:huh: I'm surprised. Didn't think they'd actually force out CEOs like that.
http://www.msnbc.msn.com/id/29946290/
QuoteNBC: White House told GM boss to step down
Comes on eve of Obama making major announcement about automakers
BREAKING NEWS
msnbc.com news services
updated 18 minutes ago
DETROIT - A senior Obama administration official has told NBC's John Yang that General Motors CEO Rick Wagoner was asked to step down by the administration.
The Associated Press reported that Wagoner will leave the struggling Detroit automaker immediately. The person asked not to be identified because Wagoner's plans have not been formally announced.
The move comes on the eve of President Obama unveiling his plan to reinvigorate the U.S. auto industry. Obama and other administration officials have said they would demand deeper restructuring from General Motors Corp. and Chrysler LLC before they would get any more government loans.
Both GM and Chrysler are living on a total of $17.4 billion in federal aid.
Associated Press contributed to this report.
Quote from: jimmy olsen on March 29, 2009, 05:08:50 PM
:huh: I'm surprised. Didn't think they'd actually force CEOs like that.
Obviously they wouldn't if they were not funding his corporation.
Anyway I have nothing to say on that matter until I see Obama's plan.
OMG ITS COMMUNISM!11111
Quote from: Valmy on March 29, 2009, 05:17:10 PM
Anyway I have nothing to say on that matter until I see Obama's plan.
:lol:
Quote from: Valmy on March 29, 2009, 05:17:10 PM
Anyway I have nothing to say on that matter until I see Obama's plan.
That's a hefty assumption, that Obama actually has a plan, rather than just witchhunting.
When it's all over, you'll all wish that Bush could have served a third term.
Quote from: Neil on March 29, 2009, 05:56:11 PM
When it's all over, you'll all wish that Bush could have served a third term.
Considering how much Obama is on TV, I already do. I'll take Bush's neglect of the last year of his 2nd term over Obama the attention whore.
I better not miss an episode of NCIS because of that fucker. I need my Cote de Pablo fix every week.
Quote from: Neil on March 29, 2009, 05:56:11 PM
Quote from: Valmy on March 29, 2009, 05:17:10 PM
Anyway I have nothing to say on that matter until I see Obama's plan.
That's a hefty assumption, that Obama actually has a plan, rather than just witchhunting.
When it's all over, you'll all wish that Bush could have served a third term.
apropos your avatar, they will come to appreciate the glory that was Nixon one day :cool:
Quote from: Ed Anger on March 29, 2009, 06:01:12 PMConsidering how much Obama is on TV, I already do. I'll take Bush's neglect of the last year of his 2nd term over Obama the attention whore.
I love my rock star President. :blush:
Unlike Clinton, he doesn't even try to be the center of attention. ZOMG BARACK ATTACK...*THUMP*
Quote from: Richard Hakluyt on March 29, 2009, 06:03:26 PM
Quote from: Neil on March 29, 2009, 05:56:11 PM
Quote from: Valmy on March 29, 2009, 05:17:10 PM
Anyway I have nothing to say on that matter until I see Obama's plan.
That's a hefty assumption, that Obama actually has a plan, rather than just witchhunting.
When it's all over, you'll all wish that Bush could have served a third term.
Once the hippies are mostly dead.
apropos your avatar, they will come to appreciate the glory that was Nixon one day :cool:
I guess this isn't too surprising, but GM's problems are systemic, and maybe not this guy's fault? Except if he's not putting through enough change and restructuring while the corp is in serious financial problems, and getting govt bailouts.
If I'm Rick Wagoner, I have to say that I feel really conflicted. ON the one hand, when GM goes down the tubes four months from now, you were already gone. On the other hand, you're missing the opportunity to get sweet gov't cash.
Is it just me, or is there a strange divide in the tone between the way Obama handles the auto companies and the financial companies?
Quote from: Faeelin on March 30, 2009, 09:29:05 AM
Is it just me, or is there a strange divide in the tone between the way Obama handles the auto companies and the financial companies?
He really got screwed over way back when he got talked into buying an AMC Pacer.
Quote from: Faeelin on March 30, 2009, 09:29:05 AM
Is it just me, or is there a strange divide in the tone between the way Obama handles the auto companies and the financial companies?
No, not just you at all. I do find it disgusting that industries that actually make something and require relatively small bailouts are drug through the mud, while those who laid waste to the economy while in no danger of creating any tangible wealth get hundreds of billions quietly.
Quote from: garbon on March 29, 2009, 05:47:20 PM
Quote from: Valmy on March 29, 2009, 05:17:10 PM
Anyway I have nothing to say on that matter until I see Obama's plan.
:lol:
Meh it is still early in his Presidency I am still trying to be fair :blush:
Quote from: Faeelin on March 30, 2009, 09:29:05 AM
Is it just me, or is there a strange divide in the tone between the way Obama handles the auto companies and the financial companies?
It's just you.
Comparing these two bailouts makes little sense.
The auto companies' troubles are essentially "business as usual" when it comes to state aid - they got into the trouble not because of the international financial markets' upheaval, but because they simply suck at what they do and their products did not sell during the time of the boom either. The rules against state aid and protectionism were made to prevent exactly the situations like helping the likes of GM and Chrysler - by propping up "national champions" who are financially unsound and thus distorting international competition.
Besides, as big companies as they are, the fall of GM or Chrysler will be a relatively small ripple in the overall economy.
Neither of this concerns applies to the bail out for the financial industry. While some of the banks may be to blame for the extent of the crisis we are having, none of the could really prevent it on its own or "sell better products" and thus escape the upheaval. And besides, if they would fall, they would take most of the economy down with them.
Quote from: KRonn on March 30, 2009, 09:25:33 AM
I guess this isn't too surprising, but GM's problems are systemic, and maybe not this guy's fault? Except if he's not putting through enough change and restructuring while the corp is in serious financial problems, and getting govt bailouts.
Of course they aren't his fault. The White House just needs a scapegoat in this case.
Quote from: Martinus on March 30, 2009, 09:55:52 AM
The auto companies' troubles are essentially "business as usual" when it comes to state aid - they got into the trouble not because of the international financial markets' upheaval, but because they simply suck at what they do and their products did not sell during the time of the boom either. The rules against state aid and protectionism were made to prevent exactly the situations like helping the likes of GM and Chrysler - by propping up "national champions" who are financially unsound and thus distorting international competition.
