GM on top again

GM Should have gone under, what Obama and congress did was unconstitutional. The government put about 3,000 small business owners under last year alone, more than 300 local restaurants that employed 3,000 people in the DFW area closed last year. The Obama administration and Democrats have a more than horrible record for hurting small business owners in this country. The raising of the minimum wage three times in three years were just the start of the great recession. Rasing minimum wage caused small business's to stop growing and hiring. Since small business in this country make up 55% of the total economy is it a surprise that we were into a very diffifcult economic time?

GM still owes more than 50 billion for the bailout and that money will never be repaid. Our country seeing a profit on the GM investment? Not going to ever happen. Originally Posted by durango95

I can't respond to this because it is too full of inaccuracies and generalities. For example, I suspect that keeping GM alive saved at least 3000 jobs in this area when you include dealerships, service companies,and supply stores.

Raising minimum wage reduces the number of people who are eligible for government support... have you done the cost-benefit analysis to see if there as a net gain or a net loss? I suspect not. It's a lot less effort to just say 'Obama is bad'.

I really hope you will dig in and do the homework to find out the bottom line. That's what this country really needs... informed opinions, not political dogma.

Thanks for your input... I hope you'll submit more... L4L

You have historical precedence of a bankrupcy as large as GM would have been?

Please cite it.

It was unprecedented. It would have been a challenge to be sure. You are glossing over the losses many took for the "government" and "taxpayers" to get a profit.

http://www.businessweek.com/news/201...ess-price.html

According to that article boldholders received 30 cents on the dollar for their stake. Are the taxpayers going to reimburse them the difference? GM certainly had much more than 30 cents on the dollar in assets so more would have been recovered in a traditional bankruptcy. More of the goverment "choosing" winners and losers in deference to the laws as written.

http://dealbook.nytimes.com/2009/05/...m-bondholders/

You have no historical reference to provide to show that all of these companies supplying them would have gone out of business and the job losses incurred.

Again, my point is that regardless of whether or not this has appeared to work I challenge your assertion that the alternative would NOT have worked. Originally Posted by Boltfan

Precedence = Airlines. Large industries that failed. American is the most recent example. No, not as big an impact as GM to our economy, but large nonetheless.

Debtors lost. Shareholders lost. Employees lost. Unions lost (yay).

If you compare that with GM, Debtors lost, Shareholders lost (but not as much as they would have), Employees lost (but not nearly as much as they would have), and Unions lost (as they should have).

Yes, I've made some assumptions and yes, we'll never know for sure, but how about if you tell me why you think bankruptcy of GM would have been a better option for America in terms of jobs and taxpayer benefit. You challenge my assumptions that the bankruptcy alternative would not have been better, so please paint the picture.

Cheers, L4L

L4L
I actually agree with you, and I am a free market kinda guy. I think the bailout was the lesser of two evils. The american auto indusrty had been fading for several years and were already in trouble. Then you throw in the financial crisis with housing and the banks, and I think it would have been too chaotic for a bankruptcy plan to be inacted without an enormous amount of suffering for a whole lot of folks.

GM will still owe the tax payers a lot of money that can't be recooped, but the alternative I feel would have been much worse.

Give Bush some credit as well. This financial collapse did not become apparent till near the very end of his presidency. Going against his Republican constituents, he opted to start the bailout process for both GM and the banks. Then your buddy Obama detoured the money for his social agenda...can you say "setback".

I hope we are never in the position for this shit to happen again...but we will thanks to greed.

For the record I am a GM stockholder and down a whole lot of money.

If Obama is such a friend of the auto industry and jobs, why would he not approve the Keystone pipeline....such a bonehead. It would help create jobs and keep oil prices down which helps sell more cars. After studies by environmental groups for three years, the route has been tweeked and should be started. Instead he is postponing it until after the election. Originally Posted by cookie man

I do give Bush some credit for the actions with the auto industry. I'm not an idiot so I don't think that Bush and Obama developed these strategies themselves... they have people for that. When Obama arrived in office, I'm sure he was presented with a bunch of options that were developed by the Bush administration and he basically had to choose from them. Obama gets credit for the choice because his political balls were on the line going forward.

Keystone is a much needed reminder that the Democrats are no better than the Republicans. Obama could not support Keystone without losing the support of his party, which to me means that his party shouldn't be elected because they 'don't get it'.

