress must stop it to stop the future problems with influence and control.
Nov 12th, 2008 (10:01 am)@Rashiid Amul #36
Don’t concede that much Rashiid. You are more correct than DonC. Our government may not be as bad as the governments of other countries, but it’s not from a lack of the government trying to be as bad. The checks that have been placed on our government by the constitution and the people, which the government has been chipping away at and attempting to removed since the constitution was ratified, has kept our government from becoming as bad as that of third world dictatorship. It’s the people that keep the government from being bad. DonC, based on his comments, believes that governments act in a vacuum and are living breathing things of themselves. They are simply conglomorations of people looking out for themselves and attempting to gain as much power over the other people in a country as they can. Absolute power corrupts absolutely, which is why our government is only partially corrupt, because it only has partial power, for now.
Nov 12th, 2008 (10:01 am)#30 DonC says,
“The problem is that most Americans have absolutely no idea how the world works because they live in the NA cocoon. If they got out more they’d figure out in a hurry just how well our government works and they’d be more balanced about the government’s successes as well as its failures. And they’d stop penning nonsense about the private sector always being the answer. ”
Just to give you a few examples: I don’t know where you live, but where I live when I get up in the morning I turn on the spigot and clean drinkable water comes out. That doesn’t happen in 95%+ of the world. Then I flush the toilet and the waste goes to a treatment plant. That’s highly unusual throughout the world. Then I drive to work on a eight lane divided highway, which doesn’t exist in 95%+ of the world while all the neighbor kids go to school with actual textbooks and pencils and teachers. That doesn’t happen in most of the world.
——————————–
I’m going to agree again with DonC here. I am a staunch capitalist. My first thought about everything is ‘less government’ or ‘no government intervention,’ but I can see the error in that impulse.
The fact of the matter is, we need a little government imposed direction, or ‘socialism’ if you will, from time to time when it is for the benefit of our people as a whole.
If humanity was as advanced like it is in Gene Roddenberry’s Star Trek future, where people intrinsically cared/looked out for their fellow man government intervention would not be so vital, but that is not reality. (Maybe someday, but I doubt it).
I also agree with Rashiid, the same factors of why we need government (because people suck), is the same reason government’s tend to be bloated, lazy, inefficient entitites that need to be torn down and rebuilt every so often (they are run by people).
Side note: GM is trading up (between 10-20%, currently at 12%), solely on this speculation. $3.26 +.34 Crazy volitility seems to be the order of the day everywhere.
Nov 12th, 2008 (10:09 am)If we’re going to have a public trough, I guess American Express wants their piece of the action. And they have “American” in their name afterall. SAVE THEM UNCLE SAM. SAVE THEM.
http://www.forbes.com/feeds/ap/2008/11/12/ap5682036.html
Nov 12th, 2008 (10:19 am)#14 Joe
Long read, but it is true. I have seen some of this first hand. The Japanese nations mindset is different, and the trade war is happening.
I find it interesting that while many companies sent work overseas because it is cheaper, that did not translate into lower prices for consumers. Just better profit margins, and fewer jobs.
One reason I always try to support local.
Thank you for the link
Nov 12th, 2008 (10:27 am)#21 Jason M. Hendler says
“Considering that it is the federal government that failed to provide a sound energy policy for the last few decades, the burden to maintain the solvency of the auto industry SHOULD be on the federal government.”
======================================
If the federal government were an individual the statement would be more convincing. As the federal government has no funds except those of its citizens, saying that solvency should be on the federal government is simply to say the citizens should bail GM etc out.
To me, government action is sometimes a good thing, and I place ensuring the solvency of banks in that category. I’m not equally confident with automakers. To me it seems that we just pay the automakers bills for a few months (or maybe a year or two) and then all the same problems come back. Maybe that is good, so that the country does not have to deal with another major crisis at this moment, but if so we certainly need to think clearly about it.
Thinking that there will be a one-time injection of a few billion of federal funds and then, over the hump, everything will be fine is a great dream, but only day dreaming, not reality. Statik’s numbers show that it has to be a hundred billion (or several hundred billion for 3 automakers) to make a significant (2 year) difference, and even with that we have no assurance about when happens next.
Nov 12th, 2008 (10:29 am)#31 Rashiid
There is the famous quote about how what’s remarkable is not how badly it’s done but that it’s done at all. That’s my view on both the Volt and government. Yes our government is hardly the most efficient operation, and it can screw up a lot. But when you compare it to the rest of the world it’s remarkably effective. Same with the Volt. I’m surprised not about GM’s failures and mis-steps but the simple fact that they are pulling it off at all.
Nov 12th, 2008 (10:38 am)Statik (#42) says:
“I’m going to agree again with DonC here. I am a staunch capitalist.”
NO YOU’RE NOT, Statik! You obviously don’t even know what capitalism is!
Capitalists WORK hard to SAVE money then RISK it by investing in a FOR PROFIT business hoping for a return. They know that higher return means greater RISK. REAL capitalists RISK their OWN savings and know that there cannot be REAL gain without REAL risk.
Socialists (and other thieves) BORROW money then invest it WITHOUT risk because they just bankrupt or use the blunt hammer of Gov’t to FORCE others to bail them out if there is a problem.
Gov’t invests OTHER people’s money against their will and without regard because it is not THEIR personal money. THEY didn’t sacrifice for it. It is totally unethical when the Gov’t “invests” in 3rd party FOR PROFIT companies because there is NO recourse and therefore no PERSONAL responsibility!
Statik is no more a “capitalist” than any of the other NeoCons or Democrat-Socialists who steal from (or regulate) the productive to “help” the non-productive whether they ask for it or not. It’s PURE redistribution from the productive taxpayer to the non-productive, poorly run corporation. Only the free market PURGE can solve GM’s problem. Liquidate to others who will be better fiduciary stewards of invested capital.
Like most “intellectuals” I’m betting that neither Statik, nor DonC have EVER successfully started, run and then sold his own business for a profit. They are like college professors who talk a good talk but have no REAL experience about what they are talking about.
Some call people like DonC and Statik FALSE PROFITS, others simply call them HYPOCRITES. Are they smart, yes. Are they ignorant and foolish, YES.
