34
   

Let GM go Bankrupt

 
 
OCCOM BILL
 
  1  
Reply Sun 23 Nov, 2008 02:15 pm
@hawkeye10,
hawkeye10 wrote:

Quote:
That's really sloppy thinking. Bureaucratic incompetence has no relationship with current management’s competence level whatsoever. Next time you apply for a job and your prospective employer inquires about your qualifications; tell him you have none… then point out another moron and tell him you're not him. That should prove you’re qualified, right?


the answer would be " I can sure as **** do better than the guy you have right now"
And you would remain unemployed because only another idiot would consider that logical.

Your faith in government bureaucracy is extraordinarily misguided. When it comes to mismanaging funds; GM, Ford, and Chrysler are all pikers compared to the government of the United States. You’re also relying on a ridiculously false dilemma.
0 Replies
 
JPB
 
  1  
Reply Sun 23 Nov, 2008 02:56 pm
@roger,
I don't know, roger. I've seen a few blog comments around talking about Pelosi's "new $75 billion proposal" that she supposedly mentioned on one of the Sunday AM TV news shows. Something about an alternative plan that they will try to get passed next week.

Edit: I did find one reference online...
Quote:
She also said automakers could end up qualifying for $75 billion in loans total...source
0 Replies
 
maporsche
 
  1  
Reply Sun 23 Nov, 2008 03:30 pm
@hamburger,
hamburger wrote:

Quote:
The congress doesn't HAVE to pay them though hawkeye.

The government doesn't have any business in the general management of private business.

AND

Private business doesn't have any business asking for bailouts from the tax payers.


THEREFORE

No bailout. GM (and the other 2) either succeeds or fails.


so let a few 100,000 unemployed (perhaps a million or two ?) pound the pavement ?

i assume that bailing out the financial institutions is a different story - or should they also "swim or sink" ?
since most of the financial institutions also got themselves into the problems they are in , i don't see that they have any special rights , do they ?

if the argument is that we can't let the financial system go under because of the "financial turmoil" it would create . well , that's too bad but i don't think it would be "the end of the world" .
hbg





I was speaking agains the financial system bailout too when that was the issue.

The government doesn't have a responsibility, and have in fact misspent billions of monies that THEY DON'T HAVE, to bail out the private sector.
0 Replies
 
ossobuco
 
  1  
Reply Sun 23 Nov, 2008 04:11 pm
An early poster on the thread, I still haven't resolved my conflicting opinions on all this. I'm finding the thread useful, appreciating the various points.

To Finn, all Democrats aren't rubber stamped. I'm a union kid, but I don't agree with all union behaviors. Perhaps not as much as I don't agree with all management behaviors, but not a blanket "yea, sure".
maporsche
 
  1  
Reply Sun 23 Nov, 2008 04:21 pm
@ossobuco,
I'm fine with Unions too. I just think that when a union is partially responsible for causing a company to be unprofitable, they should suffer by having that company go out of business.

w/o the possibility of a company going bankrupt there is no incentive to stay in the black. If the UAW learns (through this bailout bill) that the government will help the big 3 anytime they need it, there is nothing to stop them from trying to get as much for their members as possible, no matter what it costs the company. And the company won't care because they know that the government won't allow them to fail.

This a dangerous proposition. Much more dangerous than just letting them fail for their own mis-management.


Edited to add:
When did this idea of "this company is too big to fail" enter our mindset as a nation? I'm curious what other companies are too big to fail. Would anyone care of one of the large oil companies were to fail? Would anyone care if Microsoft were to fail?
ossobuco
 
  1  
Reply Sun 23 Nov, 2008 04:30 pm
@maporsche,
Yes, I see that point.
hamburger
 
  1  
Reply Sun 23 Nov, 2008 05:30 pm
@ossobuco,
as usual : there is little that is just black or white - mostly a lot of grey .
hbg (a former union member - when i lived in germany)
spendius
 
  1  
Reply Sun 23 Nov, 2008 06:19 pm
@hamburger,
There's no grey here.

Letting them go to the wall just doesn't feel right.

They are a part of the American soul.

Didn't they write all the road songs? Really? And movies.

What's Bonnie and Clyde without the wheels? Think of ZeeZee Top with fuel efficient Toyotos and Daewoos with the gear stick between the bucket seats.

Bail em' out. Put Dylan in charge.
0 Replies
 
BillRM
 
  1  
Reply Sun 23 Nov, 2008 07:13 pm
@Finn dAbuzz,
Finn AIG had no unions and I would assume a very well pay work force indeed that are earning somewhat more then the unions workers at the Big Three earn and no one grand strand in Congress before cheerfully turning over more then a 100 billions to them.

Real odd that an insurance company can get over four times what the whole auto industry is asking for and not one word concerning it from anyone. Oh and the report of the 400,000 thousand dollars party they then enjoy was a very small story but the fact that the Big Three CEOs had flown in on private jets was front page news with once more statements on C-SPAN at the Congressional hearings.

No let AIG go bankrupt as it will be good for them statements at all for some very strange reasons.