Besides, as big companies as they are, the fall of GM or Chrysler will be a relatively small ripple in the overall economy.
Two million more unemployed doens't seem like a small ripple in an already deep recession.
Moreover, it's hard to say that GM is failing because of a poor product, even dring boom times, it's a bit rich to say that "None of the could prevent on its own" the problems. Sure, but the fact that there was a systematic failure within an industry doesn't make me think they weren't failing just because they made a profit based on an unsustainable bubble.
The government is not in the business of helping badly managed companies get out of their financial problems.
We live in extraordinary times, vis-a-vis the financial industry, and this calls for extraordinary measures, such as the bail out for them.
It does not mean we should throw our principles out of the window and help anyone who is just bad at what they do with the taxpayer money.
Quote from: Martinus on March 30, 2009, 09:55:52 AM
The auto companies' troubles are essentially "business as usual" when it comes to state aid - they got into the trouble not because of the international financial markets' upheaval, but because they simply suck at what they do and their products did not sell during the time of the boom either. The rules against state aid and protectionism were made to prevent exactly the situations like helping the likes of GM and Chrysler - by propping up "national champions" who are financially unsound and thus distorting international competition.
That's actually not true (shock, horror). The Big Three were not healthy companies before the bust, but they were getting better and reforming. The problem was that they were vulnerable to a downturn, and boy, what a downturn this turned out to be. As for their products not selling during the boom times, then it's close (by your standards), but not quite true. Ford F-150 and Chevy Silverado are consistently the top two sellers in US. GM was also until last year the #1 car maker by volume.
I wonder if dgs anger is driven by the fact that the auto companies problems are basically all about unions, while the financial sector has no unions to speak of?
Fuck the UAW, and fuck auto company bailouts that are nothing more than bailing out unions and protecting union jobs.
Quote from: Berkut on March 30, 2009, 10:21:31 AM
I wonder if dgs anger is driven by the fact that the auto companies problems are basically all about unions
:yeahright:
Haven't we been over this many many times before? Management has an equal share in this despite your eagerness to blame everything on the Union Bogeyman.
Quote from: Valmy on March 30, 2009, 10:24:20 AM
Quote from: Berkut on March 30, 2009, 10:21:31 AM
I wonder if dgs anger is driven by the fact that the auto companies problems are basically all about unions
:yeahright:
Haven't we been over this many many times before? Management has an equal share in this despite your eagerness to blame everything on the Union Bogeyman.
The root cause of the problem was that Big Three was effectively an olygopoly for a long time, just like the airlines. Oligopoly leads to unions being able to extort unreasonable concessions that leave unbearable legacy costs in the future, and it leads to management not caring too much about actually managing effectively. It's extremely difficult to root out the rot that lack of competition allows to set.
Quote from: Valmy on March 30, 2009, 10:24:20 AM
Quote from: Berkut on March 30, 2009, 10:21:31 AM
I wonder if dgs anger is driven by the fact that the auto companies problems are basically all about unions
:yeahright:
Haven't we been over this many many times before? Management has an equal share in this despite your eagerness to blame everything on the Union Bogeyman.
Indeed, management was stupid enough to knuckle under to the unions.
The situation with the unions means that no matter what management does, it will fail. Shitty management will make it fail sooner, but great management cannot change the fundamental equations.
Quote from: DGuller on March 30, 2009, 10:29:35 AM
Quote from: Valmy on March 30, 2009, 10:24:20 AM
Quote from: Berkut on March 30, 2009, 10:21:31 AM
I wonder if dgs anger is driven by the fact that the auto companies problems are basically all about unions
:yeahright:
Haven't we been over this many many times before? Management has an equal share in this despite your eagerness to blame everything on the Union Bogeyman.
The root cause of the problem was that Big Three was effectively an olygopoly for a long time, just like the airlines. Oligopoly leads to unions being able to extort unreasonable concessions that leave unbearable legacy costs in the future, and it leads to management not caring too much about actually managing effectively. It's extremely difficult to root out the rot that lack of competition allows to set.
Indeed - at this point, the only way to get out of those legacy contracts is bankruptcy. Certainly the unions will never voluntarily give them up.
That is why, as far as I am concerned, every single dollar given to the Big Three is a a dollar handed to a union. It will do nothing to fundamentally change anything - just allow the unions to continue employing people at stupid labor rates for a little longer. And a little longer. And a little longer.
It is like giving more blood to a patient who is bleeding to death because his left leg has been cut off while ignoring the fact that he has no leg. You can keep pumping in blood to keep him alive, but unless you do something about the root problem, it won't matter in the end.
Fortune Magazine has an article up on Wagoner:
QuoteHe could have been a contender
Rick Wagoner is a hard-working, well-meaning guy who could have been remembered as one of GM's greatest CEOs.
GM Chief Executive Rick Wagoner
NEW YORK (Fortune) -- The resignation of General Motors chairman and CEO Rick Wagoner has been rumored for weeks, if not months.
After all, GM has lost more than $80 billion over the last four years and is dependent on handouts from the federal government for survival on a day-to-day basis. Something had to give.
The past several months have not been Wagoner's finest hour. He looked uncomfortable and out of sorts during congressional hearings. And his public statements to present a rationale for the federal aid needed to keep GM alive have seemed lame and unconvincing.
But, if Wagoner had retired on January 1, 2008 instead of March 29, 2009, he might have been remembered as one of GM's greatest leaders.
Without fanfare, he negotiated an historic agreement with the United Auto Workers to reduce the burden of pension and health care costs and to make its hourly labor costs more competitive.
He was also in the final stages of the consolidation of GM's North American operations after a century of balkanization. At last, what was then the world largest auto company would be able to leverage its global scale to become cost- and efficiency-competitive.
None of this was accomplished easily, or without the shedding of thousands of blue- and white-collar workers. But through it all, Wagoner retained the respect and loyalty of the vast majority of GM's enormous workforces.
His achilles heel
What finally did Wagoner in was his misplaced respect for GM's traditions and his failure to foresee a spike in oil prices followed by the collapse of credit markets and the onrushing economic meltdown.
With the memory of GM's disastrous 1980s reorganization still fresh in his mind, Wagoner resisted the large-scale restructuring that GM demanded. Instead of making the company more efficient by doing things differently, he was content to keep doing things the same way but with fewer people.
