My thoughts exactly
Why GM CAN'T be allowed to fail...
- Thread starter theman1990
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My thoughts exactly
GM's problems are less about its products than its enormous legacy costs. How many thousands of 55 year old able-bodied retired UAW workers must we support? The solution is simple but no one in Washington has the courage to suggest it. Cut pensions!, quit paying people to sit on their ass!
And while you're at it, raise the retirement age to 72. There's a whole generation of boomer's out there that think its their birth-right to put their feet up and coast on the backs of the rest of us until they die some 20-25 years later. If you've saved enough to retire at 65 (or younger) great, go for it! If not, too bad, keep working until you are 72. My grandpa kept working until he was 86, my dad's still working at 80.
Hey Obama, instead of redistributing my wealth, redistribute my work-ethic!
My thoughts exactly
I don't think you could be any more wrong with your opinion. GM is in the worst position out of the BIG 3. Ford has yet to accept any tax payer money because they were at least smart enough to save CASH for times like this. They were also able to renegotiate with the union to cut cost (I don't know the entire details) but I do know they are able to use their newer factories that are 100% fully automated unlike GM.
Also Ford is FINALLY starting to bring the European design "flare" over to the states (new 2009 Focus - 2011 Fiesta - 2010 Taurus). I think GM is riding too much on their Volt. Do you know the starting price on the Volt is around $35k and the electric motor can only get you up to 40 miles before the gas engine kicks in to save your butt. The Volt is nothing impressive compare to Tesla and Fisker upcoming products. Or get a fully loaded Honda Insight for $21k or Toyota Prius for $25k.
I'm with everyone else and believe that GM should go BK and reorganized (remember its reorganizing - not completely shutting down and calling it quits). So yes, many will hurt in the process but it should be for the greater good in the long run.
Your last line should be a bumper sticker!GM's problems are less about its products than its enormous legacy costs. How many thousands of 55 year old able-bodied retired UAW workers must we support? The solution is simple but no one in Washington has the courage to suggest it. Cut pensions!, quit paying people to sit on their ass!
And while you're at it, raise the retirement age to 72. There's a whole generation of boomer's out there that think its their birth-right to put their feet up and coast on the backs of the rest of us until they die some 20-25 years later. If you've saved enough to retire at 65 (or younger) great, go for it! If not, too bad, keep working until you are 72. My grandpa kept working until he was 86, my dad's still working at 80.
Hey Obama, instead of redistributing my wealth, redistribute my work-ethic!
Speaking of retirement age and pensions - teachers should be subjected to the same terms. It's disgusting to see high school teachers making six figures and then retiring with massive pensions in their mid-fifties. Then we, the taxpayers, must foot the bill for this extravagance.
It's time for ambitious and entrepreneurial people to take back this country, and whoever wants something for nothing.....too bad.
We've given far more to the finance industry.
I used an ultra-conservative number on purpose. Others are saying that GM goes down and 1.5 million are out of work.
Letting GM fail (ie: close its doors) is far more scary to me than tossing them a few billion. We are tossing *trillions* onto the finance industry.
I wonder what the cumulative profits of the entire financial industry have been once they take a 2 trillion dollar deduction from the current government giveaway.
The simple fact of the matter is that this money is inexpensive for the benefits (and there are benefits). GM employs far more US employees, uses higher US parts content, and assembles more cars within the US than either Toyota/Honda. GM is obviously more tied to our economy than any foreign auto manufacturer (not debatable).
Regardless of how "American" GM is... its not debatable that compared to other manufactures they make utter and complete shit and have done so for twenty years now.
We shouldn't be tossing any money to any private business. But we sure as hell shouldn't be tossing it to a company that has been too incompetent to go 15 years without turning a profit and not being able to see the writing on the wall of their doom within the last decade.
Its not bad business at that point, its utter incompetence and it shouldn't be rewarded with me buying their product, let alone taxpayers giving them billions every other month because some how we've been duped that if GM fails some how the sun won't rise the next morning.