Nov 12th, 2008 (10:40 am)Here is an interesting cover story from the spring of 2005. Note how the handwriting was on the wall. And note the vehicles planned for recovery, the Hummer, pickup trucks and high powered convertibles.
http://www.businessweek.com/magazine/content/05_19/b3932001_mz001.htm
Nov 12th, 2008 (10:40 am)We’re gonna need a bigger trough……
http://www.iht.com/articles/2008/11/12/business/12lobbying.php
#30 DonC
I think the reason the American gov’t is RELATIVELY efficient, is because historically it’s stayed out of the free market to a greater degree than other gov’ts. Read my link above. Once you open that spigot, lobbyists are gonna come out of the wood work, and we’ve then got to trust other people to act in our interest.
I agree that there are times where it may be beneficial for the gov’t to intervene. But I think this is like saying a drug addict can use medical marijuana. Well, technically it may be beneficial, but the risks are huge and, in my opinion, outweigh the immediate benefits. Will the gov’t just stop when we want them to. Just like they’ve stopped Amtrak subsidies, farm subsidies, sugar tariffs, and a host of other things that make no economic sense. Once you put the trough out there, vested interests get created who want to see that trough stay in place, and overturning these is extraordinarily difficult.
Nov 12th, 2008 (10:46 am)<BobbyBoucher’sMother>
Nancy Pelosi is the devil!
</BobbyBoucher’sMother>
Oh sure, it’s a hyperbolic comment, but are you so sure she’s wrong?
Nov 12th, 2008 (10:48 am)#10 Rashiid Amul
“Although I favor Chapter 11, I don’t like Chapter 7. Having said that,
if the government is determined to bail them out, then let GM file Chapter 11 and then the government can provide the credit for reorganization.”
_______________________
I like this idea best of all. GM needs to go through a C11 to shed some of its problems. Only problem with that is the government will not let the union pension and health plans be terminated. I don’t like the idea of anyone’s pension being terminated, but if I remember correctly the government now guarantees pension plans up to about 60% of value. I may be a little wrong here, but that seems like a good solution for all of us. The workers don’t lose all their pension and the taxpayers don’t get hosed for the full amount of the pension. If the pension plan is like the union’s pay plan this could save the taxpayers billions of dollars. GM could come out of C11 much stronger and ready to take on competition.
I might add that I do not like anything about a C7 plan for GM. Let Chrysler go through C7, but not GM or Ford. I would rather bail them out (GM & Ford) than see either of them go to C7.
Nov 12th, 2008 (10:49 am)On October 19, 2006, John W. Snow, President George W. Bush’s second United States Secretary of the Treasury, was named chairman of Cerberus.
I smell a Rat.
Now these guys that just purchased Chrysler want a bail out too.
All these bail outs and No credit flow to any of us.
We bail them out and cant get credit lines….
I’m venting lately but I am fed up as we all are.
Nov 12th, 2008 (10:51 am)Folks, check me on this. In the early 80s the Government bailed out Chrysler. Chrysler paid all of the money back, and came out stronger. So why all the reflexive doom and gloom? If the boys (and girls) in DC do their work, they can keep GM afloat, and use the leverage to speed up progress towards a goal that nearly everyone who posts here agrees on: getting us off oil.
The alternative is watching GM and 3 million jobs disappear, which would only exacerbate the current economic crisis. Some estimate that up to 10% of the jobs in this country are related to the auto industry. I would have preferred that GM did not need government help – we all would have, but this is where we are at. GM probably could have limped along to the Volt roll out, but this economic crisis has acclerated their losses greatly.
I’m sure George W. Bush choked when he was told he had to bail out Wall Street, the banks, and the insurance companies. The fundamental mistake that Hoover made was letting 1/2 of all banks go under between 1929 and 1933, and W. didn’t want to repeat it. Now we’re in for a penny. We’re 1/2 way to avoiding another Great Depression. I don’t see how we let the American auto industry die at this point and risk another major drag on the economy as millions lose their jobs.
Nov 12th, 2008 (10:54 am)#53 Chrysler was a drop in the proverbial bucket.
Completely different world right now.
Bail me once shame on me. Bail me twice shame on you.
Nov 12th, 2008 (11:14 am)DonC and Statik – When the going gets tough, the idiots freak out. Thanks for chucking an unpopular opinion grenade into the mob, suffering the slings and arrows, and keeping a cool head . Lesser intellects will reflexively vilify you.
Don’t just choose a side people, use the rational part of your brains. Is it all the US government’s fault? The US government is comprised of people like you and me. FSM help us.
Nov 12th, 2008 (11:16 am)All GM has to do to be profitable again like honda and toyota here in the us is to break the union..and pay workers like honda and toyota does their workers..file bankruptcy and break the union…there are ppl i know who havent worked for gm for 9 years but are still getting their same paycheck every week and healthcare..no industry can survive paying generations of employees who doesnt even work in the plants any more…..
Nov 12th, 2008 (11:22 am)The NEW WORLD ORDER is upon us.
Deal with it !!
Nov 12th, 2008 (11:24 am)This has been a great debate, both sides.
-D’Artagnon
-Tim
You’re right on the money in my opinion.
-DonC
You’re assumption that this reccession was caused by free market is wrong. The Federal Reserve has been meddling in economics since the 70′s. Well longer than that, but the worst has been since Nixon ended the gold standard. How can you say anything has been free market for the last 30+ years when the government has been manipulating the currency and interest rates. Why were all the poor investments made in housing? Because investment firm could afford to with interest rates so low. No that the gov’t has bailed them aout, they have been propped up to make more bad investments. The fat has not been cleaned out of the system.
Well, I’v eranted long enough.
FWIW I wrote my congressmen urging them not to help GM. Lot of good it will do. I wrote them not to support the $700 B bailout too and look where that got us.
DON’T BLAIM ME, I WROTE IN RON PAUL!!
Nov 12th, 2008 (11:29 am)What is the political make up of the posters here at GM-VOLT.com? One would think you are all tree-huggers wanting your save-the-world plug in hybrid but so many posters are mildly agreeable to the bailouts to financial institutions that have gotten the country and GM into the position we are in but are willing to throw the working man and an entire US industry under the bus. If the Republican party has any chance of being a viable political party they will support helping the largest labor/manufacturing/blue collar industry in the world. But Bush has already expressed his reluctance to help the working man. “Joe the Plumber” is a fool to support the Republican party. In the end it’s the Democrats that will save his a_s and our country.
Let GM and Ford file bankrupty? You are all fools! A loan is not privitization! The federal taxpayers (US!) will get that money back with interest AND jobs! We will get nothing back from the bailouts to AIG and wall street!
THINK PEOPLE THINK!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Nov 12th, 2008 (11:36 am)ThombDvhomb (#55) says:
“The US government is comprised of people like you and me.”