At a time when Japanese competitors like Toyota (TM) and Honda (HMC) were constantly making improvements, that strategy proved inadequate. Even Ford (F, Fortune 500) began to perform more dynamically than GM (GM, Fortune 500). The dictum that you can't cost-cut your way to prosperity was proved in spades by GM under Wagoner.
Secondly, Wagoner remained loyal to GM's outmoded structure of brands, nameplates and dealers. As GM's market share continued to shrink, he kept trying to develop enough new models to feed eight separate brands and nearly as many separate dealer groups. He never developed a strategy for disposing of the brands and the dealers through benign neglect.
Under pressure from the government, GM finally came up with a plan to get rid of Saab, Saturn, and Hummer, and to downsize Pontiac, but the company belatedly admitted that it was moving several years too late.
In fact, it was 20 years too late, because GM has struggled for at least that long to maintain a credible rationale for each brand and to allocate enough financial resources to keep them all viable.
Finally, Wagoner failed to make the personnel moves that he needed to assure that GM operated with peak efficiency and to admit some fresh air into its closed, inward-looking culture.
That's astounding because Wagoner's recruitment of industry veteran Bob Lutz to run GM's global product development was one of his masterstrokes. Lutz took charge at GM like the Marines taking Mount Suribachi, establishing a coherent, flexible product planning process and returning GM's design operation to its rightful place at the pinnacle of the process.
But Wagoner never followed up his success with Lutz by recruiting other outsiders, leaving it to Ford and Chrysler to recruit Toyota stars Jim Farley and Jim Press.
And despite the clear failure of several staff functions to perform adequately, Wagoner never let anybody go. He despised ritual hangings to keep survivors on their toes and couldn't find it in himself to move anyone aside for poor performance.
The collapse of General Motors is a tragedy in several regards, but nowhere more so than in the case of Wagoner. Having become chief financial officer at the age of 39 during GM's last crisis in 1992, he performed loyally and uncomplainingly throughout his entire career. In other circumstances, he could have been a superstar.
Whenever anyone asked him whether GM's problems were so enormous and so intractable that he just wanted to throw in the towel, he reminded them that he had had some experience in competitive athletics as a basketball player, and that he enjoyed a good challenge.
The challenge finally got the best of him, and GM will be lucky to find anyone so decent to succeed him.
They make some good points; but the parts about the need to shut down dealerships and brands are misleading. Due to franchise laws it's very difficult and very expensive to eliminate dealerships and brands; it's not something that can be done quickly or cheaply.
Quote from: DGuller on March 30, 2009, 10:29:35 AM
The root cause of the problem was that Big Three was effectively an olygopoly for a long time, just like the airlines. Oligopoly leads to unions being able to extort unreasonable concessions that leave unbearable legacy costs in the future, and it leads to management not caring too much about actually managing effectively. It's extremely difficult to root out the rot that lack of competition allows to set.
The oligopoly is also the reason why there is an excess of dealerships; many came into being before the 1970s when Ford, Chrysler and GM controlled the vast share of the American auto market. As foreign competition increased the big three were still stuck with the same number of dealers and, due to franchise laws, were unable to cut back on that front.
Why do we even need dealerships to sell cars? It just seems like such a wasteful arrangement to me. Is there any reason why car makers couldn't just operate their own distribution networks directly?
Quote from: DGuller on March 30, 2009, 10:43:08 AM
Why do we even need dealerships to sell cars? It just seems like such a wasteful arrangement to me. Is there any reason why car makers couldn't just operate their own distribution networks directly?
As I understand it, franchise laws and the political power of the dealers have prevented car makers from changing the existing model. Auto manufacturers have wanted to do things like sell cars online, but the dealerships have blocked that so far.
Quote from: Savonarola on March 30, 2009, 10:49:01 AM
As I understand it, franchise laws and the political power of the dealers have prevented car makers from changing the existing model. Auto manufacturers have wanted to do things like sell cars online, but the dealerships have blocked that so far.
That explains why things stay the way they do, but I still wonder why the model ever evolved that way in the first place.
Quote from: DGuller on March 30, 2009, 10:51:36 AM
That explains why things stay the way they do, but I still wonder why the model ever evolved that way in the first place.
I don't know for sure. I would guess that it was a cheap way to build a national distribution network in the first decades of the 20th century when the automotive industry was started. Prior to the 1930s there were a lot of automobile companies; and some of them were quite small.
Quote from: DGuller on March 30, 2009, 10:51:36 AM
Quote from: Savonarola on March 30, 2009, 10:49:01 AM
As I understand it, franchise laws and the political power of the dealers have prevented car makers from changing the existing model. Auto manufacturers have wanted to do things like sell cars online, but the dealerships have blocked that so far.
That explains why things stay the way they do, but I still wonder why the model ever evolved that way in the first place.
In the 1920's they only had dial-up. It was to slow to buy anything online.
Obama should airlift in Maggie and break the unions.
Quote from: DGuller on March 30, 2009, 10:51:36 AM
That explains why things stay the way they do, but I still wonder why the model ever evolved that way in the first place.
It's not like people by most products direct from the manufacturer; while that has changed a bit in some industries in recent years due to the internet, most people buy things from retail outlets of one type of another, and those outlets are only very rarely owned by the manufacturer.
If they can't even build cars why would they be able to sell cars?
Quote from: The Brain on March 30, 2009, 11:48:50 AM
If they can't even build cars why would they be able to sell cars?
Oh, they build plenty of cars. Selling them has been the problem.
Quote from: dps on March 30, 2009, 11:51:38 AM
Quote from: The Brain on March 30, 2009, 11:48:50 AM
If they can't even build cars why would they be able to sell cars?
Oh, they build plenty of cars. Selling them has been the problem.
:ike:
Quote from: jimmy olsen on March 29, 2009, 05:08:50 PM
:huh: I'm surprised. Didn't think they'd actually force out CEOs like that.
http://www.msnbc.msn.com/id/29946290/
I declare Obama a pussy. A real man would have said something like
Quote"Cornelius Gallus is no longer a friend of mine."
Quote from: dps on March 30, 2009, 11:47:18 AM
It's not like people by most products direct from the manufacturer; while that has changed a bit in some industries in recent years due to the internet, most people buy things from retail outlets of one type of another, and those outlets are only very rarely owned by the manufacturer.