Frankly I think that it companies with unions are the one getting the short end of this deal.





maporsche
 
  1  
Reply Sun 23 Nov, 2008 07:45 pm
@BillRM,
Bill, you're selectively listening. Plenty of people were pissed about the AIG bill. Plenty of people were pissed about the 700B bailout. And plenty of people are pissed about the Big 3 bailout. Personally, I'm pissed about all of these bailouts. Are you? Do you only support the one that has a Union involved?

Tell me, if we bail out the big 3 because they are too big to fail, what do we do if GM fails again? How much do we spend to bail them out the 2nd time? The 3rd time? What incentive do they have to succeed?

I like how someone said that we have to do this so that we don't outsource our manufacturing in this country. How about the fact that we are borrowing money from these same countries to finance this bailout package. Is that not worse?
hamburger
 
  1  
Reply Sun 23 Nov, 2008 08:01 pm
@spendius,
Quote:
How do wind turbines and biofuel stack up with oil at $48?


i don't know of anyone who'll guarantee that the oil price won't rise again .
new drilling activities seem to have come to a standstill .
the saudis might just be ready to pounce again in another year or two .
imo it would be better to take whatever time there is to look for alternatives .
that does NOT mean that passenger cars shouldn't run on gasoline , but there might be better fuel alternatives for industries . railways might be able to switch to electric power generated through gas turbines .
i think there are lots of opportunities to reduce oil and gasoline consumption without any great impact upon our lifestyle .
hbg
0 Replies
 
BillRM
 
  1  
Reply Sun 23 Nov, 2008 08:04 pm
@maporsche,
Maporshe if the big three go belly up how many trillion not billions of dollars in going to disappear in the first day trading on the stock markets after that news break?

How many years will it add to any possible recoveries of the economic do you think?

Twenty-five billions is pocket chance compare to what we are facing over this matter hell it is what two or three months cost of fighting our so call war on terror in the middle east.

Oh well I can only hope you supporters of the anti-bail out will enjoy watching your 401 K fall off the cliff as a result.


maporsche
 
  1  
Reply Sun 23 Nov, 2008 08:14 pm
@BillRM,
The stock market is NOT the US economy. There are more things to consider than my or your 401k account.
rabel22
 
  1  
Reply Sun 23 Nov, 2008 09:16 pm
@maporsche,
I dont know about the rest of you but my 401k has already fell about 30%.
0 Replies
 
BillRM
 
  1  
Reply Sun 23 Nov, 2008 10:03 pm
@maporsche,
Oh and when people who depend of funds from their 401 K stop buying and companies can no longer raise funds on the stock market or when the book value of a firm reach a lower point then their outstanding debt on and on it go.

The wealth of trillions of dollars contain in the stock markets is one hell of a large fraction of the total economical of the US and the whole world.

More then the banking section contain that we was so worry about for example.

Hell it is in effect the networth value of all the public comapnies in the US

Have you ever taken economic 101 in your life?
spendius
 
  1  
Reply Mon 24 Nov, 2008 06:18 am
Quote:
From The Sunday TimesNovember 23, 2008

Carmakers have to be steered by market forcesIrwin Stelzer: American Account
Set out a giant honeypot and the bears will come. And the more bearish they are about their prospects, the faster they will come, and the louder they will grunt. The Bush administration presides over a giant honeypot, containing some $350 billion. And a smaller one, with a mere $25 billion already promised to the begging bowls of the three US carmakers. This smaller pot comes with too many restrictions " money must be used only to produce greener vehicles " to suit the “Detroit Three”.

So the carmakers want Congress and the White House to dip into the money originally intended to help financial institutions weather the current credit crisis, the Troubled Asset Relief Program (Tarp).

President Bush and Treasury secretary Hank Paulson don’t want to bail out the carmakers, and so are arguing that they do not have the legal authority to transfer Tarp money to a purpose not authorised in the legislation.

If GM is on the verge of bankruptcy, says the administration, all the Democrats in Congress have to do is remove the green conditions, and the initial $25 billion will flow to GM and others to meet their immediate cash needs. By the time they burn through that cash pile " at current rates that will take a few months " Barack Obama will be sitting in the Oval Office, from which perch he can decide how much taxpayer money he wants to commit to satisfying the seemingly insatiable appetite of the cash-guzzling trio.

The politics are clear. The United Auto Workers (UAW) union, which claims more than a million active and retired members, helped deliver the key state of Michigan to Obama. They are calling in their IOU.

Two things surprised the car-company bosses when they appeared before Congress last week. The first is the weight of the baggage carried by their principal spokesman, GM chief executive Rick Wagoner, whose company is in worse shape than Chrysler, and in far worse shape than Ford, which says it can survive without aid through 2009.

Wagoner contends that GM’s problems stem from a short-term liquidity crisis caused by high oil prices, tight credit and consumer reluctance to spend " all forces beyond the control of management. But Wagoner has been boss since 2000 and at GM for 31 years. During this period its market share has sunk from over 50% to 20%, its losses have mounted so that it is haemorrhaging over $2 billion in cash every month, and repeated efforts to restructure the company have failed.