Cheers,

L4L

Bring it on?

OK. Here it is.

As someone pointed out during the Chrysler bailout in the late 70s/early 80s, the danger with a government bailout is not that it won't work. The danger is that it will work.

A company is reckless with borrowing and spending, and instead of being punished for risky behavior, it is rewarded with taxpayer money. Other companies take note, particularly ones that are "too big to fail", and they, too, take stupid risks, with the ultimate fallback position that - if worst comes to worst - the government will bail them out if they pay off enough lobbyists to complain that if Chrysler got a bailout, why can't they?. Well, we bailed out Chrysler and, having established that precedent, here we are bailing out Chrysler (again!) - and GM, too.

We also bailed out a bunch of banks. Tell me, Lust4xxxLife, how much TARP money will the government get back? 30%? 50%? And it was a LOT more than the GM bailout.

Why is it that you are crowing about the alleged GM success, but not discussing the even greater money lost on the banks and Chrysler?

And why don't you talk about the losses taken by the bondholders when you talk about the money allegedly made on GM? The bondholders are taxpayers, too. They were supposed to be first in line to get paid if a bankruptcy occurred. Instead, the federal government stepped in and bailed out GM, but stiffed the bondholders. I still do not know how they got away with that legally, but I have read that some of the bondholders were also financial institutions that were also trying to get TARP money. They took a back seat in the GM deal in order to get TARP money. So, if a bank lost $5 billion on GM, but got $10 billion in TARP money as payback, do your count the TARP money the taxpayers lost as part of the GM bailout? Or does that cloud up your Obama fantasy?

And please cite your sources about how taxpayers are going to make a profit in a year. The first problem is that you are counting money that has not even been received yet.

The second problem is that i have read reports like this before and it was always a trick of selective accounting. Like GM would pay off $5 billion that it borrowed from the US ahead of schedule, but they did so by taking a line of credit with private banks that was backed by the federal government. GM hadn't really paid down any debt - they had just switched creditors and the federal government was still on the hook if GM sales did not keep up and they defaulted again.

So, please cite some articles about how the bailout has supposedly worked out and let us read the counter-points. Originally Posted by ExNYer

Two points ExNYer:

1. GM wasn't a bailout. it was an investment. It is already clear that the investment will be profitable. The investment allowed the the investor to purge those who were failing. It was a great move and I think we need to applaud that. Why not? Why not celebrate victories as much as we criticize failures?

2. TARP is forecast to be profitable by mid-2013. I'm not totally happy with that because I think the Banks are still corrupt, but from a government/taxpayer perspective, TARP is not a money sink, it will be profitable. The wars offshore are money sinks. The oil company subsidies are money sinks. The tax breaks for the most wealthy are money sinks. Gesorge Bush was the ultimate money sink.

L4L

I had to bite my tongue when I first read your post but here goes. I see East Germany's Trabant as being more successful than anything GM (government motors) will ever build. This is a failed company obama rescued with our tax dollars. Have we lost sight of that winner should win and losers should lose?

If you believe in freedom and capitalism, GM should be out of business. Should the government now bail out American Airlines next? In a free country capitalism and free enterprise are the underpinnings of a free society. The government should stay out of the way of business unless you believe in socialism or you are a communist.

The case can be made that buying a GM car is UN-American.

Do your self a favor and buy a car that will last, Toyota or Lexus! And yes I am a Ron Paul supporter.

It's pretty easy to toss around theoretical hand grenades. But, all one has to do is go back and look deeply into 1929. It is perhaps the only economic event which 2008 parallels. Bottom line to the Great Depression is that the country never fully recovered until manufacturing generated by WWII led the recovery coupled with strict rationing. Also, nealry full employment was not achieved until the armed forces and the defense manufacturing industy kicked into full gear. This is why the current recovery will be very slow - we're not replacing blue collar construction related jobs and associated white collar jobs (realtors, etc.) with other well paying blue collar jobs making concrete, hold-it-in-your-hand anything. Also, in spite of the best efforts of some, there is no full scale infantry actions requiring most able-bodied men to be in uniform likely to pop up on the horizon. This is why expectations are unrealistically high for full recovery from our current situation. Many are suffering from economic ADHD and can't get the questions right because of their level of expectations.