That's true, but when I go to Sears, I can look at and buy many brands there, which is the advantage of having stores. Dealerships, on the other hand, mostly sell only one or two brands, so to me they seem like an extra middle man without value added.
Quote from: DGuller on March 30, 2009, 12:05:07 PM
Quote from: dps on March 30, 2009, 11:47:18 AM
It's not like people by most products direct from the manufacturer; while that has changed a bit in some industries in recent years due to the internet, most people buy things from retail outlets of one type of another, and those outlets are only very rarely owned by the manufacturer.
That's true, but when I go to Sears, I can look at and buy many brands there, which is the advantage of having stores. Dealerships, on the other hand, mostly sell only one or two brands, so to me they seem like an extra middle man without value added.
Dealerships allowed the distribution network to spread more quickly, and from the point of the manufacturers, much more cheaply. And now they're juiced in.
Quote from: DGuller on March 30, 2009, 09:43:46 AM
No, not just you at all. I do find it disgusting that industries that actually make something and require relatively small bailouts are drug through the mud, while those who laid waste to the economy while in no danger of creating any tangible wealth get hundreds of billions quietly.
Are you joking? The auto companies have been dragged through the mud only to the extent that there was criticism of the CEOs taking private jets to Congressional hearings, and there has been nothing quiet about TARP.
Quote from: Admiral Yi on March 30, 2009, 12:53:46 PM
Are you joking? The auto companies have been dragged through the mud only to the extent that there was criticism of the CEOs taking private jets to Congressional hearings, and there has been nothing quiet about TARP.
The automotive CEOs had a couple grueling hearings before congress; Chrysler and GMs requests for bailouts were met with 11th hour requests for concessions from bond holders and UAW members (and even after that they were rejected.) The loans eventually came through TARP and the UAW members had to take a pay cut. Now the auto industry has been given strict time lines to restructure. The CEO of GM has been told to resign.
There may be very good reasons to treat the industries differently; but to me it seems that the automotive companies have had a much harder time securing much smaller loans than the financial institutions.
Talk about comparing apples to oranges.
They are not the same, the reasons for bailing them out are not the same, and there is no particular reason to think that they ought to be the same.
MMO companies are having an even harder time securing bailouts! ZOMG! It's so unfair!
Quote from: Savonarola on March 30, 2009, 01:14:38 PM
The automotive CEOs had a couple grueling hearings before congress; Chrysler and GMs requests for bailouts were met with 11th hour requests for concessions from bond holders and UAW members (and even after that they were rejected.) The loans eventually came through TARP and the UAW members had to take a pay cut. Now the auto industry has been given strict time lines to restructure. The CEO of GM has been told to resign.
There may be very good reasons to treat the industries differently; but to me it seems that the automotive companies have had a much harder time securing much smaller loans than the financial institutions.
I'm not sure Lehman, Bear Sterns, Washington Mutual, IndyMac and a couple hundred smaller banks would agree with that.
Quote from: Berkut on March 30, 2009, 01:19:23 PM
Talk about comparing apples to oranges.
They are not the same, the reasons for bailing them out are not the same, and there is no particular reason to think that they ought to be the same.
Nor did i say that there was; however I don't think Yi accurately characterized the difficulties Chrysler and GM had in getting their loans.
QuoteGOVERNMENT WARRANTY
It is my hope that the steps I am announcing today will go a long way towards answering many of the questions people may have about the future of GM and Chrysler. But just in case there are still nagging doubts, let me say it as plainly as I can -- if you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warrantee will be safe.
In fact, it will be safer than it's ever been. Because starting today, the United States government will stand behind your warrantee.
booyah. I'm pleased. I'm going to wrap my Challenger around a light pole now.
Quote from: Admiral Yi on March 30, 2009, 01:24:10 PM
I'm not sure Lehman, Bear Sterns, Washington Mutual, IndyMac and a couple hundred smaller banks would agree with that.
But GM and Chrysler would. ;)
Quote from: Ed Anger on March 30, 2009, 01:25:10 PM
booyah. I'm pleased. I'm going to wrap my Challenger around a light pole now.
What does this have to do with warranty? Wrapping your car around the pole is what you should do if the warranty becomes worthless. You'll get your insurance money and wash your hands of the car. Warranty guarantee is for those who will not wrap their Chrysler cars around the pole, and thus will have to do extensive repairs every couple of months to keep their cars going.
Quote from: DGuller on March 30, 2009, 01:27:53 PM
Quote from: Ed Anger on March 30, 2009, 01:25:10 PM
booyah. I'm pleased. I'm going to wrap my Challenger around a light pole now.
What does this have to do with warranty? Wrapping your car around the pole is what you should do if the warranty becomes worthless. Warranty guarantee is for those who will not wrap their Chrysler cars around the pole, and thus will have to do extensive repairs every couple of months to keep their cars going.
IT IS A JOKE. Jesus Tapdancing Christ, you people sometimes.
Damn it, my Pontiac isn't insurable by the manufacturer anymore :(
Quote from: Grey Fox on March 30, 2009, 01:31:53 PM
Damn it, my Pontiac isn't insurable by the manufacturer anymore :(
NO WARRANTY FOR CANADIANS!
(https://languish.org/forums/proxy.php?request=http%3A%2F%2F1.bp.blogspot.com%2F_bEeoqPfDBLw%2FRsQhO3zL8wI%2FAAAAAAAAAPY%2FrnL5kxnBOzM%2Fs320%2Fsoupnazi.jpg&hash=8a1d07787bc59d427168848b2b738c94b7ecb8ca)
Quote from: DGuller on March 30, 2009, 12:05:07 PM
Dealerships, on the other hand, mostly sell only one or two brands
Unless you consider the used car market.
Quote from: Savonarola on March 30, 2009, 01:25:56 PM
But GM and Chrysler would. ;)
If GM thinks it's tougher for them to get bailout money than it was for Washington Mutual they need to rethink their position.
Faelin: That 2 million figure is one put out by GM spin doctors and has been debunked. It includes Ford workers and 100% of supplier workers, even those selling to the Japs. IIRC GM, Chrysler and their share of suppliers going under would result in 800K on the streets.
