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Bailout Nation 2: General Motors


Subdude

  

50 members have voted

  1. 1. What should be GM's fate?

    • Bailout
      15
    • Bankrupt
      35


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You all bring up some pretty good points. Truthfully there should be several conditions that these companies that need to meet before they even recieve a goverment bailout. In GM's case, a restructuring plan, and a purge of all current top officials who screwed these stockholders and companies over.

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I was actually refering to the energy market crash in the 1980's when Houston had alot of businesses being shut down, a rise in unemployment and foreclosed homes.

However I don't think ExxonMobil or Shell is going to go bankrupt anytime soon since they had so much cash flow coming in earlier.

On another side note the economies in Denver and Dallas are more diverse than Houston, and don't rely on the energy sector that much.

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You never heard Toyota complain about a competitive disadvantage in trucks. When they finally decided to compete, they designed and built the Tundra. When gasoline prices spiked, GM and Ford were caught flatfooted. That is not a competitive disadvantage. That is a lack of foresight, foresight that the Japenese and Europeans had.

Is that the reason Toyota is idling their San Antonio Tundra plant?

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Also one big factor is, both Toyota and Nissan trucks are built without having to pay shakedown to the Unions and outrageous wages caused by the Unions. NON UAW plants give out profit sharing Bonuses based on performance and productivity. UAW workers never see any of that. The UAW gets cuts from all it's workers, that I thought went in a pension treasury, yet now we are having to give 25 billion to the big three to make good on pensions. So what purpose is the UAW if they aren't making good on their members? Wonder if Ron Gettelfinger is hurting right now? I bet not.

The big need to go into Bankruptcy protection, reorganize, dump the union and be better for it.

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Next thing you know, we could be asking other countries to bail out our banks, auto industries, etc.

Buzz Words of the Year: IKE, hunkerdown, and bailout...what a year it's been.

Pelosi, Reid and Frank have petitioned the FED for another $50 billion to Bail out the big three

huh...why...what's in it for Pelosi?

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I still don't get what's so special about these CEOs that they deserve millions of dollars when they leave a company after they've run it into the ground.

If anyone else in the organization screws up or doesn't do his job properly, he's fired. In many states he doesn't even qualify for unemployment benefits because the firing was "for cause." Why is a CEO any different than anyone else in the company?

The company I used to work for brought on this guy back in the 80's. Back then the company was starting to slip and he was tasked with turning the ship around. Long story short -- by the time he left last year got $80 million in a golden parachute for turning a profitable company with tons of assets into a company with $13 billion in debt that just got its debt rating reduced to CC.

His job was to turn the company around. He failed. He shouldn't be rewarded for failure. Ditto for all the automaker CEOs and the bank and insurance company CEOs. They FAILed.

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I still don't get what's so special about these CEOs that they deserve millions of dollars when they leave a company after they've run it into the ground.

If anyone else in the organization screws up or doesn't do his job properly, he's fired. In many states he doesn't even qualify for unemployment benefits because the firing was "for cause." Why is a CEO any different than anyone else in the company?

The company I used to work for brought on this guy back in the 80's. Back then the company was starting to slip and he was tasked with turning the ship around. Long story short -- by the time he left last year got $80 million in a golden parachute for turning a profitable company with tons of assets into a company with $13 billion in debt that just got its debt rating reduced to CC.

His job was to turn the company around. He failed. He shouldn't be rewarded for failure. Ditto for all the automaker CEOs and the bank and insurance company CEOs. They FAILed.

According to TheNiche, companies have to pay a lot of money to attract that level of incompetence.

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I still don't get what's so special about these CEOs that they deserve millions of dollars when they leave a company after they've run it into the ground.

This is precisely what happens when so much wealth (power) is concentrated in the hands of so few people. Musical chairs. They run one company into the ground, they sit on the boards of a few others. They go to another company, jump industries, go sit on some more boards, making yet more money to lose yet more shareholder value. There's no reform because they sit on each other's boards. Eventually they get to run a think tank, or get a cabinet position.

It is akin to royal inbreeding. And when it contirunes to unravel, expect to hear a lot more class warfare rhetoric. There's you, me and everyone else, getting f*** all, and the 1% who own everything now begging for a handout so that they still have a chair to sit in when the music stops.

