White House tells GM boss to step down

[Berkut]

UAW, who somehow manage to come out of the entire deal with their cherry contracts intact

They are getting nothing of the sort.  The union health care trust is taking a $20+ billion hit, and there are big cuts in retiree health benefits, active worker fringe benefits, COLA suspensions, eliminations of bonuses, and loss of vacation time.  Plus a 6 year no strike pledge.

They get guaranteed employment and a huge stake in the company they helped destroy. That is a sweetheart deal, since they only thing the union deserves is dissolution.

The "health care trust" is taking a huge hit? Boo-fucking-hoo. I don't have a health care trust, and every year I pay more and more - so why should I bail out their sweetheart health care trust? ig cuts in retiree health care benefits? Boo-hoo, join the real world where your "retiree health care benefits" is whatever you manage to purchase with the money you earned and saved.

You aren't going to elicit any sympathy from me because they are going to have to "pay" for their newfound ownership in the company they helped  destroy with minor cuts to the very programs that destroyed the company to begin with.

What, now they will only be able to sweep floors for $75k/year? Cry me a river.

[grumbler]

Generally speaking Chapter 11 reorgs conserve significantly more asset value than liquidations.  The main reason to prefer a Chapter 7 is if you are a secured or highly senior creditor who doesn't care if value is destroyed further down the capital structure.  Given that the taxpayer is a potential loser in this process, that doesn't seem that desirable to me.

My understanding is that bondholders think they are high enough in the food chain to get more value from a liquidation than they are being offered in the reorg (which they just turned down, forcing the courts to oversee the reorg).  The taxpayer will lose in any case.  The question is merely how much the taxpayer will lose, and it seems to me as a taxpayer that it is better to cut losses early rather than drag out the process and lose more money at a slower rate.

Nor is it clear to me how a Chapter 7 would work in this context.  Who would want to buy a single GM plant for example?  It's not like a retailer where the principal assets consist of unsold inventory or real estate that can be fairly easily and quickly monetized.  There are a bunch of lumpy assets with limited potential buyers.  And via collateral pledges, the control of so-called "viable portions" of the business may be scattered.

Someone who wanted to produce cars, for instance, would buy car or parts factories; people wanting to finance car purchases would pick up GMAC; other companies would pick up those elements that could make them profits.  Those owning control of the various assets would need to want to sell, of course; if not, then they can keep the assets, and make money off of them by operating them.

[Berkut]

No chance that will be allowed to happen.

You may be right, unfortunately.  As a taxpayer, though, I have to hope that those trying to liquidate the corporation have a better handle on the situation than you.

:lol:Obama has said he is committed to making GM work--ie, no liquidation. If he offers the right price, he can get the creditors to go away. The company will not liquidate--it is just a question of what parts emerge, what the structure of the company is coming out of bankruptcy, and how much the creditors get paid.

Right, what Obama has really said is that he is committed to protecting the interests of the UAW. And that is all he is doing. He is protecting them with staggering amounts of taxpayer dollars, while telling the actual owners of the company to go fuck themselves.

And people got upset when he was called a Socialist. They guy is forcing the owners of the company to turn over their interest to the union. Hugo would be proud.

[Berkut]

  Those owning control of the various assets would need to want to sell, of course; if not, then they can keep the assets, and make money off of them by operating them.

That is crazy talk, speaking of selling the means of production like that!

The means of production are and rightly should be owned by labor.

And hey, that is what we will end up with at the end of the day! UAW owns GM! Whoooot!

[Zanza]

Does someone know what the "good" parts of GM are? I.e. which division or daughter or whatever is at least likely to turn a profit once the recession ends? Chevrolet is viable because it is a strong brand I guess. What else?

[Barrister]

Someone who wanted to produce cars, for instance, would buy car or parts factories; people wanting to finance car purchases would pick up GMAC; other companies would pick up those elements that could make them profits.  Those owning control of the various assets would need to want to sell, of course; if not, then they can keep the assets, and make money off of them by operating them.

But as I see it, no other major auto manufacturer is going to want to pick up any significant portion of GM's factories at present.  No one is seriously looking to expand capacity.  Many of the plants are in union-friendly jurisdictions like Michigan.  GMAC is in a huge mess, and is unlikely to attract any serious bids.

While I can see bids for a few select pieces: maybe someone wants to pick up Opel, GM undoubtably has a large patent and other IP ownership that should sell, and plants for a few niche products like the Corvette or the Volt, but beyond that most of GMs assets would be sold for the value of scrap.

[Admiral Yi]

Does someone know what the "good" parts of GM are? I.e. which division or daughter or whatever is at least likely to turn a profit once the recession ends? Chevrolet is viable because it is a strong brand I guess. What else?

I assume you're already aware of the takeover talks re Opel and Vauxhall.

[DGuller]

Does someone know what the "good" parts of GM are? I.e. which division or daughter or whatever is at least likely to turn a profit once the recession ends? Chevrolet is viable because it is a strong brand I guess. What else?

Cadillac has to be a good piece as well.  Their recent models can compete with the German luxury makes.

[Berkut]

Someone who wanted to produce cars, for instance, would buy car or parts factories; people wanting to finance car purchases would pick up GMAC; other companies would pick up those elements that could make them profits.  Those owning control of the various assets would need to want to sell, of course; if not, then they can keep the assets, and make money off of them by operating them.