Our current situation is a case of "it could have been much worse," empirically difficult to prove. I guess it's OK to roll that pair of dice with other peoples' money and livelihoods but I suspect that the shoe would pinch if put on the other foot. The financial industry certainly didn't suffer a great deal since the bonuses are still rolling in. I'm not convinced that those businesses didn't have personnel a few steps down the food chain who couldn't have played the same roll at a greatly reduced cost in fixing the mess that the supposedly "irreplaceable" bundlers and wizards allegedly could only do. They can call their instruments "products" all they want, LOL. I guess that it's like the Supreme Court's definition of pornography, we know it when we see it. I, for one, don't see it since I suffer from having spent all of my working life selling actual "things" to construction and manufacturing businesses who, in turn, make actual "things" - many for export.

Randy another point you might consider is we had no competition after WWII. Germany and Japan were sidelined for many years. I remember one time anything made in Japan was considered junk. Not today. German engineering is incredible.

Competition brings out the best in all of us. One of my favorite persons is Milton Friedman. I think Milt had it right.

I think the power of this country is based on a strong middle class. A strong middle class is both the engine and the market for a strong economy. The three pillars for a strong middle class (using our own history post WWII as the reference) are 1) a strong job market, 2) high quality affordable education, and 3) high quality affordable health care.

We're currently failing on all three of these pillars. The GOP candidates are pushing policies that would make (2) and (3) worse. Democrats are making some progress on (1) but don't have the answers we need. I can't support any of them. Fuck.

I had to bite my tongue when I first read your post but here goes. I see East Germany's Trabant as being more successful than anything GM (government motors) will ever build. This is a failed company obama rescued with our tax dollars. Have we lost sight of that winner should win and losers should lose?

If you believe in freedom and capitalism, GM should be out of business. Should the government now bail out American Airlines next? In a free country capitalism and free enterprise are the underpinnings of a free society. The government should stay out of the way of business unless you believe in socialism or you are a communist.

The case can be made that buying a GM car is UN-American.

Do your self a favor and buy a car that will last, Toyota or Lexus! And yes I am a Ron Paul supporter. Originally Posted by morrissey

No need to bite your tongue. This is meant to be an open discussion.

So... you think the Trebant is more successful than the Corvette, the Cadillac, the Camaro, the Volt... or anything else that GM will build? By what yardstick? Certainly not by volume, revenue, or profits. Please elaborate.

You think winners should win and losers should lose? Does that mean you think that America should be allowed to lose - to fail - without government intervention? America should be allowed to slide down to a second world economy like Brazil or India? Whether you understand it or not, that's what you're proposing (Ron Paul is too). Let American industry fail... let America fail... because that's capitalism. Sorry... I disagree. Government has a role to protect us. That includes more than just military protection... it includes economic protection. The rich will protect themselves, but the middle class need a strong government.

I agree with capitalism and free enterprise. That's why I'm so impressed with the Obama strategy to buy shares in GM rather than hand out money. Obama used free enterprise to support an American company and it's going to make a profit for the company and for the taxpayer. Nobody loses. Nothing could be better unless you wish ill will on Americans who work for GM or people who own shares in GM.

Should America bail out AA? No, I don't think that's necessary. AA knows what actions need to be taken and they're capable of executing them. Just like the other airlines, they needed Chapter 11 as a tool to unwind the unions and unreasonable debt terms. If the entire US Airline industry was on the ropes at that same time, as was the case with the auto industry, then yes, I think that might merit government involvement.

Thoughts?

Let's see where GM is in another few years.

1. Since when is the Government been authorized to pick and choose winners in the free market? it may look good on the surface to have given the majority ownership to the fucking union but seriously, can a union owned firm truly compete over the next 10 years with non union firms world wide?

No.

Think back to when Chrysler got a loan. Worked for a while.

Now how is Chrysler doing? That loan didn't realy fix any of the actual problems, it was a band-aid just like this was a band-aid to GM but the infection is still there rotting from the inside.

In the mid-80's when I worked for GM in IT, Toyota could put a car to market in 24 months. It took GM 72 months.

When I left in the mid-90's, GM was down to only 60 months. 5 fucking years compared to the 2 years for Toyota.