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Article debating some of GM's options.

http://www.msnbc.msn.com/id/27671594/

It seems clear that an outright collapse of the auto industry would be catastrophic. A GM failure could cost 2.5 million GM and supplier jobs in the first year, plus $108 Billion in tax revenue. $50 Billion in bailout money seems cheap in comparison. Yet, as many point out, a bailout is no guarantee that GM survives, merely a guarantee that it lasts a little longer. GM is fiercely opposed to bankruptcy, but I wonder if that is because GM knows that it is such dire straits that bankruptcy would carve it up and sell it off. The only thing that seems certain is that GM in its present configuration is doomed.

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I still don't get what's so special about these CEOs that they deserve millions of dollars when they leave a company after they've run it into the ground.

If anyone else in the organization screws up or doesn't do his job properly, he's fired. In many states he doesn't even qualify for unemployment benefits because the firing was "for cause." Why is a CEO any different than anyone else in the company?

The company I used to work for brought on this guy back in the 80's. Back then the company was starting to slip and he was tasked with turning the ship around. Long story short -- by the time he left last year got $80 million in a golden parachute for turning a profitable company with tons of assets into a company with $13 billion in debt that just got its debt rating reduced to CC.

His job was to turn the company around. He failed. He shouldn't be rewarded for failure. Ditto for all the automaker CEOs and the bank and insurance company CEOs. They FAILed.

Yours is an example of the mentality that a captain should go down with his ship. But if I owned a dangerous rustbucket of a vessel operating in dangerous waters infested by notorious pirates and with no guarantee of a responsive coast guard, I can assure you that finding an willing and qualified captain of the sort that I would need to make such a dubious operation even possibly successful...would, shall we say, be expensive. And he probably wouldn't be all that thrilled if I suggested that he adhere to the old naval tradition.

The fact is, he'd probably want a lot of money, an agreement for a large amount of severance pay in the event that the ship was lost, and especially hefty health and life insurance policies. The problem is that if he was smart enough to be qualified for the job, he'd know better than to take it without such assurances.

And if I were able to find a good one willing to take the job, I'd pay the price and smile as I cut the first check. A crappy ship without an able captain may as well be sold for scrap--regardless of its sentimental value. ;)

This is precisely what happens when so much wealth (power) is concentrated in the hands of so few people. Musical chairs. They run one company into the ground, they sit on the boards of a few others. They go to another company, jump industries, go sit on some more boards, making yet more money to lose yet more shareholder value. There's no reform because they sit on each other's boards. Eventually they get to run a think tank, or get a cabinet position.

It is akin to royal inbreeding. And when it contirunes to unravel, expect to hear a lot more class warfare rhetoric. There's you, me and everyone else, getting f*** all, and the 1% who own everything now begging for a handout so that they still have a chair to sit in when the music stops.

Now THIS is a problem. You've cited an example of moral hazard, just the category of problems that golden parachutes are supposed to be rigged to mitigate.

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Article debating some of GM's options.

http://www.msnbc.msn.com/id/27671594/

It seems clear that an outright collapse of the auto industry would be catastrophic. A GM failure could cost 2.5 million GM and supplier jobs in the first year, plus $108 Billion in tax revenue. $50 Billion in bailout money seems cheap in comparison. Yet, as many point out, a bailout is no guarantee that GM survives, merely a guarantee that it lasts a little longer. GM is fiercely opposed to bankruptcy, but I wonder if that is because GM knows that it is such dire straits that bankruptcy would carve it up and sell it off. The only thing that seems certain is that GM in its present configuration is doomed.

I'm not really clear on what the methodology is on this study, and I'm not at all convinced that the results are valid in any way shape or form. Could someone post a link to this study? Or is it even publicly available?

For instance, what is a "GM Failure"? Is that what happens if they go bankrupt and have to reorganize like the airlines have done? Or is that what happens if they call every single one of their employees and tell them not to report to work on Monday?

Realistically, whether GM declares bankruptcy or not, it MUST downsize and it MUST produce fewer cars. It MUST lay people off because the cost of goods sold exceeds the revenue. So some number of the job losses and lost tax revenue are going to happen one way or the other.