NO, it’s not. The decision makers in gov’t are well connected, wealthy elitists. Many are multi-generational and making a mid-six figure income. They have NEVER risked owning their own successful businesses. They know NOTHING about TRUE capitalism. They are wealthy, well connected corrupt lawyers and socialist cronies feeding at the taxpayer’s trough.
Their pay grade and power depends on how many people they manage or how much money is flowing through their department. THIS is why they are interested in INCREASING bloat, and waste, NOT streaming by cutting the fat and waste. And why not, after all it’s not their money (labor, blood, sweat, tears, risk & pain), it’s somebody else’s so it’s FREE to them.
They (like most socialists and fascists) believe they are above the rest of us, the law and the Constitution. They HATE our freedom, love their own freedom and power over us. They believe that the ends justify the means and they believe they are better suited to manage OUR lives than we are. The gov’t is made up of elitist predators taking advantage of bureaucracy to enrich or empower themselves and mindless slugs who couldn’t get a better job in the private sector.
No, they are NOT like the rest of us at all unless you are talking about them being human. Then again, that’s another debate.
Nov 12th, 2008 (11:38 am)#59 KentT said
The federal taxpayers (US!) will get that money back with interest AND jobs! We will get nothing back from the bailouts to AIG and wall street!
====================================================
Regarding AIG, in effect the government took it over and owns it now, for better or worse.
Regarding GM, it is extremely unlikely that the US will get its money back with interest. GM would have to become hugely profitable to pay back these huge sums. It has not been that way for a long time, in fat years as well as lean ones.
It may be worth delaying the bankruptcy of GM for social reasons, but let us not kid ourselves. We are not getting the money back.
Nov 12th, 2008 (11:38 am)Wow.. where to start. There are so many EXTREME ideas here. BTW, to me, shouting extreme ultimatums is just a sign of ingorance.
Regarding the debate in this thread, i feel bad for Don C as he seems to be one against several. FYI – i tend to agree with what most of Don C says.
#38 George says:
The private sector can not, without the assistance of the government, force anyone to patronize it’s establishments or buy it’s products or use it’s services.
———————–
I’ll offer a counterpoint… What if the private company has a monopoly, what if they sell water or food or gas/oil/energy? I guess you could decide not to buy from them. I wonder what would happen?
I see a lot of anti-government posts. What about the police & fire departement? Should we make them private, so only the rich can afford the best firemen & policemen? What about infrastructure? If you dont live in CA or NY, sorry, you cant afford (or its not profitable for us to provide you) power, roads, plumbing, etc. There’s so many examples, i could go on and on and on. I didnt even touch on international matters.
Yes, i agree the goverment is bloated and wastes a lot of money. But they are a necessity. Unless you want to live in anarchy, trapped in a bomb shelter, holding a rifle, and dont care about the progress of our country (think of mad max), then you have to accept a government.
Regarding the auto sector (and in my opion at least 1/3 of the manufacturing sector with it), float them a loan for a year. Your going to pay for it anyway, might as well go the less painful route.
Nov 12th, 2008 (11:41 am)This is not about saving three mediocre automakers it’s about saving tens of millions of American jobs. That is what is at stake here, sure the big three have made their share of mistakes, but our unemployment is already 6+ % if the big three go under we would be looking at 16-20% unemployment. How do you think that would impact the economy.
Nov 12th, 2008 (11:43 am)We are just soldiers marching to the golden rule of puff and pass…
Nov 12th, 2008 (11:48 am)While the bailouts are tough to swallow for most americans, there doesn’t seem to be another alternative….and you don’t have to take my word for it….
http://jalopnik.com/5083470/cnbcs-jim-cramer-save-gmor-risk-a-great-depression
How could you say it is okay for GM, Ford, Chrysler to go Chpt 7 if there will be no economy left to salvage? I know OH,MI, and IN would all become seriously economically depressed, we already are feeling it now.
I’m confused by the logic of the naysayers…
Nov 12th, 2008 (11:48 am)GXT #19
I think universal healthcare would be a great solution to make our manufacturing sector more competitive on the world stage. I think it would also allow many more small business to thrive as many more people would be willing to try their hand at their own business. I don’t know how many times I’ve talked to people that want to try something on their own but need the medical benefits that a large employer can provide.
Nov 12th, 2008 (11:53 am)Lyle commented yesterday about the curious evolution of GM-Volt.com from providing information about the technical development of the Volt to a platform for discussing the business debacle which GM has become. Never more obvious than on this thread today.
First, I would say that this blog is the best source of information and informed discussion on all of the above that I have seen. Congratulations Lyle on your groundbreaking work.
Second, it is really gut-wrenching to read through this thread. I am getting really sick of this whole soap opera. I have supported some sort of help for GM up to now, but I am coming to agree with Spin at #39. It is a black hole that makes money vaporize. If we write a check for $50 billion to GM as it now exists, they will be back for more in “x” months. Spin says 6. It wouldn’t surprise me if it was less.
Plus, as so many have pointed out, where does it end? Boeing?
What is the old saying? “Insanity is the process of doing the same thing over and over and expecting the results to change.” If Rick Wagoner had a shred of pride, he would resign. IMHO, as long as he, Bob Lutz, Mr. Henderson, et al are still in place, I wouldn’t give them a !@#$%^ dime. You guys are so smart and indispensible, you figure it out.
I could go on, but the more I type, the madder I get, so I’ll just stop now.
Nov 12th, 2008 (11:54 am)Why doesn’t the government offer a 3k-5k tax break for all people that buy an american car….it would keep cars moving, keep people employed, infuse GM’s ballance books….but would it be enough?
Nov 12th, 2008 (11:57 am)#65 kushwail said
“How could you say it is okay for GM, Ford, Chrysler to go Chpt 7 if there will be no economy left to salvage?”
=========================================
GM, Ford and Chrysler are far shot of the whole economy. If they go bankrupt, it will probably be to C11 rather than C7 and the healthier parts will keep operating under much more favorable conditions. If they go to C7, there will remain a large and healthy US auto industry, even if it is companies that have HQ in other places.
There will be great pain to some people (both employees and investors), but the Detroit auto companies that now employ many fewer people than even a few years ago. They constitute only a small fraction of the overall economy, and that fraction will be reconstituted by the C11 phoenix companies, or by other companies.
Nov 12th, 2008 (11:58 am)hi KentT #59,
“tree-huggers wanting your save-the-world plug in hybrid…willing to throw the working man and an entire US industry under the bus.”