Well Wagoner leaves with a $20 million retirement cushion so I won't shed a tear over him getting canned.
http://abcnews.go.com/Blotter/story?id=7208201 (http://abcnews.go.com/Blotter/story?id=7208201)
Quote
PAYDAY: GM's Rick Wagoner Drives Away with $20M Retirement
Critic Calls Multi-Million Package "Perfect Example" of Frustration with Industry
By MICHELLE LEDER and JUSTIN ROOD
March 30, 2009
Rick Wagoner will leave his post as CEO of bailed-out General Motors with a $20 million retirement package, the company's financial filings show.
General Motors Chief Executive Officer Richard Wagoner Steps Down
Although the Treasury Department has barred GM from paying severance to Wagoner or any other senior executive, Wagoner is eligible to collect millions in retirement benefits from his former employer, according to the documents reviewed by ABC News.
The Obama administration asked for Wagoner to resign Sunday, as part of its restructuring of the auto industry. President Obama said this morning that forcing Wagoner out indicated it was a time for new leadership.
Under Wagoner's leadership, GM lost tens of billions of dollars, took billions in taxpayer-financed aid, and cut tens of thousands of jobs, including announced plans to cut 47,000 employees by the end of 2009.
Upon his departure, Wagoner becomes eligible for both a "Salaried Retirement Plan" and an "Executive Retirement Plan" with General Motors. The combined value of the plans at the end of last year was $20.2 million, according to the company's filings with the SEC, although compensation experts said his age -- 56 -- may make him ineligible for the entire amount.
"Most of that will be paid out as an annuity over five years, the remainder is a small lifetime annuity," GM spokeswoman Julie M. Gibson said in an email earlier today. But in a subsequent "clarification" email after this story published, Gibson said that the terms of Wagoner's final compensation were not yet hammered out. "Specifics on any compensation entitled to, or actually paid to Mr. Wagoner are still being reviewed," she wrote.
"I think it's another perfect example of why there's so much frustration among working people," said Tiffany Ten Eyck of Labor Notes, a Detroit-based independent publication covering unions. "I wouldn't mind retiring out of an industry in crisis with a $20 million package."
GM has received billions in loans from the U.S. Treasury Department, and recently asked for billions more. Under its agreement with Treasury, it cannot pay severance fees to senior executives. That ban does not appear to apply to retirement benefits, however.
Wagoner began his career at GM in 1977, working as an analyst for its New York treasurer's office. Wagoner was promoted to several positions within the company, including managerial roles in Europe and South America, before being named CEO in 2000.
Wagoner received compensation topping $63 million during his tenure as a GM executive from 1992 through 2008, according to an analysis of company data.
Last November, ABC News cameras spotted Wagoner in Washington, D.C. arriving on GM's $36 million luxury aircraft. He had come to the nation's capital to tell members of Congress that the company was burning through cash, and needed over $10 billion in U.S. taxpayer funds to stay afloat.
In a followup visit to Washington in December, Wagoner arrived in a Chevy Malibu hybrid. GM announced plans to sell its corporate luxury jet fleet that same month.
I would imagine Wagoner will clean up on a lawsuit or two as well.
Quote from: Vince on March 30, 2009, 02:35:03 PM
Well Wagoner leaves with a $20 million retirement cushion so I won't shed a tear over him getting canned.
I doubt there is anyone here shedding a tear over Wagoner's situation. The issue with this story is what exactly canning him is supposed to accomplish. "New leadership" is not a plan or a policy, it's a slogan.
Well, I guess that solves everything.
Quote from: Martinus on March 30, 2009, 09:55:52 AMThe auto companies' troubles are essentially "business as usual" when it comes to state aid - they got into the trouble not because of the international financial markets' upheaval, but because they simply suck at what they do and their products did not sell during the time of the boom either.
To be fair, virtually the entire auto industry is in deep trouble right now. I work in the auto industry and my company posted record profits until summer 2008, but afterwards it went downhill so fast that there is no precedence. The business just crumbled. And it is the same almost in the entire industry. So while GM and Chrysler do have very serious structural problems those problems are excerbated by the economical crisis.
Quote from: Caliga on March 30, 2009, 09:55:53 AMOf course they aren't his fault. The White House just needs a scapegoat in this case.
If you can't blame the CEO for years of mismanagement and producing an $80 bn loss over the last two years, who can you blame?
Quote from: Zanza2 on March 30, 2009, 05:38:50 PM
If you can't blame the CEO for years of mismanagement and producing an $80 bn loss over the last two years, who can you blame?
If quote unquote mismanagement were the sole or primary reason for the loss then he would deserve to be sacked. But it seems in this case mismanagement is being used as a synonym for bad outcome.
For example I caught a soundbyte on the news which made it sound like part of the White House bill of particulars against Wagoner was that he didn't "negotiate strenuously enough with labor unions and GM creditors." Does that seem fair to you? If the unions and lenders don't give up enough to restore GM to profitability is that Wagoner's fault?
Quote from: Admiral Yi on March 30, 2009, 06:33:48 PM
Quote from: Zanza2 on March 30, 2009, 05:38:50 PM
If you can't blame the CEO for years of mismanagement and producing an $80 bn loss over the last two years, who can you blame?
If quote unquote mismanagement were the sole or primary reason for the loss then he would deserve to be sacked. But it seems in this case mismanagement is being used as a synonym for bad outcome.
For example I caught a soundbyte on the news which made it sound like part of the White House bill of particulars against Wagoner was that he didn't "negotiate strenuously enough with labor unions and GM creditors." Does that seem fair to you? If the unions and lenders don't give up enough to restore GM to profitability is that Wagoner's fault?
Ceding the high-efficiancy market to Honda and Toyota could be considered mismanagement, as could maintaining the bloated multiplicity of brands, many in direct competition with each other.
Quote from: Neil on March 30, 2009, 06:55:55 PM
Ceding the high-efficiancy market to Honda and Toyota could be considered mismanagement, as could maintaining the bloated multiplicity of brands, many in direct competition with each other.
What do you mean by high-efficiency market?
I agree about the brands, but others have said dealership arrangements impose restrictions.
Quote from: Admiral Yi on March 30, 2009, 06:59:45 PM
What do you mean by high-efficiency market?
Cars that get good gas mileage like Prius, Civic and Corolla.