Realistically, if all GM dealerships closed, that isn't going to affect the number of vehicles sold. People that would've bought at those dealerships will buy at different dealerships. I can't imagine that it wouldn't help Ford and Chrysler a great deal, in fact. It could help to prevent or reduce the size of bailouts to remaining firms. A lot of the dealerships will probably just be sold off and rebranded, though. Some significant number of the layoffs would be impermanent.

It is unrealistic to expect that a GM bankruptcy means that all of their employees get fired and that most of the supply chain will go under and fire all of their employees. BUT...even if that were in the cards, those people aren't going to stay unemployed forever. Many of them will get new jobs with employers that aren't burdens on the economy and that even are required to pay corporate income taxes, of all the ludicrous things!

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http://www.cargroup.org/

Sounds like a pro-big 3 think tank. It seems to me a "GM failure" would apply to a Chapter 7 bankruptcy, where GM ceases to exist. It appears that the job loss figure does not account for the remaining auto manufacturers picking at the carcass and re-opening some plants, and rehiring some idled workers. Much of the idled workers will eventually rehire in some capacity, whether auto related or not. The question should be...for non-GM stakeholders...is it better to let this relic fail, or to prop it up? There ARE consequences to non-GM stockholders and employees. The debate should center on whether we wish to suffer those consequences.

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http://www.cargroup.org/

Sounds like a pro-big 3 think tank. It seems to me a "GM failure" would apply to a Chapter 7 bankruptcy, where GM ceases to exist. It appears that the job loss figure does not account for the remaining auto manufacturers picking at the carcass and re-opening some plants, and rehiring some idled workers. Much of the idled workers will eventually rehire in some capacity, whether auto related or not. The question should be...for non-GM stakeholders...is it better to let this relic fail, or to prop it up? There ARE consequences to non-GM stockholders and employees. The debate should center on whether we wish to suffer those consequences.

They provided two scenarios, and in the scenario from which the media and politicians seem to be quoting, this is how they arrived at their estimates:

"Our second scenario also assumes that Detroit Three production and employment falls by 100 percent in the first year but recovers to 50 percent in the second and third years. We assume essentially the same first year supplier crisis forall automakers in the United States. Production would fall about 50 percent in the first and second years for the international producers. However, it is assumed that the international producers would recover fully by the third year and that the surviving Detroit companies would restore production to 50 percent of the former combined level by the second year and maintain this level in the third year."

They're not only talking about GM. They're talking about GM and Ford and Chrysler "failing" at the same time! They estimate that for every one employee of the Detroit Three, 9.3 employees lose their jobs elsewhere.

Even in this implausible scenario there would be adverse impacts to the domestic parts manufacturers, but it would not cost them 100% of their business because many of their parts go to foreign companies with plants based both overseas and domestically.

And with that in mind, the "spinoff effects" on employment are ridiculous.

EDIT: And they’re estimating that personal income declines by $125.1 billion in 2009, which translates to $522,685 of lost personal income from throughout the economy for every single lost job from Ford, GM, or Chrysler.

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I don't know guys, i'm getting a really bad feeling about this entire bailout. I thought we would find out several years from now about how it did or didn't work, but there might be bad news much sooner. They said if The Big 3 collapses, that could mean over 3 million jobs lost!!Nevermind, Red posted the jobs lost and tax revenue.

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I don't know guys, i'm getting a really bad feeling about this entire bailout. I thought we would find out several years from now about how it did or didn't work, but there might be bad news much sooner. They said if The Big 3 collapses, that could mean over 3 million jobs lost!!Nevermind, Red posted the jobs lost and tax revenue.

The 3+ million job loss figure that gets tossed around is from the report's worst-case scenario. This is where everything owned by Ford, GM and Chrysler as well as every single one of their suppliers disappears overnight--as if it were sucked up into thousands of improbably large wormholes and transported into the center of the sun--never to be glimpsed again.

No, seriously. It's that rjdiculous.