But as I see it, no other major auto manufacturer is going to want to pick up any significant portion of GM's factories at present.  No one is seriously looking to expand capacity.  Many of the plants are in union-friendly jurisdictions like Michigan.  GMAC is in a huge mess, and is unlikely to attract any serious bids.

While I can see bids for a few select pieces: maybe someone wants to pick up Opel, GM undoubtably has a large patent and other IP ownership that should sell, and plants for a few niche products like the Corvette or the Volt, but beyond that most of GMs assets would be sold for the value of scrap.

If GM went out of business, there would likely be a huge production increase by other manufacturers. It isn't a closed system.

Some portions might go for scrap, but then some portions are likely only worth that. Such is the nature of capitalism.

I guess we can just nationalize them and turn the means of production over to the workers instead, managed (of course) by the benevolent hand of the State. There are a lot of advantages to that approach, certainly. You can make sure the workers are paid according to their needs, rather than according to their ability - for example.

[Barrister]

They get guaranteed employment and a huge stake in the company they helped destroy. That is a sweetheart deal, since they only thing the union deserves is dissolution.

The "health care trust" is taking a huge hit? Boo-fucking-hoo. I don't have a health care trust, and every year I pay more and more - so why should I bail out their sweetheart health care trust? ig cuts in retiree health care benefits? Boo-hoo, join the real world where your "retiree health care benefits" is whatever you manage to purchase with the money you earned and saved.

You aren't going to elicit any sympathy from me because they are going to have to "pay" for their newfound ownership in the company they helped  destroy with minor cuts to the very programs that destroyed the company to begin with.

What, now they will only be able to sweep floors for $75k/year? Cry me a river.

Berkut - while you're obviously enjoying ranting about UAW, the problem I see is that what you are suggesting is just impossible, both in fact and in law.

GM decides that, as part of restructuring in bankruptcy, it is going to tear up its UAW contract and offers jobs to all its workers on terms it dictates - and at much lower wages and benefits.

UAW - all of it - would have a fit.  Massive strikes at every plant.  UAW has fairly deep pockets and can afford strike pay for quite a while, and the UAW has pretty militant members, and its unlikely that most workers would cross the floor.

I can't imagine how GM would produce any significant number of cars or parts in the meantime. 

I just can't imagine any of this working.

Is there something I'm missing?

[Berkut]

Only the fact that any deal resulting in the UAW continuing on and actually getting even more ability to make sure that GM cannot compete is by definition worse than the whatever could happen otherwise.

Let them have a fit. Their pockets aren't that deep - and if they are so deep, why do we need to bail them out with tens of billions of dollars? Let them just buy GM themselves, and go about fixing all the bad decisions the Capitalists made so they can build awesome cars at fair prices.

News flash BB: It isn't working now, so why should your inability to imagine it working later matter?

If the tumor cannot be cutout, if it is so deeply into the patient that removal is impossible, then let the patient die and quit spending insane amount of my money to keep him alive, since he will just die later anyway.

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.

[Zanza]

I assume you're already aware of the takeover talks re Opel and Vauxhall.

Yes, I don't quite get them though. Opel isn't exactly making a profit either and Fiat (the most likely suitor) is highly indebted and there is no way they'll actually pull off a Fiat-Chrysler-GM Europe merger successfully. It's more likely that Fiat goes bankrupt next year in my opinion.
Magna+Russian investors were apparently already rebuked, some American financial investor has interest in Opel (why?) and a Chinese car maker is interested - probably mostly in the brand, know-how, but not in production capacity.

As it is the world has a huge overcapacity for car making, so someone has to go to make the market viable. At the moment it looks like it's GM and Chrysler.

[alfred russel]

Only the fact that any deal resulting in the UAW continuing on and actually getting even more ability to make sure that GM cannot compete is by definition worse than the whatever could happen otherwise.

Let them have a fit. Their pockets aren't that deep - and if they are so deep, why do we need to bail them out with tens of billions of dollars? Let them just buy GM themselves, and go about fixing all the bad decisions the Capitalists made so they can build awesome cars at fair prices.

News flash BB: It isn't working now, so why should your inability to imagine it working later matter?

If the tumor cannot be cutout, if it is so deeply into the patient that removal is impossible, then let the patient die and quit spending insane amount of my money to keep him alive, since he will just die later anyway.

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.

GM couldn't compete with a huge debt burden and legacy costs (yes both were self inflcted), carrying less successful brands, and excess dealerships. Those factors are all going to change--so maybe it can compete sucessfully now.

I doubt it, but there is reason for hope.

[Berkut]

Why is everyone so terrified of the UAW having a fit?

They SHOULD have a fit - they should suffer the consequences of their short sighted and selfish policies. Of course they won't because they are so fucking good at buying up politicos, so they are going to come out of this better off - indeed, one could argue that this has been brilliantly played - the Dems and the union come out of the disaster with the Union owning the company. And really, if some retirees health care benefits take a beating, no worries. You can bet dollars to donuts that they will be taken care of by their good buddies in Congress anyway - we will see some appropriation to make up the difference.

The nasty capitalists are broken, and the workers seiz...errrh, are given the company by the State, bought for by the taxpayers. It's beautiful!

[Berkut]

As it is the world has a huge overcapacity for car making, so someone has to go to make the market viable. At the moment it looks like it's GM and Chrysler.

If that is true, then so be it - the comapanies that fail at making what the consumer wants at a price they want to pay (relative to others) should fail.

Even if it means that UAW workers might lose their jobs.