______________________________
GM third quarter 2008 results, losing $2.5 billion and draining $6.9 billion is cash reserves.
______________________________
Kent, say you owned a pizza restaurant. And you decided that the menu would offer a pizza topped with red licorice & bacon bits. You knew the other local restaurants made sausage pizza. And you knew it was a consistently strong seller for them. But you still kept on making the one YOU wanted to make. You knew red licorice was cheap and melted at a low temperature. You would make more money per pizza.
After 6 or 7 years of slow sales you decide to drop the red licorice topping and go with a straight bacon bit pizza. But, your prior bad judgment has left you with no money.
So you take your apron off and walk out to the front sidewalk. You inhale deeply and yell, “Hey everyone, I changed my ways. Give me enough money to continue selling pizza. Please don’t throw me under the bus! I’ll pay you back with interest, I promise!”.
=D~
Nov 12th, 2008 (12:01 pm)#66 pstoller 78:
Yeah, when I start agreeing with GXT the world must really be spinning backwards. He’s right on this one though, IMHO. You too.
Nov 12th, 2008 (12:02 pm)#68 kushawi said
Why doesn’t the government offer a 3k-5k tax break for all people that buy an american car….it would keep cars moving, keep people employed, infuse GM’s ballance books….but would it be enough?
=================================================
It probably would not be fast enough for the immediate crisis, but some kind of incentive program like that might help get the sector moving again. Some of the people in congress are thinking the same thing according to WSJ reports.
Nov 12th, 2008 (12:04 pm)#60 Tim
As a matter of fact, I was talking about the US government being comprised of humans. How would you govern? Would you be any different? Would you not pursue your own freedom and power? Isn’t that the capitalist way? Who here does not seek to greater power?
Nov 12th, 2008 (12:08 pm)#69 Check out this .pdf
http://www.cargroup.org/pdfs/Alliance-Final.pdf
According to this document, there are over 9 Million americans that are directly affected by the auto industry…millions more that are indirectly….just add those numbers to the current unemployment/underemployment numbers and you are looking at 10-15%+! Thats scary!
Nov 12th, 2008 (12:09 pm)#47 Tim
I must admit it. You have very strong opinions. Whether anyone agrees with you, I don’t know. I do know I agree you have the right to express your opinions. I can’t say I agree with much of what you have said, but yet I find myself in agreement with some. Most of us have some of the same strong feelings from time to time, but generally it passes. Continue to be passionate about your feelings, but express them a little less strong. You make some good points but hurt your case by the way you express it.
Let me add one other thing. Statik and DonC have opinions just as you do. They express them and should do so whenever they chose. I think you were a little hard on both of them. They both have expressed some opinions here that should be part of the discussion and we should not belittle them for what they express. Just as I am trying to not belittle you for what you said as opposed to how you said it. Thank you for your opinions.
Nov 12th, 2008 (12:13 pm)kdawg (#62) says:
Yes, gov’t is important and valuable when it is LIMITED to those things we cannot do such as:
1) Common defense of our boarders (not doing that)
2) Making sure that the people are FREE from gov’t intervention. (not doing that)
3) Keeping the market free by NOT:
*Competing with it
*Regulating it to death
*Taxing it to death
*Providing unsound fiat currency and inflation
*Allowing monopolies to form (including itself which is the worst monopoly)
*Allowing an unleveled playing field by choosing and funding favorites.
*Redistributing from the productive to the non-productive
*Creating hundreds of thousands of laws and then changing them at a whim so the people are always afraid to invest their hard earned savings (capital).
*Ignoring our supreme law (the Constitution)
I could go on and on about what Gov’t should NOT be doing… but they are!
Kdawg, we NEED services like fire, rescue and roads. But LOCAL gov’t and private competition ALWAYS provides these services better and at lower cost than gov’t monopoly. Why? Because they are competing for a taxpayer base with other LOCAL Gov’t.
Our founders studied history so they knew this to be true. That’s why the added the 10th Amendment and wanted the Constitution to be Literal & Obeyed NOT “interpreted” to the objectives of the powerful who want to concentrate power in themselves and NOT in the people.
Federal gov’t is a blunt instrument like a club. It is a black hole. It is pure raw power you cannot compete with or escape from! It can never replace the competitive nature of local free markets. Federal power can only destroy freedom in order to gather more power for itself. This always leads to a social and/or financial meltdown. Just ask the Soviets, the French, the English, the Romans, the Persians, the Egyptians and so on.
History repeats and an all powerful central gov’t with a global empire is NOT sustainable.
Gentlemen, “Prepare to be assimilated. Resistance if futile!” that is until the collective is finally destroyed.
Nov 12th, 2008 (12:13 pm)The expensive house down the street was purchased a few months back. The family that moved in couldn’t afford it, but they got a loan and moved in anyway.
A few weeks later they bought a new car and enrolled their 5 kids into private school. They ate out nearly every meal and got a maid.
One day they looked at their bills and their bank account and noticed that they were spending much more that the wife and husband were making combined. It was troubling. But they kept spending, hoping for brighter days ahead. They even bought their daughter a horse.
Over the next few weeks, they had to take out a line of credit from the bank and sign up for several more credit cards to make their minimum payments on everything they owed. They kept borrowing because they also continued to spend, getting a 72″ plasma TV and even giving their maid a raise.
Soon, they noticed that they owed more than both the husband and wife could make in 5 years. But, thinking things might improve, they brought on a gardener, bought an RV, and got a new saddle for the horse.
A few days ago they realized that there was no way they we’re going to be able pay the bills that had stacked up. But they couldn’t fire the maid or the gardener because those people needed those jobs. And getting rid of the Horse and the plasma TV would make the children sad. Getting a more modest house would hurt their image, so that wouldn’t do. And bankruptcy was simply not an option.
So they asked the government to give them some money to pay the bills and give them still more so they could continue to live in their nice house and pay their workers.
The government said, “We must do this! If we don’t, look at the impact it’ll have! Things will be even worse!”
So, this morning, all my neighbors and I got a letter from the government that read:
Dear US Taxpayer,
We appreciate your hard work, sacrifice, and the fact that you’ve stayed out of debt and managed to save some money.
But to help your neighbor down the street, we have taken %40 of the money in your savings account and placed it into the checking account of your neighbor down the street. This should help them get through these tough times and will allow them to keep paying their employees.
And just a heads up, If things do not improve, we will be forced to come back for even more. If fact, just plan on us doing this every 6 months or so. Trust us, this is best for everyone. Please keep working hard, watching your spending, and saving!
