Bailout Nation 2: General Motors

[Subdude]

I fundamentally agree with you. As a conservative who strongly supports "Defense" though, I'm nervous about selling our three biggest means for manufacturing heavy equipment in a time of war. I know thats overzealous conservative paranoia, but its still there none the less.

I would rather see them collapse, consolidate, restructure, and the have one or two brands emerge as the victor. Yes, some jobs will be lost, but that's the risk of capitalism. I'd rather see bailout money go to the laid off workers for a set period of time, than to go to the companies themselves. I don't think it will help them recover, and we have all seen the mixed results with banking bailout.

Worst case scenario is that we'll still have Japanese. I would however prefer the notion of knowing at least one american vehicle manufacturing company will survive.

For the life of me I can't see what the defense problem is with Chinese owning car factories in America. What possible difference could it make? What are you worried that they are going to somehow ship the factories back home? In the event, their owning factories here just increases their stake in there being a healthy American economy. If they are willing to take them off the taxpayers hands (where they will soon be) it seems we should be encouraging it, not turning protectionist against our own better interests. Other nations own assorted factories in the US, and we own factories in other countries. What's the problem with that?

[TJones]

For the life of me I can't see what the defense problem is with Chinese owning car factories in America. What possible difference could it make? What are you worried that they are going to somehow ship the factories back home? In the event, their owning factories here just increases their stake in there being a healthy American economy. If they are willing to take them off the taxpayers hands (where they will soon be) it seems we should be encouraging it, not turning protectionist against our own better interests. Other nations own assorted factories in the US, and we own factories in other countries. What's the problem with that?

How many Chinese undercut Chevys can I put you down for Subdude ? You think quality is a problem with American cars now.....

How many factories does the U.S. own in China ?

The defense problem lies within the ability to have access to assembly lines and Technology brought on by the auto industry in case of war. We might as well sell them, Microsoft , Coca-Cola and NASA while we're at it. Or, how about our Aerospace firms ?

"United Technologies Corporation

General Dynamics Corp.

L-3 Communications

Honeywell International Inc.

Parker Hannifin

Computer Sciences Corp.

Thales Group (U.S. branch)

Lockheed Martin Corp.

Northrop Grumman Corp.

Boeing "

The auto industry is an easier fix than people want to believe. It doesn't have to be sold to ANY outside interest. You simply have to bring in the reigns on the CEOs and upper level Mgrs. I've said it before, let them file Chap.11, let them reorganize, then if they want the bailout and the Govt. wants to give it to them, there will be certain rules in place and accounting to be accountable for BEFORE they get to see a dime.

[Subdude]

How many Chinese undercut Chevys can I put you down for Subdude ? You think quality is a problem with American cars now.....

How many factories does the U.S. own in China ?

The defense problem lies within the ability to have access to assembly lines and Technology brought on by the auto industry in case of war. We might as well sell them, Microsoft , Coca-Cola and NASA while we're at it. Or, how about our Aerospace firms ?

"United Technologies Corporation

General Dynamics Corp.

L-3 Communications

Honeywell International Inc.

Parker Hannifin

Computer Sciences Corp.

Thales Group (U.S. branch)

Lockheed Martin Corp.

Northrop Grumman Corp.

Boeing "

The auto industry is an easier fix than people want to believe. It doesn't have to be sold to ANY outside interest. You simply have to bring in the reigns on the CEOs and upper level Mgrs. I've said it before, let them file Chap.11, let them reorganize, then if they want the bailout and the Govt. wants to give it to them, there will be certain rules in place and accounting to be accountable for BEFORE they get to see a dime.

Fine. If the Chinese manufacture poor quality cars then they will suffer the same fate as the American manufacturers. Even if they do buy factories, in the (extremely unlikely) even of a war it's not like we would lose access to technology and assembly lines. Car manufacturing is a low-tech business that over time is drifting off to cheaper locations. We don't benefit by trying to stop the unstoppable. Again, Japanese and German companies all have American factories, and I don't hear anyone yelping about it posing any particular security threat. This is just old-fashioned protectionism.

[TJones]

Fine. If the Chinese manufacture poor quality cars then they will suffer the same fate as the American manufacturers. Even if they do buy factories, in the (extremely unlikely) even of a war it's not like we would lose access to technology and assembly lines. Car manufacturing is a low-tech business that over time is drifting off to cheaper locations. We don't benefit by trying to stop the unstoppable. Again, Japanese and German companies all have American factories, and I don't hear anyone yelping about it posing any particular security threat. This is just old-fashioned protectionism.

Because the Germans and Japanese owe us big time for rebuilding their countries and they don't have any REAL armies to speak of. It is all about keeping the Chinese at arms length Sub.

[Jeebus]

For the life of me I can't see what the defense problem is with Chinese owning car factories in America.

