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evnow
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Re: Quote questions

Tue Sep 21, 2010 10:00 am

AndyH wrote:I agree with you here, evnow. The other side of the coin, though, and just as valid, is the unfortunate truth that GM has been legally 'fratriciding' those ancillary units since at lest the 1970s. The Flint that I grew up in in the 1960s and '70s no longer exists.

It's going to take some time to know for sure whether bankruptcy or bailout was the lesser evil.
The slow hemmoraging of manufacturing jobs in the US ofcourse will not be solved by the bailout. That needs long term & permanent changes in some of our policies i.e. those that help manufacturing vs finance.

The bailout was like the ICU treatment. The fact that GM & US auto industry is still alive means the policy was successful. Collapse of GM/Chrysler would have undoubtedly pushed us into depression.
1st Leaf : 2/28/2011 to 5/6/2013
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indyflick
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Re: Quote questions

Tue Sep 21, 2010 10:48 am

evnow wrote:The bailout was like the ICU treatment. The fact that GM & US auto industry is still alive means the policy was successful. Collapse of GM/Chrysler would have undoubtedly pushed us into depression.
You're spot on. I believe in destructive capitalism, however I also know there are times when panics set in and capitalism can begin to feed on itself. It's at those points when the government must act, moral hazard be damned. I also believe it was poor government policy (which GM lobbied hard for) which got GM in deep trouble. They made a lot of profit on Hummers and big trucks, with all of the government business incentives, during the boom times. I was really hoping the GM execs would have learned a lesson from their failure, but I don't think they actually did. They've changed a lot, but not enough. I know Lutz is gone now, but I don't think he learned a damn thing. He's been involved in other train wrecks in his career and those didn't change him either. It's as though he lacked a feedback mechanism.

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evnow
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Re: Save General Motors ?

Tue Sep 21, 2010 11:05 am

There was an article which listed the liability the feds would have had to fund had GM/Chrysler went down (health insurance etc for retired employees) - which itself was higher than the bailout money !

GM woes have been a long time in the making. Both the corporate leaders & union leaders bargained future benefits for today's profitability. So, GM made a lot of money early on and as future liabilities turned to present liabilities over the decades, GM was in big trouble. The 2008 recession and auto market contraction just dealt the final blow. There was a nice article by Nate Silver on this sometime back.

http://www.fivethirtyeight.com/2009/03/ ... aking.html
This issue is wrongly portrayed by both the liberal and the conservative media as one of management versus labor, when really it is a battle between General Motors past and General Motors present. In the 50s, 60s and 70s, everyone benefited: GM and its shareholders got the benefit of higher profit margins, and meanwhile, its employees benefited from GM's willingness to cut a bad deal -- for every dollar they were giving up in salary, those employees were getting a dollar and change back in retirement benefits. But now, everyone is hurting.
Image

ps : Look out for similar problems with various cities / counties. They all have the unfunded retirement benefits problem.
1st Leaf : 2/28/2011 to 5/6/2013
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smkettner
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Re: Save General Motors ?

Tue Sep 21, 2010 9:34 pm

I disagree that the Federal money given, loaned or traded for equity was a good idea.
GM should have been allowed to enter bankruptcy and exit or liquidate without the money given from the federal government.

Same for the insurance giant and the "too big to fail" banks.

Of course we will never actually know what would have been better.
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indyflick
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Re: Save General Motors ?

Tue Sep 21, 2010 10:51 pm

smkettner wrote:I disagree that the Federal money given, loaned or traded for equity was a good idea.
GM should have been allowed to enter bankruptcy and exit or liquidate without the money given from the federal government.

Same for the insurance giant and the "too big to fail" banks.

Of course we will never actually know what would have been better.
Lemme guess, you never studied the great depression did you?

AndyH
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Location: San Antonio

Re: Quote questions

Tue Sep 21, 2010 11:07 pm

evnow wrote:
AndyH wrote:I agree with you here, evnow. The other side of the coin, though, and just as valid, is the unfortunate truth that GM has been legally 'fratriciding' those ancillary units since at lest the 1970s. The Flint that I grew up in in the 1960s and '70s no longer exists.

It's going to take some time to know for sure whether bankruptcy or bailout was the lesser evil.
The slow hemmoraging of manufacturing jobs in the US ofcourse will not be solved by the bailout. That needs long term & permanent changes in some of our policies i.e. those that help manufacturing vs finance.

The bailout was like the ICU treatment. The fact that GM & US auto industry is still alive means the policy was successful. Collapse of GM/Chrysler would have undoubtedly pushed us into depression.
Yes - the bailout was like intensive care.

GM US has been going down the tubes for many years as has already been pointed out. I have family ties to folks that used to work for GM, for Delphi, and others - they're all doing other things.

Even if GM/US died in its sleep, that would still leave GM/Canada, and GM/Mexico and Europe and China. Hell - GM sells more cars in China than in the US - that market's going thru the roof.

I just have to wonder if the fallout from GM/US would really have been as bad as the politicians, GM brass, and UAW folks led us to believe.

Did anyone really stop to see if the patient had a do not resuscitate order on file?

indyflick
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Re: Quote questions

Tue Sep 21, 2010 11:34 pm

AndyH wrote:Did anyone really stop to see if the patient had a do not resuscitate order on file?
Ya, it was filed under "EV1".

I feel GM will fail for good within the next 15 to 20 years. But it will be orderly, rather than as part of an economic panic. Other manufactures will capture GMs market share and the auto industry will thrive. Capitalism doesn't function well during times of panic. A lot of irrational behavior occurs simply out of fear. Do you really want to risk losing one of the largest manufactures in the U.S. during a panic? That would only exacerbate the panic as GMs dealerships and supply chain vendors collapsed in its wake.

smkettner
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Re: Save General Motors ?

Wed Sep 22, 2010 7:51 am

GM did go bankrupt and is not out of business. I am saying they could have just as easily gone through BK without government money.
Maybe the union would not have gotten the retirees medical fund fully funded and certainly others would have lost more.
Just the same this country is turning to communism more every year. It is a drug mentality that every economic sector that drops a little needs some sort of drug induced boost just to get through the day in the form of some tax payer funded benefits. The day when the government gets out of meddling with the economy and just provides what the government should be doing our country will be getting back on the right track.

It is a different world today than the 1930s. The government has ton of back stop support already in place that did not exist in the great depression.
1 bar lost at 21,451 miles, 16 months.
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LEAF traded at 45,400 miles for a RAV4-EV
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indyflick
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Joined: Fri Jul 09, 2010 8:18 am

Re: Save General Motors ?

Wed Sep 22, 2010 8:47 am

smkettner wrote:GM did go bankrupt and is not out of business. I am saying they could have just as easily gone through BK without government money.
Really? And where were the bridge loans and the resulting cash flow going to come from? Recall the credit market froze up and shut down during the crises. Credit didn't slow down, it shut down. Without billions of capital injection from the U.S. government, the GM bankruptcy would have been chapter 7 instead of chapter 11 restructuring. Your argument is akin to saying a person had cancer, received chemotherapy and survived is alive today. So, because they are alive today, they really didn't need chemotherapy.

smkettner
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Re: Save General Motors ?

Wed Sep 22, 2010 9:12 am

Come from? Maybe skip the funding of the union trust fund?
1 bar lost at 21,451 miles, 16 months.
2 bar lost at 35,339 miles, 25 months.
LEAF traded at 45,400 miles for a RAV4-EV
RAV4 traded in for I-Pace Dec 2018

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