White House tells GM boss to step down

[alfred russel]

Absent federal intervention, both Chrysler and GM would have gone into liquidation simultaneously, and the creditors probably would have struggled to get pennies on the dollar.

So, the buyers would have gotten better bargains and been much more financially healthy as a result.  Seems to be a good thing.

Fiat is getting control of Chrysler for free (though not a majority stake) and it appears the core of GM isn't being sold but reorganized so that the government has a majority stake and the UAW is the second largest shareholder.

[The Minsky Moment]

So, the buyers would have gotten better bargains and been much more financially healthy as a result.  Seems to be a good thing.

Probably, but the buyer in this scenario would probably be hedge funds and industrials buying up plant and machinery for its value as scrap metal.

[MadImmortalMan]

Absent federal intervention, both Chrysler and GM would have gone into liquidation simultaneously, and the creditors probably would have struggled to get pennies on the dollar.

So, the buyers would have gotten better bargains and been much more financially healthy as a result.  Seems to be a good thing.

Not only that, but those assets are currently at work losing money and destroying wealth. Having them go derelict would be a net positive to the economy.

[grumbler]

Fiat is getting control of Chrysler for free (though not a majority stake) and it appears the core of GM isn't being sold but reorganized so that the government has a majority stake and the UAW is the second largest shareholder.

True.  I was pointing out how much better off we would be if Chrysler and GM went bankrupt together.  The worst case, of course, is for both corpses to be put on taxpayer-paid-for life support until even the US government can no longer afford the burden.  The latter, alas, is what we have.

[Sheilbh]

And certainly do not use the tumor as an excuse to create some Frankensteinesque Socialist monster of a new, labor owned company. Like that is the key to making GM work.

I've not really been following this but I've got two brief points.  One is that labour owned companies can work very, very well.  In this country John Lewis is the star example, but our largest and fastest growing producer of coal is a cooperative company that's been buying up old mines and re-opening them.  I also believe it's a very dominant business model in the Basque country (though it's quite closed shop).

Second, given the current situation what's the likelihood that even the decent bits would be but up?  Car sales have collapsed by 60-70% over the past year and especially in the last few months.  Even profitable car makers are having financial difficulties.  Could any of them plausibly start acquiring bits of GM in the short term?

[grumbler]

Probably, but the buyer in this scenario would probably be hedge funds and industrials buying up plant and machinery for its value as scrap metal.

Yep, and that would make the remaining automobile production assets profitable (and government life support thus unnecessary), but it won't happen.  Instead, the US government will continue to punish the more efficient by keeping the losers alive at great cost until it breaks even the US government.  By that time, of course, those who aren't such severe losers that they have gotten government live support will have gone out of business due to the unfair competition, but that is the nature of brainless government intervention, that the guilty shall prosper and the inocent suffer.

[grumbler]

I've not really been following this but I've got two brief points.  One is that labour owned companies can work very, very well.  In this country John Lewis is the star example, but our largest and fastest growing producer of coal is a cooperative company that's been buying up old mines and re-opening them.  I also believe it's a very dominant business model in the Basque country (though it's quite closed shop).

They can, indeed.  United Airlines was quite successful as an employee-owned business, for many years.

Second, given the current situation what's the likelihood that even the decent bits would be but up?  Car sales have collapsed by 60-70% over the past year and especially in the last few months.  Even profitable car makers are having financial difficulties.  Could any of them plausibly start acquiring bits of GM in the short term?

If the price is right, of course they can plausibly purchase the bits of GM expected to profit.  They wouldn't be able to do so with the US government artificially supporting unrealistic prices, nor could they if faced with potentially unfair US government-owned-GM business practices which downplay debt because of who owns them, of course.

The real problem is that the bad drives out the good, and if the crash of Obama-GM is delayed long enough, the profitable and smart auto companies will be too damaged to afford to rescue anything from the delayed smash, even if it is virtually free.

[DGuller]

BTW, I've seen a blog post that alleges that the Chysler dealerships that were closed were all owned by Republican donors.  The writer sounded like a typical brain-dead right-winger nut, so there is a high likelihood that this is yet another right wing fabrication based on selective analysis at best.  However, if true or largely true, the implications could be disastrous for Obama.

[ulmont]

BTW, I've seen a blog post that alleges that the Chysler dealerships that were closed were all owned by Republican donors.  The writer sounded like a typical brain-dead right-winger nut, so there is a high likelihood that this is yet another right wing fabrication based on selective analysis at best.  However, if true or largely true, the implications could be disastrous for Obama.

Car dealers in general skew dramatically Republican.
http://www.fivethirtyeight.com/2009/05/news-flash-car-dealers-are-republicans.html

[crazy canuck]

BTW, I've seen a blog post that alleges that the Chysler dealerships that were closed were all owned by Republican donors.  The writer sounded like a typical brain-dead right-winger nut, so there is a high likelihood that this is yet another right wing fabrication based on selective analysis at best.  However, if true or largely true, the implications could be disastrous for Obama.

If you took a random sampling of car dealer owners you would get a large number of Republicans....

edit: I was beat to the punch.

[alfred russel]

BTW, I've seen a blog post that alleges that the Chysler dealerships that were closed were all owned by Republican donors.  The writer sounded like a typical brain-dead right-winger nut, so there is a high likelihood that this is yet another right wing fabrication based on selective analysis at best.  However, if true or largely true, the implications could be disastrous for Obama.

Car dealers in general skew dramatically Republican.
http://www.fivethirtyeight.com/2009/05/news-flash-car-dealers-are-republicans.html

So had McCain won, the auto dealers would get a majority equity stake.

[crazy canuck]

BTW, I've seen a blog post that alleges that the Chysler dealerships that were closed were all owned by Republican donors.  The writer sounded like a typical brain-dead right-winger nut, so there is a high likelihood that this is yet another right wing fabrication based on selective analysis at best.  However, if true or largely true, the implications could be disastrous for Obama.

Car dealers in general skew dramatically Republican.
http://www.fivethirtyeight.com/2009/05/news-flash-car-dealers-are-republicans.html

So had McCain won, the auto dealers would get a majority equity stake.

No.  But he would have been more political pressure on him to save the dealerships along with everything else.

[MadImmortalMan]

There was a GOP Congressman who lost his dealership, IIRC. That probably started the rumor.

[Hansmeister]

I've not really been following this but I've got two brief points.  One is that labour owned companies can work very, very well.  In this country John Lewis is the star example, but our largest and fastest growing producer of coal is a cooperative company that's been buying up old mines and re-opening them.  I also believe it's a very dominant business model in the Basque country (though it's quite closed shop).

They can, indeed.  United Airlines was quite successful as an employee-owned business, for many years.

And what, pray tell, happened to United Airlines in the end.

[KRonn]

Such a mess. Plus, seems too much owned by the government now? This couldn't have been done better, even a govt controlled bankruptcy a while ago, or something?