White House tells GM boss to step down

[The Minsky Moment]

Oh, I understand perfectly well that GM may be, as you note, virtually worthless.  However, liquidation of GM would at least make it impossible for my government to use my money to prop up a worthless corporation.

I am suggesting a somewhat different possibility - that GM as a going business has tangible value but that for technical reasons relating to how the company parcelled its assets as collateral among so many different creditors, a Chapter 7 is not a feasible means for unlocking that value.

[MadImmortalMan]

Berk is speaking from the standpoint of a taxpayer, and I get it. I mean, the opportunity cost for the taxpayer in this situation of doing nothing and letting them die sure as hell looks better than the cost of saving them and making them viable. If you can quantify a value for a living GM to the taxpayer. The problem is that that opportunity cost is no longer achievable at this point. We've already sunk our billions into the whole rescue thingie.

[DontSayBanana]

Berkut is talking from the standpoint of a taxpayer, yes, but also being a colossal twit. For the goat-man himself:

1) Enough with the UAW bashing. Been there, done that. I tried it myself and found most of the problem was with legacy costs (primarily healthcare), which actually points the finger more at management than the UAW. Have they contributed to dream pay expectations? Certainly, but I'm getting tired of you scapegoating the UAW for what's turning out to be colossal fuckups all across the board.

2) UAW hardliners will picket. Once the strike pay runs out, guess what? They suckle on unemployment at the cost of the taxpayer. Guess what happens when the state can't afford their unemployment anymore? Tax hikes. Automatic ones that you can't do anything about.

3) You're grossly underestimating the people's ability to be stubborn on principle when they should be desperate. Unless you can back threats with governmental authority, telling someone you're going to screw them until they cave is more likely to make them walk away in frustration than renegotiate. I'm thankful you and your "screw 'em all" attitude is not running this show, as we would see a tremendous waste of human and material resources.

[garbon]

Yeah, I'm sure GM will prove to be a solid investment.

[DontSayBanana]

Yeah, I'm sure GM will prove to be a solid investment.

I've never once claimed that it would be a solid investment. I'm just saying that Berk's "cure" is worse than the disease.

[garbon]

And I think you are wrong.

[dps]

Berk is speaking from the standpoint of a taxpayer, and I get it. I mean, the opportunity cost for the taxpayer in this situation of doing nothing and letting them die sure as hell looks better than the cost of saving them and making them viable. If you can quantify a value for a living GM to the taxpayer. The problem is that that opportunity cost is no longer achievable at this point. We've already sunk our billions into the whole rescue thingie.

That's the point--those are sunk costs.  It would have been better if GM and Chrysler had never been given a penny of taxpayer money, but the fact that that money was wasted doesn't justify wasting more.

[DontSayBanana]

And I think you are wrong.

Sending unemployment soaring even higher and further diminishing the credit base in the US would solve exactly what, save for your deeply held principles?

You can bitch all you want about how that's only a possibility, but taking these kinds of gambles is what got us into this mess in the first place. I'm not all for unions and I'm not all for an industry being nationalized, but the system is broken- the chief goal at this point should be putting scaffolding under that industry while we give it a firmer foundation with more clearer goals so that we can save a SHITLOAD of American jobs.

[garbon]

aka kick the ball down the road. Haven't we done enough of that?

[Razgovory]

Berk is speaking from the standpoint of a taxpayer, and I get it. I mean, the opportunity cost for the taxpayer in this situation of doing nothing and letting them die sure as hell looks better than the cost of saving them and making them viable. If you can quantify a value for a living GM to the taxpayer. The problem is that that opportunity cost is no longer achievable at this point. We've already sunk our billions into the whole rescue thingie.

That's the point--those are sunk costs.  It would have been better if GM and Chrysler had never been given a penny of taxpayer money, but the fact that that money was wasted doesn't justify wasting more.

I thought the rational method was to ignore sunk costs.

[dps]

Berk is speaking from the standpoint of a taxpayer, and I get it. I mean, the opportunity cost for the taxpayer in this situation of doing nothing and letting them die sure as hell looks better than the cost of saving them and making them viable. If you can quantify a value for a living GM to the taxpayer. The problem is that that opportunity cost is no longer achievable at this point. We've already sunk our billions into the whole rescue thingie.