Like I said, it was just overzealous paranoia. I think the argument has more than been made that it would not be as big an issue as the conservative talking heads try to make it. I would rather see it remain an American owned operation - but its not necessary to my well being. I drive Japanese.

[Subdude]

Because the Germans and Japanese owe us big time for rebuilding their countries and they don't have any REAL armies to speak of.

Oh, brother.. You're kidding, right?

It is all about keeping the Chinese at arms length Sub.

If there were any interest in keeping China at arm's length we wouldn't be buying everything they manufacture, and letting them finance our deficit. It seems if anything we ought to be thrilled that they would be investing here and keeping jobs in America instead of China. I'm still not seeing where the big security threat is.

[BryanS]

If there were any interest in keeping China at arm's length we wouldn't be buying everything they manufacture, and letting them finance our deficit. It seems if anything we ought to be thrilled that they would be investing here and keeping jobs in America instead of China. I'm still not seeing where the big security threat is.

The big security threat... and I mean BIG... is the fact that if we don't DO SOMETHING for our country, get off our collective a _ _ es and MAKE SOMETHING, we are just going to get fatter, and fatter; so fat that we will be helpless to defend ourselves. We will all be sitting at home watching movies in our Chinese-built home theater systems, shoveling high-sugar, high-starch processed foods down our throats, to the extent that we become immobile in our homes, needing fire and rescue crews to come open our houses up like tin cans, to get us out. What a disgrace that would be, for our nation. But that is what we are becoming. Fat, movie-watching, defenseless Americans.

[crunchtastic]

The big security threat... and I mean BIG... is the fact that if we don't DO SOMETHING for our country, get off our collective a _ _ es and MAKE SOMETHING, we are just going to get fatter, and fatter; so fat that we will be helpless to defend ourselves. We will all be sitting at home watching movies in our Chinese-built home theater systems, shoveling high-sugar, high-starch processed foods down our throats, to the extent that we become immobile in our homes, needing fire and rescue crews to come open our houses up like tin cans, to get us out. What a disgrace that would be, for our nation. But that is what we are becoming. Fat, movie-watching, defenseless Americans.

I don't understand how the anger doesn't translate to action. So much vitriol over politics, for example, yet so much complicity. I'm too old to be a revolutionary, but as the weeks pass and the news sucks harder, the more I sometimes wish I could make a really radical change in my life. Alas, I'm weak and fat. And distracted with holidays like Thanksgiving.

[BryanS]

General Motors May Fail This Month Without Aid, UAW Chief Says

[memebag]

Let's see what happens when over 3M workers lose their jobs, in addition to all the indirect damage that would occur following the complete and final implosion of the United States free market, capitalist system. Congratulations America! You just screwed yourself.

(Psst. You can't save free market capitalism by giving tax dollars to private companies. "Free market" means they are free to fail, and the government doesn't interfere to keep them going. Spending tax dollars to bolster employment numbers is more of an "old-school communism" sort of thing.)

[barracuda]

(Psst. You can't save free market capitalism by giving tax dollars to private companies. "Free market" means they are free to fail, and the government doesn't interfere to keep them going. Spending tax dollars to bolster employment numbers is more of an "old-school communism" sort of thing.)

True, but how to rationalize bailing out one massive industry and not another? The failure of the auto industry will have drastic consequences in an already dismal economy.

If this was a small or inconsequential industry, I would say, let them fail. But I'd rather take this one on the chin and keep the economy from plunging further into an abyss. Just make sure they have a viable plan for success so we can get our money back in time.

[RedScare]

The only way GM fails is if it refuses to enter Chapter 11 bankruptcy. In spite of the hand-wringing and threats from GM and the UAW to the contrary, the debate is whether a bailout or a Chapter 11 will give GM a better chance of survival. No one is trying to make GM disappear. Listening to the UAW and Waggonner, it is easy to lose sight of this fact.

[crunchtastic]

Money into an un-restructured GM is money into a black hole.

[RedScare]

Money into an un-restructured GM is money into a black hole.

You should know.

[Subdude]

True, but how to rationalize bailing out one massive industry and not another? The failure of the auto industry will have drastic consequences in an already dismal economy.

If this was a small or inconsequential industry, I would say, let them fail. But I'd rather take this one on the chin and keep the economy from plunging further into an abyss. Just make sure they have a viable plan for success so we can get our money back in time.

It's not the industry that is failing. It is certain firms within the industry. And there is all the difference. Should taxpayers be paying for the government to select firms to be propped up. If GM fails the auto industry will continue on, thank you. The sales will just go to other firms. When Pan Am and TWA failed the airline industry did not fold up and die, and we're not especially worse off today because they did. Same thing with GM.

[crunchtastic]

You should know.

Hey my company is getting sold! We are an asset! A valuable asset! At any rate, I still have a job thru January.

yay.