Plain and simple, this bailout was the worst thing for GM.

As noted, your assumptions about what would have happened if they had been allowed to fail and go through a bankruptcy are all bullshit. made up propaganda from the left and the unions.

Worried about jobs? Then why aren't you bitching about the car salesmen at the SAAB dealerships losing their ass because GM wouldn't cut a deal with the Chinese trying to buy that car line so anyone owning a SAAB sold after GM divested them is now shit out of luck. New cars on the lot? Worthless with no warranty.

GM cut Saturn because it got absorbed back into the main company where the unions fucked them over. Springhill was a good first step is getting rid of the union shit but behind the scenes interference by elected officials fucked that up.

Other car companies have come and gone before GM came along and even during their time and the economy was great with them starting up and failing or making it.

When you look at the number of "different" cars GM sold, especially for people such as myself who actually crunched the manufacturing date right from the engineers in the 80's you see how fucked up the company was then and still is.

So no, this was not a good move let alone something our government should never have been allowed to do with tax dollars in the first place.

Randy another point you might consider is we had no competition after WWII. Germany and Japan were sidelined for many years. I remember one time anything made in Japan was considered junk. Not today. German engineering is incredible.

Competition brings out the best in all of us. One of my favorite persons is Milton Friedman. I think Milt had it right. Originally Posted by morrissey

We had no competition after WWII? That's not quite correct, but for many major industries (auto, steel, aero, tech), let's assume it is correct. Now let's consider who was the major customer for these products that we were building... us! Yes, the American middle class! We needed cars to drive, offices to work in, elevators to get to our offices, roads to drive on, bridges to cross rivers, lawn mowers to cut our grass, ovens to cook our meals and fridges to cool our beer. Etc., etc., etc.. We all worked in jobs to create goods and services that we all were the market for. The government - yes, the government - also put a ton of people to work with infrastructure projects that would employ a lot of people and provide us with an infrastructure that would make us a global force to be reckoned with. Private industry didn't sponsor our infrastructure... WE did. We, the taxpayer.

But wait! Now morrissey buys his cars from Japan that he perceives as higher quality for less cost. Who wouldn't? I drive a German car. So now we're increasingly paying people in other countries for our major consumer goods, yet we still want our same standard of living. We move jobs offshore yet we expect the local consumer market to grow... really? if the people we put out of work (yay capitalism) can't buy stuff anymore, why will the market grow?

The USA is becoming a have and have-not nation. That is another way of saying 'Second World', whether that is popular or not. People need to wake up and open their minds and stop listening to the dogma from the political candidates.

L4L

morrissey's point is one I happen to agree with - it helps make my point about expecting an instant recovery. We do have other competition. I, too, grew up in times where "Made in Japan" was a punch line. I wonder why "Made in China" isn't one now, given what we know about the quality and dangers of their products. And, L4xxxL is right in that we are still pretty large customers of whomever is making the things. Unless we can find a way for more people to make more money, that too will pass.

There was no net gain when the minimum wage was raised. The number of people on government assistance went up after the minimum wage was raised. Unemployment went up too so I dont see how raising the minium wage took people off government support. The number of people at the poverty level has increased over the past three years.

Government owning any type of business is bad. The US Post Office is closing outlets and about to lay off thousands and this is just the start. Things are getting better, but at a snails pace. We dont need to keep raising wages, we need to concentrate on retraining workes along with increased budgets for education.

A lot of these answers are derived by applying simple economic theory. The government can not supply you with anything unless it takes it away from someone else first. The business engine is what makes a country great. More government is bad, more freedom is good.

The government may have good intentions the after affects are terrible. The government has no business picking winners an losers. Let the market decide. The best product wins. By GM stock is still continues to struggle. My bet is on TM. And yes I own shares.

I don't think the GM/Chrysler bailout (whatever you want to call it) was ever meant to be profitable. Hell, I'd even take breakeven at this point. To call it an investment would be disingenuous. Our government did it for political reason. Plain and simple. No rational actor/investor would have sunk $50 billion into GM like the Fed and Canadian govt did. The old GM was a failed business model thanks to the UAW legacy costs and corporate mismanagement.

Whether the bailout was right, wrong, indifferent...that's for historians to determine 50 years from now.

In the meantime...I'll only look at Ford, if I were to buy "American."