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I don't know guys, i'm getting a really bad feeling about this entire bailout. I thought we would find out several years from now about how it did or didn't work, but there might be bad news much sooner. They said if The Big 3 collapses, that could mean over 3 million jobs lost!!Nevermind, Red posted the jobs lost and tax revenue.

I agree with Niche that the 3 million job figure is worst case, though it doesn't need to get anywhere near that high to have some serious ripple effects. However, given that the financial bailout is not going accoeding to plan, either in Paulson's actions or the banks use of the money for its intended use, I am not that comfortable that a GM or Big 3 bailout would work that well, either. And, like we keep asking, what are we bailing out...a badly run relic? GM thinks bankruptcy is a dirty word, but it has many useful purposes.

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I think it is a must that we bail out the American Auto Industry cause if they fail basicly America wont have an auto industry. The auto industry will need to do more than just get a bail out but it is a start. I am not sure how much Auto is still apart of Detroit's economy but it will devastate that city and state if it fails. We have seen what has happened to Detroit when the American Auto is in a huge slump. They also have plants all across America so it will be felt all across the country. GM was once the biggest corporation in America, and we invented the car! If we dont have an auto industry thats a slap in America's face. The big three are failing at the same time as of now. All we have to do is look at the numbers to see they need help. GM lost over 70 billion since 2004! The big three can only blame themselfs but I think they thought Americans would not jump to overseas car makers like they did. If you see the sells of Toyota to GM, Ford, or Chrysler it is shocking. I think the big three need to come togather as one corporation. If they come togather they can concentrate on competing with the overseas auto makers.

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...and we invented the car!

The Americans did not invent the car, the Germans did. Gottleib Daimler and Karl Benz are credited with building the first gasoline-powered automobiles. One of Benz's early customers named the car after his own daughter - Mercedes Jellinek, giving birth to the famous brand name.

However, Henry Ford, an American, revolutionized the mass production of automobiles (they have previously been built one at a time), driving down manufacturing costs, and making automobile ownership accessible to the general public.

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The Americans did not invent the car, the Germans did. Gottleib Daimler and Karl Benz are credited with building the first gasoline-powered automobiles. One of Benz's early customers named the car after his own daughter - Mercedes Jellinek, giving birth to the famous brand name.

However, Henry Ford, an American, revolutionized the mass production of automobiles (they have previously been built one at a time), driving down manufacturing costs, and making automobile ownership accessible to the general public.

Actually Ransom Olds was mass producing on an assembly line in 1902, prior to Henry Ford, but as you stated Ford did revolutionize the system and increased the volume and made a more affordable vehicle, that the average person could own. Prior to Henry Ford, only the wealthier people owned cars. Ford's first cars were low cost as compaired to his competition, and you could get them in any color you wanted, as long as it was black!

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The Americans did not invent the car, the Germans did. Gottleib Daimler and Karl Benz are credited with building the first gasoline-powered automobiles. One of Benz's early customers named the car after his own daughter - Mercedes Jellinek, giving birth to the famous brand name.

However, Henry Ford, an American, revolutionized the mass production of automobiles (they have previously been built one at a time), driving down manufacturing costs, and making automobile ownership accessible to the general public.

You got what I mean though. Cant let it die we have done so much for the auto industriy. And I did not know we did not invent the car. In elementry and middle school they make it seem like the Model-T was the first car ever and the best thing that happened to the world along with the assembly line. I think we all know there going to bail them out. I would choose to bail out the Auto industry over banks and mortgage companies.

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I agree with Niche that the 3 million job figure is worst case, though it doesn't need to get anywhere near that high to have some serious ripple effects. However, given that the financial bailout is not going accoeding to plan, either in Paulson's actions or the banks use of the money for its intended use, I am not that comfortable that a GM or Big 3 bailout would work that well, either. And, like we keep asking, what are we bailing out...a badly run relic? GM thinks bankruptcy is a dirty word, but it has many useful purposes.

The numbers being quoted already include generous ripple effects.

And 3 million isn't worst case. It's BS. It is <0.001% possible.