Quote from: Neil on March 30, 2009, 07:06:55 PM
Cars that get good gas mileage like Prius, Civic and Corolla.
You do realize that Detroit sells smaller cars at a loss, don't you?
Quote from: Zanza2 on March 30, 2009, 05:38:50 PM
Quote from: Caliga on March 30, 2009, 09:55:53 AMOf course they aren't his fault. The White House just needs a scapegoat in this case.
If you can't blame the CEO for years of mismanagement and producing an $80 bn loss over the last two years, who can you blame?
Jaron. Duh.
Quote from: Admiral Yi on March 30, 2009, 07:17:13 PM
Quote from: Neil on March 30, 2009, 07:06:55 PM
Cars that get good gas mileage like Prius, Civic and Corolla.
You do realize that Detroit sells smaller cars at a loss, don't you?
And yet well-managed companies make money, and smaller, more efficient cars are the future. Their mismangement has put them in a position where success is impossible.
Quote from: Neil on March 30, 2009, 07:45:12 PM
And yet well-managed companies make money, and smaller, more efficient cars are the future. Their mismangement has put them in a position where success is impossible.
Legacy benefits add $1,500 to the cost of each GM car. There's also a quality perception gap of about $2,000--i.e. consumers think GM cars are $2,000 worse than they really are. So to go head to head with the Nips GM has to build a car that's $3,500 better and price it the same.
Now you can argue that the quality perception gap is just GM's chickens coming home to roost from the crap they put out in the 70s. But I don't see how you can pin that on Wagoner.
Quote from: Admiral Yi on March 30, 2009, 06:33:48 PM
Quote from: Zanza2 on March 30, 2009, 05:38:50 PM
If you can't blame the CEO for years of mismanagement and producing an $80 bn loss over the last two years, who can you blame?
If quote unquote mismanagement were the sole or primary reason for the loss then he would deserve to be sacked. But it seems in this case mismanagement is being used as a synonym for bad outcome.
For example I caught a soundbyte on the news which made it sound like part of the White House bill of particulars against Wagoner was that he didn't "negotiate strenuously enough with labor unions and GM creditors." Does that seem fair to you? If the unions and lenders don't give up enough to restore GM to profitability is that Wagoner's fault?
that wasn't the only reason he was fired though. they had a list. since the company is in crisis and on tax support in as many countries as they can get cash from, it's not business as usual. but in the end, the buck always stops at the top. and Wagonboy himself being now has 20 million reasons why this is a good thing.
Quote from: Admiral Yi on March 30, 2009, 08:09:39 PM
Quote from: Neil on March 30, 2009, 07:45:12 PM
And yet well-managed companies make money, and smaller, more efficient cars are the future. Their mismangement has put them in a position where success is impossible.
Legacy benefits add $1,500 to the cost of each GM car. There's also a quality perception gap of about $2,000--i.e. consumers think GM cars are $2,000 worse than they really are. So to go head to head with the Nips GM has to build a car that's $3,500 better and price it the same.
Now you can argue that the quality perception gap is just GM's chickens coming home to roost from the crap they put out in the 70s. But I don't see how you can pin that on Wagoner.
Actually, what the quality gap means is that consumers will pay a $2,000 premium to avoid driving a GM. It has nothing to do with the actual quality of the car.
Still, GM has failed to close all their American factories and outsource the jobs to other countries. They have failed catastrophically.
Quote from: saskganesh on March 30, 2009, 08:26:26 PM
that wasn't the only reason he was fired though. they had a list. since the company is in crisis and on tax support in as many countries as they can get cash from, it's not business as usual. but in the end, the buck always stops at the top. and Wagonboy himself being now has 20 million reasons why this is a good thing.
Do you remember what else was on the list?
Quote from: Neil on March 30, 2009, 07:06:55 PMCars that get good gas mileage like Prius, Civic and Corolla.
The Civic and the Corolla are really great products, the Prius is more of a marketing bubble. It's actually not getting better mileage than say Civics or Corollas with modern engines. And the production of hybrids is so much more resource intensive that whatever would save in fuel consumption would still not compensate what you had to put into it in the first place.
Quote from: Zanza2 on March 31, 2009, 06:17:28 AM
Quote from: Neil on March 30, 2009, 07:06:55 PMCars that get good gas mileage like Prius, Civic and Corolla.
The Civic and the Corolla are really great products, the Prius is more of a marketing bubble. It's actually not getting better mileage than say Civics or Corollas with modern engines. And the production of hybrids is so much more resource intensive that whatever would save in fuel consumption would still not compensate what you had to put into it in the first place.
That's not the point. The point is that out of the top ten cars in the US last month, spots 1-6 and 9 are owned by foreign manufacturers. Out of roughly 140,000 top ten cars sold in February, more than 3/4 of them were from Toyota, Nissan, Honda and Hyundai. And this is in the Big Three's backyard.
They have primed themselves for failure by allowing the largest section of the market to be taken away from them.
Quote from: Admiral Yi on March 30, 2009, 08:09:39 PM
Legacy benefits add $1,500 to the cost of each GM car. There's also a quality perception gap of about $2,000--i.e. consumers think GM cars are $2,000 worse than they really are. So to go head to head with the Nips GM has to build a car that's $3,500 better and price it the same.
Now you can argue that the quality perception gap is just GM's chickens coming home to roost from the crap they put out in the 70s. But I don't see how you can pin that on Wagoner.
Where did you that number?
Quote from: Admiral Yi on March 30, 2009, 08:51:17 PM
Quote from: saskganesh on March 30, 2009, 08:26:26 PM
that wasn't the only reason he was fired though. they had a list. since the company is in crisis and on tax support in as many countries as they can get cash from, it's not business as usual. but in the end, the buck always stops at the top. and Wagonboy himself being now has 20 million reasons why this is a good thing.
Do you remember what else was on the list?
first off I don't watch your tv programs. If you don't pay attention, I cannot help you. :P
offhand: failure to properly downsize, failure to come up a plan to merge/buy Fiat (or anyone else), failure to reform dealer network, not just failure to negotiate with bondholders and union.
Quote from: Razgovory on March 31, 2009, 10:26:37 AM
Where did you that number?
$1,500 from TV (CNN?), $2,000 from Time.
Quote from: Admiral Yi on March 30, 2009, 08:09:39 PM
Legacy benefits add $1,500 to the cost of each GM car.