We shouldn't be tossing any money to any private business. But we sure as hell shouldn't be tossing it to a company that has been too incompetent to go 15 years without turning a profit and not being able to see the writing on the wall of their doom within the last decade.
Its not bad business at that point, its utter incompetence and it shouldn't be rewarded with me buying their product, let alone taxpayers giving them billions every other month because some how we've been duped that if GM fails some how the sun won't rise the next morning.
Point taken, but those are all sunk costs. They are not a factor in making a decision about GM.
Ski_Banker
Suspended
The writing is on the wall, guys. Obama wants to completely remake GM around a green car business model. And if union card check passes (it will), he won't HAVE to worry about overpaid Detroit union workers -- Toyota, Honda, BMW will all get stronger unions which will *bring* their costs back up to UAW levels.
This whole bankruptcy threat is simply part of a negotiation with the bondholders (not the unions).
This whole bankruptcy threat is simply part of a negotiation with the bondholders (not the unions).
You are 100% right about all of this. The entire business has become a giant house of cards and all govt support does is continue to prop up a giant house of cards.
The facts are that Big 3 employess have been making more money than they should be for the last 50 years and the widget companies have been more successful than they should have been over the same time period. In recent years, the Big 3 have been mismanaged to a much higher degree than they would if there was no implicit or explicit govt bailout around the corner. You'd have to be a fool to think that companies like the Big 3 and AIG don't know they are considered too big to fail.
If these companies had been doing everything in their power to avoid bankruptcy over the last 20 years the downsizing and layoffs would have been much more gradual and new and/or different technologies may have come about that employed more people offsetting the current supplier layoffs. This is how the house of cards gets built.
Instead, as now, when the Big 3 have pushed their value to the limit and have been mismanaged the house of cards comes falling down devastating the economy since all of the needed downsizing and/or restructuring happens instantly as opposed to gradually over time allowing for new opportunities for misplaced workers and minimizing the strain on the overall economy.
So the "solutions" become either let them fail, devastating the economy but only for a relatively short time or support them, keep the economy somewhat stabilized and continue to contribute to the boom-bust pattern that keeps getting worse each cycle--essentially selling out your future for the present.
Government-sponsored enterprises (GSEs) are what bailed-out companies become and that is quite frankly the worst possible way to insure a company stays profitable over the long-term. Fannie Mae's and Freddie Mac's status as GSEs enabled them to perform a massive money-grab and create a house of cards as big as possible since they knew they would be bailed out explicitly. Same with AIG and the Big 3, but implicitly.
The ironic ending is that once the govt is involved public opinion begins to tug and the average person (who has no idea how large corporations operate) begin to get outraged at things like earned executive bonuses that were tied to performance and contractually obligated to the execs long before the collapse. The politicians, eager to please the constituents and get re-elected, start limiting executive pay driving away good executives that do know how to run large companies by virtue of the fact that they earned those bonuses based on performance. The company henceforth becomes less profitable since the best executives don't want to work for a company where their contract-based earnings and bonuses can disappear on a politician's whim. The result is that just when the govt needs the company to be as profitable as possible after investing all the taxpayer's money (or inflating the currency to invest it) it becomes less profitable.
GM (Government Motors) has unveiled their first model! Help is on the way!
http://pajamasmedia.com/blog/government-motors-gm-unveils-its-first-model/
http://pajamasmedia.com/blog/government-motors-gm-unveils-its-first-model/
Exactly. Cut the leg off, hobble and survive or slowly bleed to death.
Your definition of "relatively short amount of time" seems to be at least 10 years. In absolute numbers, the elimination of jobs will be massive - and they will also be exactly the type of jobs which are hard to create (well paying jobs).
It may be 10 years or more and probably not even that. But that pales in comparison to the collapse of the entire economy and/or massive inflation or deflation of the currency that will inevitably happen in 50 or 100 years. The conditions that allow the boom-bust cycle to perpetuate and worsen will not be eliminated and the fear of a 5+ year recession or depression scares everyone into selling out their future and children's for the present.
