GM bailout rant

[DanCar]

What do you think about throwing billions of your tax dollars at the near bankrupt automakers?

Here is what I think?
1) They did this to themselves by not engineering cars like the Prius
2) The UAW has a hand in this by, being difficult to work with and high pensions
3) They need heavy restructuring that is not going to happen with government oversight.
Will happen in a free market bankruptcy and get well.

The time to help the automakers is after a third party reviews their business and restructures appropriately. Not before when people like Rick Wagoneer and the board will think business as usuall and its the economies fault. Perhaps the UAW should use some of their 700 million dollar strike fund to bail out the automakers.

Well hopefully after the bailout (before or after bankruptcy) we will see more cars like the Prius and less SUVs that GM loved to market.

I hope you don't believe the doom and gloom that Rick and team have portrayed if there is a bankruptcy. This chicken little story is touted because Rick doesn't want to lose his job.

Thanks,
Daniel

[JSH]

Originally Posted by DanCar

What do you think about throwing billions of your tax dollars at the near bankrupt automakers?

Here is what I think?
1) They did this to themselves by not engineering cars like the Prius
2) The UAW has a hand in this by, being difficult to work with and high pensions
3) They need heavy restructuring that is not going to happen with government oversight.
Will happen in a free market bankruptcy and get well.

The time to help the automakers is after a third party reviews their business and restructures appropriately. Not before when people like Rick Wagoneer and the board will think business as usuall and its the economies fault. Perhaps the UAW should use some of their 700 million dollar strike fund to bail out the automakers.

Well hopefully after the bailout (before or after bankruptcy) we will see more cars like the Prius and less SUVs that GM loved to market.

I hope you don't believe the doom and gloom that Rick and team have portrayed if there is a bankruptcy. This chicken little story is touted because Rick doesn't want to lose his job.

Thanks,
Daniel

I think you are misinformed and didn't follow the congressional hearings.

The hearings were all about oversight and an appointed board with the ability to rewrite contracts to make all the stakeholders give what is need of them in a reorganization.

I also think it is absolutely vital to keep our manufacturing base. Banks sell debt, automakers sell real products.

[MadHungarian]

Hmmm. Bail out the white collars; throw out the blue collars? Hey--if it works for you . . . .

[jayman]

I agree. Medium and large businesses have gone through Chapter 11 before.I'm willing to bet you've flown on an airline while it was in Chapter 11

The smart corp's are those that use Chapter 11 to emerge leaner, stronger, and smarter. I have no doubt the Big Three could emerge leaner, stronger, and smarter

IF THEY WANTED TO

I see the United States going down the slippery slope of corporate welfare/socialism to end up with the legacy mess that Canada has with Crown Corporations. Billions of taxpayer dollars were squandered up here trying to pick winners in the economy, which absolutely does not work

If an individual or a corp has a good idea, they generally succeed in the market. If they don't they vanish.

I'm sick and tired of watching Crown Corps up here be legally exempt from audit and investigation, pissing away billions into some black hole. Especially Hibernia Management and Development Corp: that sure benefited Exxon/Mobil

[MadHungarian]

There is a BIG difference between buying a $250 ticket with the expectation of flying next week and buying a $25,000 car with the expectation that a 5yr/50,00 warranty will go the distance. Not many would take that risk. Bankruptcy (Ch. 11) will lead to liquidation (Ch. 7) . The widespread effects will be disastrous for an untold number of families (family values?) and for the economy in general.

[DanCar]

Dealers love selling extended warranties. If people are concerned about the warranty I have no doubt enterprising 3rd parties will sell or provide a separate guarantee, in which you are still covered if there is a bankruptcy issue.

People are also smart enough to know that the industry will not liquidate and it is just a matter of time before the company emerges from bankruptcy in a leaner meaner fashion. We know the government will help them get out of bankruptcy.

[jayman]

Originally Posted by MadHungarian

Bankruptcy (Ch. 11) will lead to liquidation (Ch. 7) .

Really?

That was true of a Ponzi Scheme like Enron. However, if the Big Three prove so inflexible, so stuck in the past, that they cannot find a clear path to future performance in light of a crippling global recession, then they are doomed to failure

Let's consider the track record of Canadian Crown Corporations that keep trying to prop up obsolete industries. In the end, it doesn't work, and the only thing the taxpayers have to show for it is a billion dollar writedown. The success rate of Crown Corps picking "winners" in the economy is dismal

In the case of Canadian taxpayer funds used to invest in "successful" Canadian companies, like Bombardier or Research In Motion (Maker of the BlackBerry), it's difficult to determine that the public investment alone helped at all

That is, these companies make highly successful products and/or services that are world-class in their respective industries. As there is no repayment required from Crown Corps, in effect the "investment" becomes free money to be used as perks.

So where does this Corporate Socialism end? Do we also provide loans to companies like Tesla? How about to dealerships who overleaveraged? Should we also bailout the folks who build poor quality McMansions?

Considering the current market value of a corp like GM, this proposed bailout/loan/bribe will - essentially - nationalize the company. Well, that works for me, we might as well nationalize every failing business.

[xsmatt81]

I don't see a problem with giving the big 3 some cash, so long as they use it wisely and reshape their business model after the fact.

I mean seriously what's another 25-50 billions when every single week Bernake and paulson are throwing BILLIONS at banks and lending companies, buying toxic stocks and mortgages. They just spent 306bn for citi. The cost for the financial bailout is going to be in the 8 trillion ball park when all is said and done..and that's just the stuff they tell you about.

[DanCar]

Originally Posted by MadHungarian

Hmmm. Bail out the white collars; throw out the blue collars? Hey--if it works for you . . . .

Has Rick Wagoner made any good decisions in the past 10 years? I'm aware of the bad decisions he has made, like killing the EV1, and focusing hybrid technology on the SUVs. Rick has made GM stand for "Gas More".

To support best the blue collar worker the GM board and Rick need to go. That won't happen with government oversight. With smart leadership more jobs will be available.

[zenMachine]

Looks like Congress and Mr. Bush have found a palatable compromise to keep GM & Chrysler alive (albeit on life support) until Dr Obama has a chance to put on his gloves and try to save this gravely ill patient.

What we don't need at this very moment is another shock to the economy in the form of massive job losses. That would surely pull everybody down, and the rest of the world with us (the auto companies are global enterprises, don't forget.)

The question to be asked now is what kind of conditions need to be placed on these loans (not giveaways) in order to ensure that not only taxpayers get their money back but these companies can turnaround and become strong and viable again. After all, it is in our vital national interest to have a healthy and competitive auto industry.

Myself, I would love to see Chrysler come through with their REV Town & Country.