And how did that come to be? Companies that pay defined benefits are supposed to set aside annual reserves which are then invested. The annual cost to the company is thus a function of the total benefit that needs to be paid, and the expected rate of return (ROR) on the benefit fund.
What happened is that the car companies decided to make unrealistic assumptions about the long-run rate of return. GM for example assumed 10 percent. During the bull market of the 90s, those assumptions held up and the company was even able to use high returns to cut back on contribution flows. Even after the run ended, GM only cut back ROR to 9 percent. This allowed the company to do things like gain paper profits on bizarre accounting tricks - for example, GM once borrowed over $10 billion on the bond market at 7.5% and then put the money in the pension fund. It then immediately booked hundreds of millions in profit based on the expected 9 percent return on the pension fund!
These accounting games are all fine and dandy, except that to no one's surprise, the GM pension fund has not in fact returned 9-10 percent over the last decade. That shortfall has to be made up and making it up requires taking a hit on the income statement. And there lies the source of much of the legacy cost overhang.
OK, but what does that have to do with Wagoner?
As an aside, do you know by any chance whether the retiree health plan (as opposed to pensions) is funded out of current revenue?
Quote from: Admiral Yi on March 30, 2009, 06:33:48 PM
If quote unquote mismanagement were the sole or primary reason for the loss then he would deserve to be sacked. But it seems in this case mismanagement is being used as a synonym for bad outcome.
For example I caught a soundbyte on the news which made it sound like part of the White House bill of particulars against Wagoner was that he didn't "negotiate strenuously enough with labor unions and GM creditors." Does that seem fair to you? If the unions and lenders don't give up enough to restore GM to profitability is that Wagoner's fault?
I kind of agree that Wagoner got scapegoated but the plain truth is that GM and the others made big mistakes, and he bears some of the responsbility for that. Let's say for the sake of argument (only) that we let him off the hook for the strategic blunder of putting all the company eggs in the SUV basket. That still leaves the problem that the Big 3 (with GM in shaky lead) seriously overinvested in production capacity given the market base. And when it became apparent that production levels were unsustainable, rather than take necessary steps to retrench, GM's response (and Ford and Chrysler) was to jam more product down with margin-busting price incentives, and "zero money down" sweetheart credit offers arranged through their financing arms. That temporarily staved off the day of reckoning, but only by guranteeing that when that day came, it would be even more painful.
Yes the unions bear blame, but this is not unique to the Big 3. There are unions in Germany as well - plus they have those crazy co-determination rules where lathe operators get seats on the board, and there are enormous social contributions taxes to pay. Renault has to deal with French labor conditions and social charges which aren't fun either. Every company has to deal with their own set of challenges. As it so happened, GM failed to overcome theirs. And at some point, the guy in charge has to held accountable.
I'd say this is a muddy mix. Wagoner mismanaged things? Certainly. It should have been a quiet separation, though; UAW needs to be taking more fire from this- their workers earn up to TWICE that of comparable non-union personnel, and yet UAW refused to BUDGE on payroll. People need to remember this when plants start closing down and UAW members find the supply of jobs in their hiring halls drying up. The media blitz surrounding Wagoner is still diverting attention away from serious money pits in the auto industry.
Quote from: The Minsky Moment on March 31, 2009, 03:51:11 PM
Quote from: Admiral Yi on March 30, 2009, 08:09:39 PM
Legacy benefits add $1,500 to the cost of each GM car.
And how did that come to be? Companies that pay defined benefits are supposed to set aside annual reserves which are then invested. The annual cost to the company is thus a function of the total benefit that needs to be paid, and the expected rate of return (ROR) on the benefit fund.
What happened is that the car companies decided to make unrealistic assumptions about the long-run rate of return. GM for example assumed 10 percent. During the bull market of the 90s, those assumptions held up and the company was even able to use high returns to cut back on contribution flows. Even after the run ended, GM only cut back ROR to 9 percent. This allowed the company to do things like gain paper profits on bizarre accounting tricks - for example, GM once borrowed over $10 billion on the bond market at 7.5% and then put the money in the pension fund. It then immediately booked hundreds of millions in profit based on the expected 9 percent return on the pension fund!
These accounting games are all fine and dandy, except that to no one's surprise, the GM pension fund has not in fact returned 9-10 percent over the last decade. That shortfall has to be made up and making it up requires taking a hit on the income statement. And there lies the source of much of the legacy cost overhang.
Thanks for touching upon this. I myself am always a little confused when some Big Three diehard says that US carmakers are at a disadvantage because they have a lot of retired workers to support, while Japanese carmakers gain an unfair advantage by not having them in their own American plants.
I always thought that when a company has a pension fund, it funds it the moment a liability is incurred, and not when the worker retires and starts receiving payments. Therefore in theory it doesn't matter if you have ten retired workers for every working one, or none at all, all those liabilities should've been taken care of long time ago. However, I'm a property/casualty actuary, not a pension actuary, which means I'm pretty much a layman when it comes to nuts and bolts of this.
Quote from: Admiral Yi on March 31, 2009, 03:56:17 PM
As an aside, do you know by any chance whether the retiree health plan (as opposed to pensions) is funded out of current revenue?
What is supposed to happen is that regular contributions are supposed to be made to the benefit trusts, but if those contributions prove insufficient given the expected liability, there has to be additional amounts reserved, and that has to be taken out of operating revenue.
Quote from: Ed Anger on March 30, 2009, 01:25:10 PM
QuoteGOVERNMENT WARRANTY
It is my hope that the steps I am announcing today will go a long way towards answering many of the questions people may have about the future of GM and Chrysler. But just in case there are still nagging doubts, let me say it as plainly as I can -- if you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warrantee will be safe.
In fact, it will be safer than it's ever been. Because starting today, the United States government will stand behind your warrantee.
booyah. I'm pleased. I'm going to wrap my Challenger around a light pole now.
Yeah, have fun dealing with the government to get your warranty honored. This won't be the same as cheese distribution.
Quote from: derspiess on March 31, 2009, 04:20:20 PM
Yeah, have fun dealing with the government to get your warranty honored. This won't be the same as cheese distribution.
What makes you think that? :unsure:
Quote from: derspiess on March 31, 2009, 04:20:20 PM
Yeah, have fun dealing with the government to get your warranty honored. This won't be the same as cheese distribution.