The sad truth is that GM has too many workers making too few cars that people want, being sold through too many dealers at prices too low to turn a profit.

A second surprise for GM, Ford and Chrysler has been the extent and intensity of the opposition to a bailout from a variety of politicians.

Proponents of the bailout have always expected to have a fight on their hands from conservatives who believe that capitalism without failure is like religion without sin, from long-time critics of the industry’s management, and from those who feel that the UAW has for years extracted excessively lush compensation packages from the carmakers. (If you doubt that GM’s union contracts are a big source of its inability to compete, consider this: outside North America, where it is not burdened with such legacy costs, it is a highly successful company.)

But nobody guessed that politicians in the many states in which non-union foreign carmakers such as Toyota, Nissan, Honda and BMW are providing good jobs for more than 113,000 workers would be quite so vigorous in protecting those companies from unfair, taxpayer-subsidised competition.

That opposition and the weak performance of the carmakers’ chiefs in their appearance before Congress forced the Democratic leadership to abandon efforts to push through its bill to allocate $25 billion of Tarp money to the Detroit Three. Score a win, although only a temporary one, for the Bush administration.

The car companies will now have to await the coming of Barack Obama before receiving the taxpayer-funded loans they seek " which he will make available, he says, only if he can be shown that “we are creating a bridge loan to somewhere as opposed to a bridge loan to nowhere”.

The opposition to the bailout makes a powerful case for denying aid and letting GM file for bankruptcy. A bailout will do nothing to lighten the burden of the legacy costs under which GM and others labour. GM’s over-numerous dealers are protected from termination by state laws, and its workers’ extravagant benefit packages by contracts that require almost full compensation for laid-off workers, indefinitely. Only a bankruptcy court judge can undo those legacies.

Bankruptcy is not an option, says Wagoner firmly. Consumers will buy tickets on bankrupt airlines because their relationship with the carrier lasts only for the short duration of the flight. But car purchasers are entering a long-term relationship with the manufacturer on whose warranty they must rely.

Unfortunately for Wagoner, there is an easy fix to that problem: a government guarantee of all warranties backing vehicles sold while GM (or Chrysler) is in bankruptcy. Throw in government guarantees of pension obligations, some retraining and other protection for older workers who might be adversely affected by rulings of the bankruptcy courts, and you have a compassionately conservative and economically efficient solution to the industry’s problems.

But that is not to be. Politics trumps economics, and Obama now has promises to keep. Nobody wants to take note of the fact that our British friends poured billions into a failed attempt to rescue British Leyland.

The stark choice is bankruptcy now or bankruptcy later, and now beats later by at least $50 billion.

Irwin Stelzer is a business adviser and director of economic policy studies at the Hudson Institute.

spendius
 
  1  
Reply Mon 24 Nov, 2008 06:45 am
@spendius,
Quote:
But nobody guessed that politicians in the many states in which non-union foreign carmakers such as Toyota, Nissan, Honda and BMW are providing good jobs for more than 113,000 workers would be quite so vigorous in protecting those companies from unfair, taxpayer-subsidised competition.


Orwell's "stick rattling in a bucket" is right there before your very eyes triumphantly liquidating the true American dream.

Of course--"It's the economy,stupid"-- got there first.

It seems to me that if those companies go under North America will be a mere accumulation of 300 million assorted biological entities. And I don't think that could be said about banks going down. Your soul is at stake.

You are being picked off by the Japanese and Germans simply by their locating plants in the boonies where the essential engineering is of no consequence and only Lego assembly is conducted.

It happened here.
0 Replies
 
maporsche
 
  1  
Reply Mon 24 Nov, 2008 07:10 am
@BillRM,
Actually, I'm an economics major in college right now. So yes, I've taken Eco101 (well, it's 121 in my college, but I know what you mean).

And what I learned in Eco121 is that companies who fail, must be allowed to fail. That is a basic economic truth.

On another side note, I see the US is proposing a 306 Billion dollar plan to bial out Citigroup. Another company apparently too big to fail.

WHEN WILL THIS MADNESS END?
spendius
 
  1  
Reply Mon 24 Nov, 2008 07:26 am
@maporsche,
Are you suggestng that your economics "major" is sufficient for you to pronouce such a fatuity. I think the word "major" has gone to your head.

Major Major Major Major. Inducted during World War II, he is promoted from Private to Major while still in boot camp, without attending the Officers Training Corps or any advance warning at all. This is caused by an IBM machine with a "sense of humor almost as keen as his father's". (See Catch 22).

A bit like your promotion from toss-pot to economics expert by word magic.
maporsche
 
  1  
Reply Mon 24 Nov, 2008 07:31 am
@spendius,
Not what I suggested at all spendy. Simply answered the chaps question.

Now, what I'm saying though is the truth. I have no emotional attachement to GM, Ford, or Chrysler as you seem to do, speaking from childhood memories and such about your perception of the American dream from across the pond.
 

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