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I think it is a must that we bail out the American Auto Industry cause if they fail basicly America wont have an auto industry. The auto industry will need to do more than just get a bail out but it is a start. I am not sure how much Auto is still apart of Detroit's economy but it will devastate that city and state if it fails. We have seen what has happened to Detroit when the American Auto is in a huge slump. They also have plants all across America so it will be felt all across the country. GM was once the biggest corporation in America, and we invented the car! If we dont have an auto industry thats a slap in America's face. The big three are failing at the same time as of now. All we have to do is look at the numbers to see they need help. GM lost over 70 billion since 2004! The big three can only blame themselfs but I think they thought Americans would not jump to overseas car makers like they did. If you see the sells of Toyota to GM, Ford, or Chrysler it is shocking. I think the big three need to come togather as one corporation. If they come togather they can concentrate on competing with the overseas auto makers.

We will have an auto industry; they just won't be headquartered here (because we don't run car companies very well). I've never owned or even driven a vehicle on a regular basis that wasn't a foreign brand. I've never owned or even driven a vehicle that wasn't assembled in the United States.

I've also never owned or driven a vehicle on a regular basis that wasn't comprised of parts from all over the world. I'd wager that you haven't, either.

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I still don't get what's so special about these CEOs that they deserve millions of dollars when they leave a company after they've run it into the ground.

It really makes no sense. And the shareholders don't ever seem to revolt, or at least we do not hear about them doing so.

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I don't know guys, i'm getting a really bad feeling about this entire bailout. I thought we would find out several years from now about how it did or didn't work, but there might be bad news much sooner. They said if The Big 3 collapses, that could mean over 3 million jobs lost!!Nevermind, Red posted the jobs lost and tax revenue.

I think the American public had a bad feeling about this bailout from the get-go. It was the lawmakers (both sides of the aisles) that were intent on pushing it through.

Now we are hearing about money being used for purposes other than what it was allocated for, more money that is needed, and the US government now buying companies (since when does the government need to own these things).

The new world order, that I always thought was a myth and propaganda, is here folks. And nothing we say or do is going to change it because the people that are running this ship couldn't give a duck's quack if you like it or not.

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It really makes no sense. And the shareholders don't ever seem to revolt, or at least we do not hear about them doing so.

It happens now and again. The shareholders file lawsuits about it, and they generally go nowhere.

Back to the automakers, specifically -- I think there's a lot of scare tactics and FUD surrounding the possible failure of one or more of the big American car companies.

I keep hearing numbers stating that millions of jobs will be lost. I don't see it. Sure, thousands. But not millions.

Just because one car company stops making cars doesn't mean there won't be any more cars left or that people will stop buying cars. Eventually all cars break down and will have to be replaced. Ford, Chrysler and GM's suppliers should have been gearing up decades ago to sell parts to the foreign company making cars in the U.S. or even to export parts.

It's like the Wal-Mart curse -- Wal-Mart takes a fancy to a particular doll and orders six brazillion from a small company. The company fills that order but then unwisely focuses its entire business on the Wal-Mart account. When Wal-Mart stops carrying the doll, the company goes out of business because it was short-sighted.

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I still don't get what's so special about these CEOs that they deserve millions of dollars when they leave a company after they've run it into the ground.

If anyone else in the organization screws up or doesn't do his job properly, he's fired. In many states he doesn't even qualify for unemployment benefits because the firing was "for cause." Why is a CEO any different than anyone else in the company?

The company I used to work for brought on this guy back in the 80's. Back then the company was starting to slip and he was tasked with turning the ship around. Long story short -- by the time he left last year got $80 million in a golden parachute for turning a profitable company with tons of assets into a company with $13 billion in debt that just got its debt rating reduced to CC.

His job was to turn the company around. He failed. He shouldn't be rewarded for failure. Ditto for all the automaker CEOs and the bank and insurance company CEOs. They FAILed.

Because having a BIG name as your CEO makes investors and Wall Street at ease. Look at Iacocca, brought back Chrysler, TWICE ! Sometimes you just get a bad egg in there and *POOF* there goes your future. Editor, if Rupert Murdoch were allowed to buy the NYT, I think circulation and profits would triple within a month. It is all about perception to the stockholders, but there has to be watchdogs in place, whistleblowers are usually way too late and only blow when disgruntled, and not when they were part of the problem.

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