Regards,
Your Government
Nov 12th, 2008 (12:14 pm)#73 Kshuwail
GM & the UAW says the bankrupcy of GM will lead to 9 million lost jobs. Come on. Many companies have went through bankrupcy and emerged OK. The airline industry was recently hit hard. They downsized (are still downsizing), but that’s what supposed to happen. The world didn’t stop, everyone still flew safely. People who say the american economy will fail are using scare tactics to get support.
Nov 12th, 2008 (12:14 pm)Here’s an interesting CBS News article: “Big Three Bailout? Not So Fast – A Better Solution Is To Let The Automakers Declare Bankruptcy” – Declan McCullagh
Among other things McCullagh says, “The labor movement spent, according to Financial Week, a whopping $385 million to elect Obama and other Democrats last week. Nobody writes such large checks without expecting something: now it’s payback time.”
He makes several other key points that make the article well worth reading at:
http://www.cbsnews.com/stories/2008/11/12/politics/otherpeoplesmoney/main4595068.shtml
Nov 12th, 2008 (12:17 pm)#47 Tim
Statik (#42) says:
“I’m going to agree again with DonC here. I am a staunch capitalist.”
NO YOU’RE NOT, Statik! You obviously don’t even know what capitalism is!
Capitalists WORK hard to SAVE money then RISK it by investing in a FOR PROFIT business hoping for a return. They know that higher return means greater RISK. REAL capitalists RISK their OWN savings and know that there cannot be REAL gain without REAL risk.
Socialists (and other thieves) BORROW money then invest it WITHOUT risk because they just bankrupt or use the blunt hammer of Gov’t to FORCE others to bail them out if there is a problem.
Gov’t invests OTHER people’s money against their will and without regard because it is not THEIR personal money. THEY didn’t sacrifice for it. It is totally unethical when the Gov’t “invests” in 3rd party FOR PROFIT companies because there is NO recourse and therefore no PERSONAL responsibility!
Statik is no more a “capitalist” than any of the other NeoCons or Democrat-Socialists who steal from (or regulate) the productive to “help” the non-productive whether they ask for it or not. It’s PURE redistribution from the productive taxpayer to the non-productive, poorly run corporation. Only the free market PURGE can solve GM’s problem. Liquidate to others who will be better fiduciary stewards of invested capital.
Like most “intellectuals” I’m betting that neither Statik, nor DonC have EVER successfully started, run and then sold his own business for a profit. They are like college professors who talk a good talk but have no REAL experience about what they are talking about.
Some call people like DonC and Statik FALSE PROFITS, others simply call them HYPOCRITES. Are they smart, yes. Are they ignorant and foolish, YES.
———————————
Wow, tell me how you really feel Tim. Trust me, I’m a capitalist.
For the record, I am for no bailout of GM.
For the record, I am for no bailout of the banks.
For the record, I am for the economy going into the crapper, if thats the consequence of its actions.
If you read my post, I support gov’t intervention, but only when it comes to providing basic humanitarian needs, to hold the base standard of living for the poor and impoverished when it is threatened, and to take measures that deal with security of the nation and the loss of the civil liberties from other authoritarian influences.
I am not in favor of government redistribution wealth, I am not in favor of the government investing my money in propping up businesses that have no right to be in business.
As for this statement: “Like most “intellectuals” I’m betting that neither Statik, nor DonC have EVER successfully started, run and then sold his own business for a profit. They are like college professors who talk a good talk but have no REAL experience about what they are talking about.”
I started my own business in 1993, after university. I run it still today, although I now don’t have to go in for the day to day things…I can spend time with my family and friends. I have never worked for anyone but myself. I have never received any type of government assistance, and no one has given me anything.
Also for the record, on a personal level, I love what is happening. I want PURE unadulterated carnage in the market. I called this market and acted on it. I liquidated all my equities a year ago, I sold my house, banking the equity, at the peak before it started the down spiral. (If you have been around this forum, you know that, because I have been on the record all the way…before it happened).
I am a capitalist, and as such, the best thing for me is a massive collapse here. I have nothing on the line as everything dives…my dollars are going farther and farther everyday.
It is people like me, a capitalist, who does not rely on the government, who have made their own money, and choose to use it the best way I know how to make more of it…who are now on sidelines, we (the capitalists) will put a end to this situation, not government, but only when we feel the free market has truely bottomed out and righted itself we will return.
Perhaps your new here, and misterpreted the meaning of my post, I don’t know.
Last time, for the record: I support intrusive government involvement on its own people only when it goes to maintaining a basic standard of living to my fellow countrymen.
“Some call people like DonC and Statik FALSE PROFITS, others simply call them HYPOCRITES. Are they smart, yes. Are they ignorant and foolish, YES.”
I don’t profess to be a PROPHET. I am certainly not hyporcite. I don’t know that I am any smarter than the next guy, I just have been fortunate enough to have grown up with a good background in finance…but I do know I am not ignorant or foolish.
Nov 12th, 2008 (12:18 pm)#69 RB says
If they go to C7, there will remain a large and healthy US auto industry, even if it is companies that have HQ in other places.
————————-
I’ll assume you are talking about Japan. This would be very scary in my opinion. I work for Japanese owned US company in the manufacturing sector. Japanese companies do not buy equipment from US manufacturers in general. They buy from their own partners in Japan. In the rare case that they do buy from a US manufacturer, they require that everything put into that piece of equipment is from a Japanese manufacturer (whom they partner with in Japan). And you keep trickling down, but eventually, its all built in Japan. So if Japan totally took over the US auto sector, you might as well say then a huge portion of the manufacturing sector as well. And a lot of people who thought the big 3 going away wouldnt affect them, would soon find out it does.
Nov 12th, 2008 (12:20 pm)#48 Van
Thanks for the great link. Too bad no one at GM apparently ever read the article. It really hit the nail on the head, didn’t it?
Nov 12th, 2008 (12:28 pm)Hot button topic. I wrote my congressmen. I suggest others do the same.
Nov 12th, 2008 (12:33 pm)#60 Tim
Now your comment is one that I can whole heartedly support and agree with. I have said much the same in the past. Government sees themselves as a “ruling class”. They exempt themselves from many of the laws and conditions they pass on to us. If I were able to I would force all congressional election holders to two terms. (I would increase the house of representatives term to two 4-year terms.) All government workers elected, appointed or hired would have to pay into social security and medicare and would not have any health plan or retirement plan not available to all other citizens. All of the government perks now enjoyed by congress and its staffs would be eliminated. If a congressman or staffer waned to get a hair cut or meal, they would have to go to the same place that you or I would. No special class of employment or citizenship would or should be created for anyone in government.