[memebag]

True, but how to rationalize bailing out one massive industry and not another?

Why bother? They probably shouldn't have bailed out the banks. That doesn't mean from now on businesses aren't allowed to fail.

The failure of the auto industry will have drastic consequences in an already dismal economy.

The auto industry won't fail. GM & Chrysler may go bankrupt, but the auto industry will carry on.

If this was a small or inconsequential industry, I would say, let them fail. But I'd rather take this one on the chin and keep the economy from plunging further into an abyss.

False dichotomy. Bailing out GM isn't guaranteed to be better for the economy than letting it declare bankruptcy.

Just make sure they have a viable plan for success so we can get our money back in time.

Like they would if they declared bankruptcy?

[BryanS]

(Psst. You can't save free market capitalism by giving tax dollars to private companies. "Free market" means they are free to fail, and the government doesn't interfere to keep them going. Spending tax dollars to bolster employment numbers is more of an "old-school communism" sort of thing.)

(Psst. We are not "GIVING" any tax dollars to GM, Ford, or Chrysler. We are giving them a LOAN... that they must PAY BACK. With interest. We MAKE MONEY, as tax payers, by doing this. We did it with Chrysler in 1979 and it worked. Compare this money-making route to what WILL happen if our domestic car industry fails and the ensuing tax payer financed unemployment checks that will go to 3 million people.)

[TheNiche]

(Psst. We are not "GIVING" any tax dollars to GM, Ford, or Chrysler. We are giving them a LOAN... that they must PAY BACK. With interest. We MAKE MONEY, as tax payers, by doing this. We did it with Chrysler in 1979 and it worked.

Your reasoning is valid only if you think that they really can turn everything around and become profitable again by the time that the loan comes due. In the case of GM, which already has negative net assets, if they can't stop the bleeding by the time that the loan comes due then they default, go bankrupt, and nothing can be collected on by bondholders. Nobody in the private sector would dare make such an investment on the terms that the government will no doubt offer, which would be indicative that the risks outweigh the possible rewards. As far as I'm concerned, any kind of investment made by the government on terms more favorable than what would be offered through the private sector may as well be a "giving" of cash, considering the odds stacked against them.

Compare this money-making route to what WILL happen if our domestic car industry fails and the ensuing tax payer financed unemployment checks that will go to 3 million people.)

The study you are citing basically assumes that all of the big three and 100% of their suppliers declare Chapter 7 bankruptcy on December 31st, 2008 and that at midnight several thousand massive wormholes open up and transport every iota of the big three's (and their suppliers') plant, property, and equipment to the center of the sun so that there is no salvage value, and that all of the land that they had formerly owned is declared off-limits to re-use in any capacity by government decree.

No, seriously. I'm not kidding. It's just that ridiculous!

[crunchtastic]

The fact that Chrysler's parent, a private asset management firm, is unwilling part with the cash that Chrysler needs to stay afloat, should tell us something about how stinky of a deal this would be for the US government. Stick a fork in Chrysler already.

[TJones]

That's just it Crunch, you beat me to it. Everyone should look at her statement. If a private company is unwilling to take a chance at pooring money into it, then it is a pretty good bet that it is unprofitable at this time. Bring on the BK and reorganize Big 3.

[memebag]

(Psst. We are not "GIVING" any tax dollars to GM, Ford, or Chrysler. We are giving them a LOAN... that they must PAY BACK. With interest. We MAKE MONEY, as tax payers, by doing this. We did it with Chrysler in 1979 and it worked. Compare this money-making route to what WILL happen if our domestic car industry fails and the ensuing tax payer financed unemployment checks that will go to 3 million people.)

It's only a loan if you get paid back. Otherwise, it's a gift. I must have been absent the day the Government Gift Clown came to capitalism class.

[TheNiche]

I must have been absent the day the Government Gift Clown came to capitalism class.

Wow. You just set the cogs powering my mind's eye into motion. Some days I wish I were high.

[TJones]

It's only a loan if you get paid back. Otherwise, it's a gift. I must have been absent the day the Government Gift Clown came to capitalism class.

Not to worry meme. The Government Gift Clown will be back on Jan.20, 2009. Make sure you leave out Cheese and Wine for him.

[BryanS]

That's just it Crunch, you beat me to it. Everyone should look at her statement. If a private company is unwilling to take a chance at pooring money into it, then it is a pretty good bet that it is unprofitable at this time. Bring on the BK and reorganize Big 3.

They're already being reorganized! Unlike all the other bailout participants, the Big 3 had to bring their re-org/get well plans to Congress, for review. Part of those plans is for everyone to give something up: labor, creditors, part suppliers, job layoffs, plant closings, etc, etc. Sounds like Chapter 11 to me! Since they've submitted their re-org plans, CONgress should go ahead and give them the Chapter 11 bankruptcy financing they will need, aka the current bailout money being requested. You can either give them $30B to re-organize under the current plans. Or you can lend much more than that under an actual Chapter 11 proceeding. Or I suspect that the real American-haters - the enemies within - would like to see Chapter 7. Those people should move to China. Because if you want American workers to work like the Chinese, why not live there too?