That's the point--those are sunk costs.  It would have been better if GM and Chrysler had never been given a penny of taxpayer money, but the fact that that money was wasted doesn't justify wasting more.

I thought the rational method was to ignore sunk costs.

Uh, yeah, that's what I'm saying.  MIM seemed to be arguing otherwise.

[DontSayBanana]

aka kick the ball down the road. Haven't we done enough of that?

It's not kicking the ball down the road if we avoid the shortcuts we've been taking in the past and manage to not fuck it up. Even a partial success in that area has a higher likelihood of a positive outcome than a slash-and-burn treatment.  There's no magic "fix" button for this; what I'm pretty certain of is that with our economy at this point, we can't take crippling yet another industry.

[Berkut]

Berkut is talking from the standpoint of a taxpayer, yes, but also being a colossal twit. For the goat-man himself:

1) Enough with the UAW bashing. Been there, done that. I tried it myself and found most of the problem was with legacy costs (primarily healthcare), which actually points the finger more at management than the UAW. Have they contributed to dream pay expectations? Certainly, but I'm getting tired of you scapegoating the UAW for what's turning out to be colossal fuckups all across the board.

2) UAW hardliners will picket. Once the strike pay runs out, guess what? They suckle on unemployment at the cost of the taxpayer. Guess what happens when the state can't afford their unemployment anymore? Tax hikes. Automatic ones that you can't do anything about.

3) You're grossly underestimating the people's ability to be stubborn on principle when they should be desperate. Unless you can back threats with governmental authority, telling someone you're going to screw them until they cave is more likely to make them walk away in frustration than renegotiate. I'm thankful you and your "screw 'em all" attitude is not running this show, as we would see a tremendous waste of human and material resources.

SUmmation:

We cannot possibly let them fail! Why, all those UAW people will be out of jobs! TEH HORROR!

Fuck 'em. Lots of people lose jobs all the time - they aren't special just because they are members of a union that has bought the Democratic party. Or rather, they shouldn't be.

Sometimes someone needs to the colossal twit. Someone needs to stand up and point out that the fucking emperor really doesn't have any fucking clothes, and the idea that the solution to the problems of the american auto industry is to turn it all over to the government and one of the most corrupt and "successful" unions in the country is in-fucking-sane.

[Berkut]

Yeah, I'm sure GM will prove to be a solid investment.

I've never once claimed that it would be a solid investment. I'm just saying that Berk's "cure" is worse than the disease.

You have this backwards - I am proposing no cure, it is the Administration that is doing so, and their cure is not just worse than the disease, it is a bloody catastrophe of Huge Chavez like proportions. Using the state to rest control of the company from the owners and hand it over to the union?

What country are we living in now?

[Berkut]

And I think you are wrong.

Sending unemployment soaring even higher and further diminishing the credit base in the US would solve exactly what, save for your deeply held principles?

You know what will send unemployment higher and be bad for the economy in the long run much worse than a company failing?

Using that companies failure as an excuse to seize it and hand it over to the union in some kind of demented Orwellian socialist pipe dream.

You can bitch all you want about how that's only a possibility, but taking these kinds of gambles is what got us into this mess in the first place.

No, that isn't what got us into this mess at all. What got GM into this mess was the very union that we are so desperate to hand GM over to, and a series of horrendous shitty decisions and nationalistic bullshit. It certainly was NOT because the government didn't jump in and run up truly breathtaking deficits bailing out failing companies.

I'm not all for unions and I'm not all for an industry being nationalized,

And yet your solution is nationalization and handing the company over to the unions.

but the system is broken- the chief goal at this point should be putting scaffolding under that industry while we give it a firmer foundation with more clearer goals so that we can save a SHITLOAD of American jobs.

Saving American jobs is a stupid, stupid reason to do anything. We don't save American jobs by pouring billions of money taken from tax payers into worthless companies. Hell, if you want to do that, just use those same billions to hire 60,000 Americans to dig holes and fill them back up again.

Jobs are saved by vibrant, growing companies doing business, not by the government running corporations, which is a 100% guaranteed recipe for failure. Governments cannot run businesses. And neither can unions.