Nov 12th, 2008 (12:36 pm)@ Tim #76
You’re confusing me. You believe we need a goverment that’s bad at or doesnt govern? That sounds like the politician running on the slogan “Vote me into office so I wont do anything and make sure my peers dont either”.
And let me understand this. You support local government, but not Federal goverment. So how do you handle Federal issues? And how local do you go? We only need state government, county government, city government, or maybe just a neighborhood watch?
Nov 12th, 2008 (12:44 pm)The writing was on the wall at least 10-15 years ago. The
arrogance and stupidity of the big three coupled with the selfish
greedy unions brought them to this sad point in history. The
competition is having them for breakfast. It’s time to start from
scratch and let them file for bankruptcy. Stupidity and greed
should never be rewarded!
Nov 12th, 2008 (12:46 pm)#10 Rashiid Amul:
Good idea. One of the best I have seen on this thread, actually. If the feds want to loan some money, let them loan it to allow C11 instead of C7. Thanks.
Nov 12th, 2008 (12:49 pm)#67 Noel Park
I know just how you feel. I am totally confused about all of the things that are going on and can not find my way through some of it. I know that many workers will lose their jobs and I do not want to see that. Yet, I don’t want GM to be given this money without some restructuring being required. GM is a bloated company selling too many competing lines. They had an opportunity earlier this summer to strip some of the lines off and drop some car brands, but they did nothing. I am a firm believer in GM only selling Chevrolet, Saturn and Cadillac. Everything else should go. If this can be accomplished as part of giving them a low interest loan, then so be it. I am not proposing any changes for brands GM sells in other countries because I do not know enough about them. Opel is a strong European brand name and should stay, of course.
It is a very frustrating time for all of us free enterprise capitalist. Less government intervention is always good. We need government to be there as a watchdog coming into play only to correct wrongs not corrected by the market place. Once the wrongs have been corrected, government should get back to their day job of providing for the national defense and international trade. Of course, in today’s world government is involved in every sector of our economy and in our very lives. We can not take a pee pee without government being there making sure we raise the seat. We need some of that, but not to the extent it has grown to today. Somewhere government has to back off and let us alone. But, not today.
Nov 12th, 2008 (12:55 pm)@MarkinWI 53
Chrysler was truly a “Loan” yes. Today the big 3 want a “Loan” and it was appoved for the $50billion. Has yet to be divied out. now this……..
“The legislation will seek to amend the $700 billion Wall Street bailout plan to include automakers…”
Yes, they are asking for a “BAILOUT” on top of the $50billion loan that was approved. So, what’s going to happen? Pelosi will expidite the “BAILOUT” funds for the “Bailout” then they will get the $50billion loan and they will live as fat cats once again. Yes, they will double dip. Why? because gas prices are back down and our Govt sucks a$S.
Nov 12th, 2008 (12:57 pm)#68 ksuhwail
“Why doesn’t the government offer a 3k-5k tax break for all people that buy an american car….it would keep cars moving, keep people employed, infuse GM’s ballance books….but would it be enough?”
——————–
The dealer has already paid the automaker for the cars on his lot. Giving a tax credit would help sell more cars and once those on the lot is gone, if the tax credit is still there, it would help drive production of more cars. This solutions sounds easy and it is. Problem is that it is a slow, long process solution. I don’t believe GM has that much time. But it could be a way to get more of us to purchase American auto company cars. We could also insist the government add a $5,000 tax to all foreign named vehicles no matter where they were produced. The “tax” could then be used to help the American owned auto companies restructure and plan new, more efficient vehicles.
Nov 12th, 2008 (1:01 pm)All my life I’ve heard it said “NEVER IN AMERICA” it won’t happen here “NEVER IN AMERICA” well its happening here, a lot of people are trying to warn us and we’re not listening, it’s coming, governments taking over private concerns, the news media having an agenda, next guns will be taken or they will know where they are, its coming and no ones listening, there are plenty of warnings
DOMB AND GLOOM, better believe it
We can stop it it’s not too late, we can still vote, if its not to late for that
Nov 12th, 2008 (1:04 pm)A vehicle tax credit for an American car … what’s an American car? Built in America? 100% American parts? An American-owned company? Can I take my tax credit and buy a SAAB? I think we’ll be stuck purchasing Hummers and Expeditions … and so it goes.
Nov 12th, 2008 (1:31 pm)Here’s the real problem people…
Whether the banks, and/or car companies get saved isn’t really the question…
Based upon what happened during the Great Depression, the government decided to increase deficit spending to maintain economic growth…sounds backwards, but seems to work in the short term.
In the long term, however, the more money we print to “save” ourselves, the less that money will be worth. For every dollar the Fed puts into circulation at a time of crisis like this, they have to take a dollar out of circulation at the right time afterward or currency devaluation occurs.
The problem is, the Fed can’t just start reducing the money supply when so much of that money is loaned to businesses. In effect, the Fed has opened up the money spigot wide open and handed the handle to investment banks, and soon, car companies. As a result, we have now decided to follow the money policies of the post-WWI Weimar Republic and post WWII Hungary. Can anyone say, “Hyper-inflation?”
I find it interesting that almost everyone who heard about a $700 Billion bailout was shocked…common sense tells us the speed and size of this kind of money management cannot be sound. But now, we just want to keep pouring gasoline on the fire and will have to bailout the car companies to keep those voters happy.
I know I’m starting to sound like a few other “Doomsayers” in this post, but if you think I’m out of my mind…just go check this out…I don’t usually quote Wikipedia, but this is a well-documented and sourced article.
http://en.wikipedia.org/wiki/Hyperinflation
Read it…it will scare the he!! out of you!
BTW…during the Depression, 25% of Americans made their living on a farm. Today, that number is just 2%. I think I’m going to go plant a garden…
Good luck and God bless America!
Nov 12th, 2008 (1:31 pm)Hmm….
Nov 12th, 2008 (1:39 pm)@N Riley
“We could also insist the government add a $5,000 tax to all foreign named vehicles no matter where they were produced.”
It’s called a Tariff. It’s already being done.
Only prob is US companies will just artificially jack up their prices to closely match the import for a better profit margin. Is that fair to the US people?
Nov 12th, 2008 (1:54 pm)#80 Statik
Nice response… It wasn’t really necessary, though it was interesting to find out that you do own your own company.
