White House tells GM boss to step down

[Ed Anger]

"Since I was a kid, Chevy has represented the highest level of performance," said Hendrick,

Southerners don't give a shit about German cars. It is Ford or Chevy or nothing.

[The Brain]

America is like a decaying carcass.

[alfred russel]

I wish that were a discussion that politicians were having, but the answer isn't necessarily a foregone conclusion.

GM and Chrysler appear to be in such rough shape that without government support both would appear to be liquidated, not retsructured in bankruptcy.  The government would be on the hook for billions for honouring pensions for retired workers, since there is no ongoing business to support those workers.  The already decimated economy of Michigan (and Windsor, Ontario) would be finished off, leading to increased expenses for all manner of social services, plus the loss of tax income.  And are there national security concerns in losing your domestic automobile manufacturing capability (except for Ford)?

I'm not sure - with all that, is $70 billion worth it?

Oh, in coming to your $70 billion figure, does that include the money that Canada and Ontario are putting on the table?

$70 billion is US only, and excludes Chrysler. But it includes all the debtor in possession financing, which hasn't been spent yet.

I checked and the US pension plan underfunded status is $13.6 billion, with another $11.9 billion outside the US. The other US benefits are underfunded $30.0 billion, with another $2.9 billion worldwide. How much these would be put on the taxpayer, I don't know--it would certainly be less than 100%. I don't know the rules, but we could be talking as little as $10 billion if medical benefits aren't guaranteed.

Even if it is 100% on the backs of the taxpayer (and I know it isn't that high), that is still only $43.6 billion in the US, leaving $26.4 billion left over. With 243k employees worldwide, that is still over $100k per employee (and obviously we wouldn't pick up the tab of foreign countries).

I don't think there are any national security concerns--if a major war comes, we will use Toyota, Honda, and Mercedes plants the same as GM ones.

While you are talking about a lot of burdens in Michigan and the midwest, we are talking about so much money at this point I don't see how the cost/benefit works to the advantage of the course we are taking.

[The Minsky Moment]

So when you stop to think about $70 billion (plus more to Chrysler)--is this really still a defensible policy?

Depends on how much the government gets back.

[DGuller]

Southerners don't give a shit about German cars. It is Ford or Chevy or nothing.

Rick Hendrik owns dozens of dealerships, selling all kinds of makes.

[Martim Silva]

Southerners don't give a shit about German cars. It is Ford or Chevy or nothing.

Actually, they do, because the Germans have plenty of car factories in the South. Mercedes-Benz has plants in Tuscaloosa and Birmingham (AL), BMW has a huge complex near Spartanburg (SC) and a car museum (called the 'Zentrum'), Volkswagen is heavily committed in Tennessee.

And the same for the Japanese: Honda has a factory in Lincoln (AL), Toyota in Huntsville (AL), Georgetown (KY) and San Antonio (TX).

These plants represent thosands of southern jobs.

Why do you think that Dixie congresspeople opposed a bailout of Detroit? Freebies to northern US car manufacturers=threat to southern jobs in German/Japanese factories.

[alfred russel]

So when you stop to think about $70 billion (plus more to Chrysler)--is this really still a defensible policy?

Depends on how much the government gets back.

Good point--I'm assuming they get back nothing. I won't be suprised if they actually put more in.

[alfred russel]

Do you guys remember a few months ago when CC suggested JR take over the car czar spot, and JR said no way he is qualified, you need someone with auto industry experience, credibility with unions, etc.

Well, this seems to be the guys we got:

The 31-Year-Old in Charge of Dismantling G.M.
by David E. Sanger
Monday, June 1, 2009
provided by
The New York Times

It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.


Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born. A bit laconic and looking every bit the just-out-of-graduate-school student adjusting to life in the West Wing — "he's got this beard that appears and disappears," says Steven Rattner, one of the leaders of President Obama's automotive task force — Mr. Deese was thrown into the auto industry's maelstrom as soon the election-night parties ended.

http://finance.yahoo.com/family-home/article/107136/The-31-Year-Old-in-Charge-of-Dismantling-G.M.?mod=family-autos

I'd post his picture if I knew how. I'd know I'd feel better with JR there.

[Oexmelin]

A bit laconic and looking every bit the just-out-of-graduate-school student

Indeed. 

[alfred russel]

Thanks Oex.

[Ed Anger]

Oh yes, for those concerned about my "nutty" GM stock purchase, will be pleased to know I sold them at a buck (or a buck and penny,I'd have to look), earning me ~12 cents profit on each share.

Better return than giving it to Tim.

[lustindarkness]

I'd know I'd feel better with JR there.

Me too, can you imagine languish mentioned in a congress hearing?!

[Razgovory]

Oh yes, for those concerned about my "nutty" GM stock purchase, will be pleased to know I sold them at a buck (or a buck and penny,I'd have to look), earning me ~12 cents profit on each share.

Better return than giving it to Tim.

I don't know.  He'll make the same profit in about three years.

[Hansmeister]

Do you guys remember a few months ago when CC suggested JR take over the car czar spot, and JR said no way he is qualified, you need someone with auto industry experience, credibility with unions, etc.

Well, this seems to be the guys we got:

The 31-Year-Old in Charge of Dismantling G.M.
by David E. Sanger
Monday, June 1, 2009
provided by
The New York Times

It is not every 31-year-old who, in a first government job, finds himself dismantling General Motors and rewriting the rules of American capitalism.

But that, in short, is the job description for Brian Deese, a not-quite graduate of Yale Law School who had never set foot in an automotive assembly plant until he took on his nearly unseen role in remaking the American automotive industry.


Nor, for that matter, had he given much thought to what ailed an industry that had been in decline ever since he was born. A bit laconic and looking every bit the just-out-of-graduate-school student adjusting to life in the West Wing — "he's got this beard that appears and disappears," says Steven Rattner, one of the leaders of President Obama's automotive task force — Mr. Deese was thrown into the auto industry's maelstrom as soon the election-night parties ended.

http://finance.yahoo.com/family-home/article/107136/The-31-Year-Old-in-Charge-of-Dismantling-G.M.?mod=family-autos

I'd post his picture if I knew how. I'd know I'd feel better with JR there.

You're doing a heckuva job, Brownie.

[Grey Fox]

Less baby boomers in power position the better it is.