Let GM go Bankrupt

@mysteryman,

Quote:

I have to disagree here.

First let me say that I am glad that you were able to find new employment after that unfortunate event with the truck...

If you think Macro I think you will see that I am right. Automation allows us to produce more stuff for less man hours right? And the two of the problems we have are that we dont have enough employment and that we produce/buy/use/discard so much stuff that we are killing the planet, dont appreciate our stuff, and dont take care of our stuff. Increasing amounts of automation will only make both problems worse.

Even those who push automation admit that they assume that the result with be that we will have ever increasing amounts of stuff. We long ago passed the point were our lives were made better by more stuff. What we need now is more quality stuff that means something to us, hopefully stuff that is well made, that we care about, and that we will take care of so that it does not need to be replaced anytime soon.

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@hawkeye10,

Snore.

1 Reply

@plainoldme,

Quote:

Snore.

Considering that it was not presented for your entertainment, who gives a ****?

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@hawkeye10,

My point is the government dealing with GM is hardly extra legal and the government take over banks and run them as the owner until they can made a deal with another bank to take then over all the time.

Placing capital into them and doing other actions until the bank in question is in a shape to be sold to another bank.

Now GM will be going public once more an as in the case of a bank will be sold.

Not to another car company but in the public market place and it look like the government is going to come out ahead in the deal.

So what is your complain?

If GM had been allowed just to shut, the likelihood is great that would have been the end of all cars manufacturing in the US.

Ford for example share the supply chain with GM to a large degree and the parts manufactures are unlikely to had been able to stay in business with just Ford buying from them.

The government seem to had acted correctly in saving one hell of a large percent of the total US economic and earning a profit at the end.

1 Reply

@BillRM,

Quote:

The breakdown of the deal that was put together is as follows; the UAW receives 17.5% equity in New GM, $6.5 billion of preferred stock and $2.5 billion cash in exchange for $20 billion owed to its benefits trust. The US government receives about 61% equity for providing $50 billion of financing. The group with the least political clout, the GM bondholders, will receive just 10% equity and some warrants in exchange for $27 billion of debt. Approximately one third of what the UAW gets! To add insult to injury, bondholders have their equity held along with other liabilities of Old GM, AKA Motors Liquidation Company. Ignoring over 200 years of contract law that placed bondholders on equal ground to the UAW as creditors, a precedent was set for favoring one set of creditors (such as political donors) over another as dictated by the executive branch of the US government.

http://www.nlpc.org/stories/2010/10/13/obama-administration-boasts-auto-industry-bailout-success-review-warranted-0

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@hawkeye10,

Hawkeye are you of the opinion that the bondholders would had been better off if the government had allow GM just to had shut down instead of getting the deal they did get?

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@BillRM,

Quote:

Hawkeye are you of the opinion that the bondholders would had been better off if the government had allow GM just to had shut down instead of getting the deal they did get?

Safe Guarding the law and Constitution which protect our Liberty and freedom is infinitely more importantly than any gain that might come from allowing the government to abuse said law and Constitution. Even before we talk about the survival of GM being an injustice and a violation of our claimed economic principles which will at best cause us heartburn for decades saving GM was bad idea. Taken in total saving GM might be have been an even worse idea than saving AIG, but both mistakes will cost us big over the long run.

1 Reply

@hawkeye10,

Sorry cannot agree the constitution first of all is not a suicide pact and in any case does not demand that we revisit the 1930s.

The bondholders of GM and everyone else are far better off now and in the future because of the handling of the GM bail out.

The only ones that came out behind in this deal are the foreign cars manufactures from China to Japan.

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@InfraBlue,

InfraBlue wrote:

Quote:
The Obama Motors/Government Motors/GM/Chevy/Volt is a big heavy steaming pile of liberal horse ****.

How do you figure?

Have you looked at the design and specifications?

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@hawkeye10,

Protecting Bondholders isn't in the ******* Constitution and it isn't a responsibility of government. At all.

I'm not surprised that rich Bondholders have done everything they can to argue that they should be the first ones who get paid in a crisis, but neither do I give a **** about that. The government's job is to do what's best for the country, not what's best for bondholders.

The NLPC is a heavily right-wing think tank that is paid to pump out anti-union and pro-Republican pieces, so I'm hardly swayed by indignation from them.

Cycloptichorn

1 Reply

@H2O MAN,

H2O MAN wrote:

InfraBlue wrote:

Quote:
The Obama Motors/Government Motors/GM/Chevy/Volt is a big heavy steaming pile of liberal horse ****.

How do you figure?

Have you looked at the design and specifications?

Yeah, but what about the design and specifications, exactly, make it a big heavy steaming pile of liberal horse ****?

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@InfraBlue,

Oh yeah, good luck with that one.

Cycloptichorn

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@InfraBlue,

What do you know about motor vehicles?
What is your experience with building, driving, racing and modifying motor vehicles?

1 Reply

@Cycloptichorn,

Quote:

Protecting Bondholders isn't in the ******* Constitution and it isn't a responsibility of government. At all

There is this thing called bankruptcy law and we should not go around it, even if the President wants to and Congress keeps quiet. We are organized by law, when we start ignoring the law at will the law as well as the Constitution become worthless. I am not saying that GM is a Constitutional question, I am saying that ignoring the law is. Almost everyone agreed that dealing with GM through lawful means was going to be too slow and that it probably would not yield the result of saving GM because some stake holders would use their rights to object to the government plan and derail it. We should have done it anyway. Protecting the rule of law is more important than what happens to GM, and oh by the way, by all rights and capitalism theory GM should have ended up dead.....so we got that wrong as well.