So here’s another question for you (DonC, et al):
Preamble:
Having waded though this thread, what appears to be the most reasonable solution to the impending GM bankruptcy is GM filing Ch 11 with US gov’t credit keeping the bankruptcy from escalating to Ch 7.
Advantages:
)
* GM has the capacity to keep its basic corporate structure
* GM can keep current and future platforms/technology (e.g. the Malibu, CSV, Vue, and oh yeah, the Volt
* GM can be released from the more onerous contractual oblications (e.g. the previously mentioned Job Bank program that’s allowing non-productive (counter-productive ?) workers to receive paychecks)
* GM can optimize existing supplier contracts
* GM can eliminate several of the cannibalistic brands (e.g. Pontiac, GMC, Buick) without threat of reprisal from corresponding dealers
* The US can continue to maintain an independent heavy manufacturing sector. The US has been the leader in knowlege-based technology ever since it started, but I don’t believe we can outsource all of our heavy manufacturing without severe long-term repurcussions. Manufacturing is dramatically improved when optimized with high quality information systems, but OOP doesn’t actually create a suspension system.
FWIW, I believe that GM has been heading in this general direction anyway (e.g. releasing all of those mid-level white collar jobs).
Question:
What’s the downside? As an alleged neo-capitalist (what is that any way?) I don’t really see any downside to GM or North America.
I do see a tremendous Political Disadvantage (from a neo socialist CongressCritter’s perspective):
Undermining the UAW is a non-starter for Congress… the Dems (and more than a few Republicans) are way too endebted to large unions.
Nov 12th, 2008 (2:04 pm)#88 N. Riley said, “I am a firm believer in GM only selling Chevrolet, Saturn and Cadillac. Everything else should go.”
I couldn’t agree with you more, N. Riley. I have heard that sentiment as well from a number of other Auto industry commentators (most with higher pedigree’s than the armchair quarterback that is me). Chevrolet/Saturn/Cadillac seems to fit so well with the “Triple Brand” philosophy that has been been proven a winner in Toyota for example. It breaks down easily for the consumer:
Chevrolet = Mainstream assortment of vehicles
Saturn=Youthful segment with European flavor mixed in.
Cadillac=Luxury, of course.
Those three brands fully cover the spectrum of consumers without inundating with the bloated plethora of models that are offered currently. I looked at last month’s sales for GM. SAAB, Hummer, Buick, Pontiac, and GMC added all together accounted for 27% of GM’s total sales. I realize that 27% is nothing to sneeze at, but considering the amount of investment it takes to keep these 5 divisions flush with current and viable products, for the return they give in sales, seems to be a waste.
Big question is, can GM kill divisions such as these, without mass lawsuits, mass job loss, and mass defection to competitor’s?
Nov 12th, 2008 (2:30 pm)#95 CaptJackSparrow
I am not proposing an import tariff. The foreign companies get around this by building plants here in country. I am proposing a tax be levied against any vehicle purchased in the U.S. that is not made by GM, Ford or Chrysler. That tax would go towards paying for a tax credit to purchase a vehicle from GM, Ford or Chrysler. I know that this would impact some jobs held by workers in these foreign owned U.S. plants, but that is much more acceptable than seeing the massive job loss if one, two or all three of the Big Three were to go “under”.
I am for helping people purchase American owned vehicles and if they decide not to, that is well and good. They can pay the tax premium for doing so. We could go so far as to add a tax on insurance companies to write policies covering foreign owned vehicles. This way the government could “walk softly and carry a big stick” once again. Part of my plan would be a requirement for GM, Ford and Chrysler to restructure and drop redundant lines. For GM that would mean keeping Chevrolet, Saturn and Cadillac lines only.
I know what everyone is going to say. This is a pretty tough proposal. But if you don’t like it, come up with one better.
Nov 12th, 2008 (2:32 pm)I say drop Cadillac. Look at the new Fisker Karma. They just announced the hiring of 200 engineers and designers in Pontiac, MI. As GM continues to operate, they need to stay focused on the Volt which would be a very well positioned product to the middle market. I would not continue financing precious resources on the high end market that GM has so clearly missed.
Nov 12th, 2008 (2:37 pm)#96 ThomC
I agree with all you said. Very well presented. It would be a very hard sell in congress because of the union money to be lost to the democrats. This plan, because it could work to our advantage, is dead on arrival in congress. The democrats are determined to do all in their power to insure the unions do not lose any pension or health benefits as presently defined and currently agreed to. There is just too much at stake for the democrats to support anything that would see the loss of pensions funds and health funds for the union.
Nov 12th, 2008 (2:37 pm)QUESTION for us.
Rick Wagoner says “Bankruptcy not an option”, and this is primarily based on the theory that the public will not buy a big ticket item like a car (unlike an airline ticket) from a company in bankruptcy because of the warranty implications.
Well, this means that once Rick publicly said GM will run out of cash / go bust, he killed whatever sales that might have made from that point, because who would buy from a company about to go bust! So 4th quarter losses will be huge.
So what’s wrong this this?
Uncle Sam underwrites warranties, thus consumers are not any more afraid to by GM. GM files chapter 11.
To contain the domino effect Uncle Sam, may choose to help out a few suppliers most hurt by bankruptcy, who are not paid for delivered parts because of bankruptcy, but not those players that are closer, thus containing the problem. GM is then free to reorganize.
Comments please?
Nov 12th, 2008 (2:42 pm)#97 Schmeltz
“Big question is, can GM kill divisions such as these, without mass lawsuits, mass job loss, and mass defection to competitor’s?”
—————–
Chapter 11 with financing guaranteed by the U.S. government is the best, surest and fastest method. GM might get around to this if left to their own timing. But we are talking about decades for GM to do this without be pushed to do it. This could be a pre-condition to getting government financing for the C11 restructuring that would be expensive, but necessary. GM could come out of C11 lean and trim and ready to compete.
Nov 12th, 2008 (2:45 pm)I have been saying today and some yesterday that I was sitting on the fence (with the attendant splinters) when it came to a decision of bailing out GM or them going Chapter 11. Well, I now believe C11 would be the best path as long as the government guaranteed financing with a low interest loan. It would give GM the best opportunity to strip away the dead, dragging down parts of its structure. That would include the union problems GM must face.