[TheNiche]

They're already being reorganized! Unlike all the other bailout participants, the Big 3 had to bring their re-org/get well plans to Congress, for review. Part of those plans is for everyone to give something up: labor, creditors, part suppliers, job layoffs, plant closings, etc, etc. Sounds like Chapter 11 to me! Since they've submitted their re-org plans, CONgress should go ahead and give them the Chapter 11 bankruptcy financing they will need, aka the current bailout money being requested. You can either give them $30B to re-organize under the current plans. Or you can lend much more than that under an actual Chapter 11 proceeding. Or I suspect that the real American-haters - the enemies within - would like to see Chapter 7. Those people should move to China. Because if you want American workers to work like the Chinese, why not live there too?

And if you believe in the feasibility of the reorganization of GM and Chrysler, then I've got some condos in S. Florida that you might be interested in getting the government to refinance for me. Now what I need you to do is to not seriously challenge or question me, only briefly flip through my business plan to make sure that there are enough pages of filler material, and then go contact your congressmen to get the ball rolling.

If you do forsake me (a proud American) then China is going to own South Florida condos, a major threat to the sovereignty of the United States, and that would make you an America-hater--an enemy within--meaning that you should move to China because if you want them to own our condos then why not live there too?

Get a clue.

[Subdude]

Compare this money-making route to what WILL happen if our domestic car industry fails

Why do people keep repeating that the domestic car industry is failing? IT ISN'T THE INDUSTRY, it is three firms in the industry. Cars will continue to be manufactured and sold in America.

We are giving them a LOAN... that they must PAY BACK.

Isn't that the job of banks? Why should the government make loans that banks won't?

(Which gets me wondering, since the government has partially socialized all of the major banks, why is it making loans the banks won't? )

Or I suspect that the real American-haters - the enemies within - would like to see Chapter 7. Those people should move to China.

Ah yes. You disagree with me, therefore you must hate America. Nice try.

Maybe you America-lovers can explain why it is that so much American business needs to become wards of the state.

[jm1fd]

Why do people keep repeating that the domestic car industry is failing? IT ISN'T THE INDUSTRY, it is three firms in the industry. Cars will continue to be manufactured and sold in America.

Those three firms are uhmmm...let's see....the ONLY DOMESTICALLY OWNED firms in the industry! They're all failing....hence, the domestic car industry is failing. Sorry, Tesla doesn't count. Their production to date numbers in the DOZENS of cars.

[TJones]

Why do people keep repeating that the domestic car industry is failing? IT ISN'T THE INDUSTRY, it is three firms in the industry. Cars will continue to be manufactured and sold in America.

Sub, you have to understand. The Big 3 is considered Domestic. Even though some of my beloved Nissans and those gawdawful Toyotas are built in places like Smyrna,Tenn. and San Antonio,Tx. they are still considered Foreign cars.

[BryanS]

Isn't that the job of banks? Why should the government make loans that banks won't?

(Which gets me wondering, since the government has partially socialized all of the major banks, why is it making loans the banks won't? )

Laughable. Maybe if the banks DID THEIR JOBS and would actually LEND the money that the US government has given them, some against their will - GM, Ford, and the rest would not need US Govt funding! At least our domestic car companies would DO SOMETHING with the money, MAKE something vs. a bunch of pencil-pushing, neck-tie wearing accountants/banks who take the money, hoard it - don't do anything with it - and hence don't really add any value. Why the US Govt sees it as imperative to give an order of magnitude more money, without any meaningful strings, with little question, to the non-sweating finance industry vs. the backbone of our manufacturing industry - that actually produces - is beyond me. All that is being asked is for consistency: lend to them all, or lend to none.

Ah yes. You disagree with me, therefore you must hate America. Nice try.

Maybe you America-lovers can explain why it is that so much American business needs to become wards of the state.

Not me. You don't have to disagree with me to make you an America-hater (which I say with some hyperbole). It's sending 3 million people to the unemployment line, which would cost us significantly more than any bailout, that's the issue. We added 500K last month. What's another 1, 2, 3 million more? We have the option to avoid that catastrophe. Just letting it happen would be tragic and un-American: because we would have just given up. That kind of attitude in 1940 and we'd all be speaking German and Japanese right about now.

And I know. We'll still have "domestic" auto production in this country after Detroit falls. All those workers could re-locate to the South and build BMWs, Mercedes, and Toyota Tundra trucks. Pathetic that it would have to come to that... because there was nothing wrong with the American products... or the workers that built them.