1 Reply

@hawkeye10,

hawkeye10 wrote:

Quote:
Protecting Bondholders isn't in the ******* Constitution and it isn't a responsibility of government. At all
There is this thing called bankruptcy law and we should not go around it, even if the President wants to and Congress keeps quiet. We are organized by law, when we start ignoring the law at will the law as well as the Constitution become worthless. I am not saying that GM is a Constitutional question, I am saying that ignoring the law is.

I don't believe 'bankruptcy law' prevents the Exec branch from doing whatever they want when they determine it's necessary for our economy.

Not only that, but can you point to the specific laws in question? Do you know the actual history of bankruptcy law? Or are you just sort of parroting the right-wing stuff you've read.

Quote:

Almost everyone agreed that dealing with GM through lawful means was going to be too slow and that it probably would not yield the result of saving GM because some stake holders would use their rights to object to the government plan and derail it. We should have done it anyway.

I totally disagree. It's not just that the bondholders would have 'disrupted' the gov't plan, it's that there weren't any buyers available; the company would have been seriously dismantled. And allowing GM to fail and be broken up would have been disastrous for our economy, which was alread

Quote:

Protecting the rule of law is more important than what happens to GM, and oh by the way, by all rights and capitalism theory GM should have ended up dead.....so we got that wrong as well.

Who gives a **** about 'capitalism theory?' This is the real world, not an economics class. And it's abundantly clear at this point that the gov't made the right choice.

Cycloptichorn

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@Cycloptichorn,

Quote:

Not only that, but can you point to the specific laws in question? Do you know the actual history of bankruptcy law? Or are you just sort of parroting the right-wing stuff you've read

I know very little about the law, and I know that there was very little disagreement about the conclusion that the law was not followed in this case.

Quote:

I totally disagree. It's not just that the bondholders would have 'disrupted' the gov't plan, it's that there weren't any buyers available

as you will recall that according to the government plan there was never a need for an outside buyer (besides the government). However, had it needed to go into bankruptcy court and executed in normal fashion the government plan never would have happened. The stakeholders who would have certainly objected, because they were not getting the payout that their stakes and contracts demanded, would have delayed the reorganization for at least a year, and GM did not have the ability to survive that, and likely a judge in the end would have gone against the government plan anyways because justice demanded this result.

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@Cycloptichorn,

Is it ethical to bail out one company while letting others go broke? Is it ethical or even constitutional for the government to play favorites?

Actually, this subject has long been a pet peeve of mine, because I have observed local governments giving tax breaks to big companies to coax them into moving to their town. Examples would be giving a company a pass for a number of years on state or local taxes, or waiving property and / or sales taxes for a company when they agree to move into a town. One specific example was waiving property taxes for a Home Depot, meanwhile a privately owned hardware store had been there for 20 years quietly and obediently paying all of their taxes. Those kinds of practices strike me as "should be or might be unconstitutional." It is certainly unethical at least, in my opinion.

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@okie,

okie ,
i would certainly agree with you !
local politicians will usually put on a big show to demonstrate how clever they are in attracting new businesses and industries - never mind the neighbouring municipalties who really have to pay for .

and sometimes these new plants close after a couple of years leaving behind NOTHING - except some unemployed workers .

that's politics at the local level - GRRR !

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@okie,

okie wrote:

Is it ethical to bail out one company while letting others go broke? Is it ethical or even constitutional for the government to play favorites?

Why don't you ask the Bush admin; that's exactly what they did with Lehman Brothers and Bear Stearns.

Not only that, but which companies are you complaining didn't get bailed out? Specifically.

Quote:

Actually, this subject has long been a pet peeve of mine, because I have observed local governments giving tax breaks to big companies to coax them into moving to their town. Examples would be giving a company a pass for a number of years on state or local taxes, or waiving property and / or sales taxes for a company when they agree to move into a town. One specific example was waiving property taxes for a Home Depot, meanwhile a privately owned hardware store had been there for 20 years quietly and obediently paying all of their taxes. Those kinds of practices strike me as "should be or might be unconstitutional." It is certainly unethical at least, in my opinion.

Oh, you're against that? This practice - one of waiving taxes on companies that move there - is one of the PRIME reasons that businesses expand into 'red' states such as Texas and Oklahoma. Conservatives do what you are talking about with abandon.

Cycloptichorn

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GM's stock price has been steadily rising ever since the IPO. Currently it's about 16% higher than it was before; if the gov't were to sell today, we would lose a total of 7 billion dollars on the deal. To put it another way, that's far less than we spent every single month on the wars in Iraq and Afghanistan.

It's difficult to see how one could be in favor of unlimited, giant sums of money spent on war, but be against saving millions of jobs and keeping a major company in America alive in the middle of a recession. It makes zero sense, and those who go on about 'capitalist theory' are being absolutely ridiculous. We don't live in a textbook, we live in the real world, and sometimes we have to make decisions that reflect that.

Cycloptichorn

0 Replies

Let GM go Bankrupt

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