The fact is that even the Great Gepression would have likely come to an end by 1936 if less government intervention had been undertaken. This is a well-publicized and well-supported position. The free market was much more free and easier to self-correct back then even though, as today, many of the causes of the Depression were not normal free-market dynamics due to manipulation of currency, tariffs and collusion with banks.
The free market has amazing ability to self-correct but since most of these economic problems were created by the corporate-statist capitalism we've lived under for the better part of 100 years it's much more difficult for the free market to correct since it's not a normal free-market dynamic.
Japan is a perfect example. The govt, with support of the banks, tinkering in the markets during the late 80s created a problem and the govt intervention that was supposed to correct the problem has unnecessarily extended the recession to this very day. Do you really think that Japan would still be in a recession without fiat currency and clown, no-nothing politicians in charge of monetary policy? Or that the problem would have been created in the first place?
The govt is very effective at creating problems that it appears only the govt can solve. We are so frightened by the prospect of a market correction that we do anything to avoid it, believing that the govt is going to actually help us and protect us, allow them to make monetary policy and inflate and deflate the currency at will through a quasi-private corporation that has practically no oversight and that operates without fear of failure.
The govt has absolutely no business creating monetary policy and never did. We are seeing what happens when they do. The introduction of the Fed in 1913 was sold to Americans as the most effective way to create stability in the economy and preserve the value of the dollar. Since the dollar has lost over 95% of its value since then and we've had at least 5 distinct recessions, three of which are arguably depressions, how can anyone claim that the Fed has been a successful experiment and that govt monetary policy has generally been effective?
I guess my problem is that we are tossing 2T+ at a financial industry which has likely not shown a cumulative profit over the past 30+ years. Why is the auto industry a different situation?
It's not different at all in my opinion. Not singling out the auto industry and I apologize if it appeared that was the case.
That's an interesting question. Not long ago all banks were technically insolvent due to the Latin American debt crisis. However, there were also decades of extreme profitability in between. At least the financial firms are actually cyclical, the domestic automakers were losing money during much of the greatest expansion of wealth and new drivers in all of history (90's).
Doesn't really change the fact that financial services really aren't that profitable in the long term. When you lose trillions it becomes obvious that the industry simply does not add a whole lot of value. At least the auto industry, on average, is profitable.
If I didn't manage my business effectively, no one would be standing up to bail me out. I am sorry; I would not bail them out. I would not bail out the banks either. Just exactly how much can the tax payer handle before they just give up working?
Sigh.... my son's favorite car is the Corvette. Unofotunately for him, I have vowed NEVER to spend a dime on GM... But with this bailout BS... I guess I'll be buying a bunch of Corvettes for people who can afford one... while I still can't.
Because Ford and Chrysler will corner the rental car market.
Who knows, maybe there is a chance for Tesla to replace GM as one of the big 3. Yes, there will be a transition period for the GM suppliers also (if GM is allow to failed). It will no longer be business as usual. Suppliers will have to be pragmatic and change their business strategy & processes with the current business environment.
Who knows, maybe there is a chance for Tesla to replace GM as one of the big 3. Yes, there will be a transition period for the GM suppliers also (if GM is allow to failed). It will no longer be business as usual. Suppliers will have to be pragmatic and change their business strategy & processes with the current business environment.
Doesn't really change the fact that financial services really aren't that profitable in the long term. When you lose trillions it becomes obvious that the industry simply does not add a whole lot of value. At least the auto industry, on average, is profitable.
I think you could swap financial services and automakers and make the same argument. The last year and a half are so would classify as a 'black swan' event and is not necessarily inherint in the structure of the industry; i.e. regional firms and smaller banks that actually do what banks are supposed to do still did fine. Then again, Porsche still mints money with ease through the ups and downs and there are auto companies like Hyundai that have grown* during this downturn. It's more how you manage a business than the business itself. I just don't think GM can be turned around without bankruptcy at this point.
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