Nov 12th, 2008 (2:45 pm)#96 ThomC wrote:
Advantages:
)
* GM has the capacity to keep its basic corporate structure
* GM can keep current and future platforms/technology (e.g. the Malibu, CSV, Vue, and oh yeah, the Volt
* GM can be released from the more onerous contractual oblications (e.g. the previously mentioned Job Bank program that’s allowing non-productive (counter-productive ?) workers to receive paychecks)
* GM can optimize existing supplier contracts
* GM can eliminate several of the cannibalistic brands (e.g. Pontiac, GMC, Buick) without threat of reprisal from corresponding dealers
——————-
With some more time & money, isnt this possible without going Ch11 (and risking Ch7)?
Nov 12th, 2008 (2:46 pm)#96 ThomC
The problem with the bankruptcy is that we don’t know how consumers will react. If a store goes Chapter 11, and it sits there, and there are goods on the shelf, people don’t react. Cars may be different. Since warranty and service work are concerns consumers may not be willing to buy a vehicle from a company in Chapter 11.
This is the reason why avoiding bankruptcy is important, though in fact shareholders in the big three will definitely be wiped out. While technically not operating in Chapter 11 the companies will definitely be in more or less the same situation except that rather than a bankruptcy judge with a lot on his/her plate you’d have a team dedicated to restructuring the companies.
Nov 12th, 2008 (2:48 pm)#101 Mark Bartosik
It is a plan. There are several “plans” being discussed. Yours may work out ok, if structured correctly.
Nov 12th, 2008 (3:20 pm)Lyle has added another post to our blog. One about Paulson saying previous legislation does not allow automakers receiving any of the 700 billion and congressional democrats disagreeing. Check it out.
Nov 12th, 2008 (3:31 pm)Hi guys & gals!
I wanted to add my 2 cents worth =)
First, let me say that when I keep hearing that GM should be left to fail, I am shocked. It’s like you are saying to an overweight person with bad eating habits who has a cancer as a result, “Too bad! You made yourself this way, so I can’t help you.” People, we all agree that they should be re-structured, but if we don’t help them NOW, to use the above analogy, we’ll be letting the patient die of cancer and losing the benefit that person could bring us PERMANENTLY. You don’t treat the overweight problem (i.e. re-structuring) first, you gotta cure the cancer first, i.e. save them by bail-out though we don’t like it!!!
For national defense issue, do you really want ALL the autos made by other countries, and please don’t tell me that American/Canadian workers are producing Toyota, Honda, etc. vehicles in factories located in North America. I am of Asian ethnicity and grew up until early Jr. High in Asia so I know how Asian minds work. I don’t know how many times I have to pound non-Asian folks this cocept: though the factory might be in NA, and the workers might be North Americans, ultimately the revenue generated by those sales are going overseas to benefit the foreign company/country. I’m not a war-monger, but what happens when a war or some crisis breaks out and we have to fight one of the auto-producing country; they shut down the factory, all the workers are laid off, and most importantly all the R&D knowledge is not accessible to us. The R&D will benefit the other country not us. We might be able to take-over and use their factory to produce some stuff in crazy hypothetical situations like wars and other crisis, but it would be of limited benefit to us.
If we have our own NA auto-companies, we not only benefit (somewhat) from revenue not being shipped overseas, but also R&D knowledge which would be crucial in crisis. We simply cannot let any of our NA automakers to fail! We have to bail them out, and using appropriate conditions attached to the said bail-out, force them to become lean and efficient.
Let me know what you think.
Nov 12th, 2008 (3:49 pm)Everybody wants to blame the auto companies for the situation they are in stating that they made bad business decisions….this is not true at all…..the reason they are hurting is because of the Unions….get rid of the Unions and the company would be able to recover.
Nov 12th, 2008 (4:32 pm)#103 n riley
I have been saying today and some yesterday that I was sitting on the fence (with the attendant splinters) when it came to a decision of bailing out GM or them going Chapter 11. Well, I now believe C11 would be the best path as long as the government guaranteed financing with a low interest loan. It would give GM the best opportunity to strip away the dead, dragging down parts of its structure. That would include the union problems GM must face.
—————————-
Welcome to the fold. We have some burgers on the BBQ and drinks are at the bar, make yourself at home.
Nov 12th, 2008 (4:41 pm)@TUT 109
HERE HERE!
I second that motion!
@Sam Y 108
The health of an individual is one thing. True it’s their decision. If YOU want to help every Obese person, it’s America you have that choice. But what we are talking about is a Business. Just like every other business. Will you go help fund Circuit City, Linens’an Things or Mervyns because they can’t sell their product?
GM is a business that can’t sell the inventory of their vehicles they built and continue to build. They could not “Evolve” in time eventhough it was obvious where the market was going. Just like the Donosaurs. Oh, and by the way, no matter what the price of whatever automobile is on the market, if it costs more than the American car, they artificially inflate the american car for a higher return.
“For national defense issue, do you really want ALL the autos made by other countries”
Well. there always Ford or Chrysler. So what I am really hearing is, if a foregin made vehicle is more superior and less expensive we should still buy American and spnd your money? No wonder the Govt pays up the yinyang on parts!
Nov 12th, 2008 (4:55 pm)@statik 110
Didn’t offer me BBQ or drinks.
I guess I should stop being an as$…..
nah
p
Nov 12th, 2008 (5:55 pm)hi Zach #39,
“I don’t understand what GM is thinking… the numbers don’t add up at all!!”
________________________
Ever play poker?
If GM can cry “the sky is falling” enough, they may get what Paulson was able to get.
If three years ago GM had announced, “I want a bail out now”, we would have looked at them like they were nuts. But, now things have changed. The government wallet (tax coffer) has been opened by Paulson pushing his do-or-die talk to Congress.
GM asking for $25 billion (which we gave to them) and then $25 billion more doesn’t seem to be so hard to imagine.
Come on GM, just make the efficient cars and claim your first $25 billion. This is our current offer and I hope our final offer. The sooner the Volt is available, the sooner your first $25 billion is available.
This goes for you too Ford. Where’s that sleek EREV? You can do it.
I emailed my representative and asked for all bail outs to stop.
https://writerep.house.gov/writerep/welcome.shtml
http://www.senate.gov/general/contact_information/senators_cfm.cfm
=D~
Nov 12th, 2008 (9:43 pm)#62 kdawg says:
I’ll offer a counterpoint… What if the private company has a monopoly, what if they sell water or food or gas/oil/energy? I guess you could decide not to buy from them. I wonder what would happen?
========================================================
Only thing is, that without government intervention a true monopoly can not develop. Monopolies are granted by governments.
Nov 13th, 2008 (5:30 pm)I thought my mother-in-law was UGLY! She is no match to Pelosi.