So it will be just like dealing with my car insurance company? :P
Quote from: DGuller on March 31, 2009, 04:11:21 PM
I always thought that when a company has a pension fund, it funds it the moment a liability is incurred, and not when the worker retires and starts receiving payments.
That is what is supposed to happen. And logically, because these obligations represent committments over decades of time, the company should just pick a realistic rate of return, and make regular contributions at a level rate per retiree given that ROR, with the understanding that some years you will outperform and some years you will underperform, given the nature of the markets. But the Big 3 could not resist taking huge profits off of their pension fund outperformance in the 90s bull market. GM took that extra money and used it to help pay out their dividend and do brilliant things like give Fiat a $2 billion put option for a JV it later abandoned. When - predictably - the market turned, GM had to make up the losses. For a few years, they put it off through various accounting gimmicks. Now, their approach is to complain about "legacy costs" and burn through tens of billions of dollars in federal aid money.
Quote from: DGuller on March 31, 2009, 04:23:24 PM
What makes you think that? :unsure:
If the company goes under you lose the dealer network that currently does the warranty work. So at the very least you're going to have issues of third parter payers.
Quote from: Admiral Yi on March 31, 2009, 04:30:07 PM
Quote from: DGuller on March 31, 2009, 04:23:24 PM
What makes you think that? :unsure:
If the company goes under you lose the dealer network that currently does the warranty work. So at the very least you're going to have issues of third parter payers.
But don't the dealers get paid by the manufacturer for the warranty work?
Quote from: derspiess on March 31, 2009, 04:20:20 PM
Yeah, have fun dealing with the government to get your warranty honored. This won't be the same as cheese distribution.
Obamamessiah will send me a check personally.
And stop opening the wounds by reminding me of that delicious cheese.
Quote from: DGuller on March 31, 2009, 04:33:48 PM
But don't the dealers get paid by the manufacturer for the warranty work?
Sure, but I assume that the dealer relationship makes it easier to confirm that the work is covered by the warranty and for the manufacturer to confirm that the work they're paying for is actually being performed. Maybe not.
Quote from: Admiral Yi on March 30, 2009, 03:31:54 PM
Quote from: Vince on March 30, 2009, 02:35:03 PM
Well Wagoner leaves with a $20 million retirement cushion so I won't shed a tear over him getting canned.
I doubt there is anyone here shedding a tear over Wagoner's situation. The issue with this story is what exactly canning him is supposed to accomplish. "New leadership" is not a plan or a policy, it's a slogan.
He wasn't great from what I can tell. I've read lots about how decent a guy he is but I don't know if that's really enough. The new guy, I believe, helped turn around GM in Europe which is now one of their most profitable areas so he could be better.
I think the main thing (as with Obama suggesting bankruptcy's an option) is that this should scare the unions and bondholders into realising they've got to make some major concessions or the party's over.
Quote from: Sheilbh on April 01, 2009, 01:36:29 PM
I think the main thing (as with Obama suggesting bankruptcy's an option) is that this should scare the unions and bondholders into realising they've got to make some major concessions or the party's over.
One would think that a more direct and just method of achieving this result would be to fire the head of the UAW.
Quote from: Admiral Yi on April 01, 2009, 02:03:57 PM
Quote from: Sheilbh on April 01, 2009, 01:36:29 PM
I think the main thing (as with Obama suggesting bankruptcy's an option) is that this should scare the unions and bondholders into realising they've got to make some major concessions or the party's over.
One would think that a more direct and just method of achieving this result would be to fire the head of the UAW.
I'm reading the bondholders are more of an obstacle, and the UAW head has little influence on those institutions.
Quote from: Sheilbh on April 01, 2009, 01:36:29 PMHe wasn't great from what I can tell. I've read lots about how decent a guy he is but I don't know if that's really enough. The new guy, I believe, helped turn around GM in Europe which is now one of their most profitable areas so he could be better.
I think the main thing (as with Obama suggesting bankruptcy's an option) is that this should scare the unions and bondholders into realising they've got to make some major concessions or the party's over.
I think the party *is* more or less over. The weird thing is that these people are showing no sense of self-preservation. You would think they would take what they could get and then cut and run, when faced with what looks like a crippled or dying industry. Instead, they're just determined to follow the business burning into the ground.
Quote from: DontSayBanana on April 01, 2009, 07:55:40 PM
Quote from: Sheilbh on April 01, 2009, 01:36:29 PMHe wasn't great from what I can tell. I've read lots about how decent a guy he is but I don't know if that's really enough. The new guy, I believe, helped turn around GM in Europe which is now one of their most profitable areas so he could be better.
I think the main thing (as with Obama suggesting bankruptcy's an option) is that this should scare the unions and bondholders into realising they've got to make some major concessions or the party's over.
I think the party *is* more or less over. The weird thing is that these people are showing no sense of self-preservation. You would think they would take what they could get and then cut and run, when faced with what looks like a crippled or dying industry. Instead, they're just determined to follow the business burning into the ground.
How so?
The Dems won't let the unions fail. They will fight to the last trillion dollars to make sure they stay afloat. It's the least they can do, under the circumstances.
won't the unions fail if the bondholders drive this to bankruptcy protection, where they will try for a better result on their value? I don't see it.
If they think they're going to get better returns in a fire sale, then this country really is populated with idiots, and it's time for me to emigrate. <_<
The bondholders would be killed in a liquidation . . . unless they are hedged with CDS.
There are approx $37 billion in CDS contracts outstanding on GM right now. How much is held by members of the bondholding group and who holds it is unknown. But the bottom line is that it is likely that signficant players in the bondholders group actually have an economic incentive to drive GM off a cliff (an incentive perversely subsidized by the US treasury which is guaranteeing the peformance of at least some of these CDS contracts).
This one of the dark secrets of the CDS market - it can create massive undisclosed conflicts of interest within a creditor group as the company nears the brink of insolvency.
There's a ticker thing on CNN this morning that says GM will likely file for bankruptcy this week. :yeah:
Quote from: Caliga on May 27, 2009, 07:31:57 AM
There's a ticker thing on CNN this morning that says GM will likely file for bankruptcy this week. :yeah:
Yep. About time, too. GM is too big to succeed.
Since Obama is going to ensure that the UAW owns 80% of GM before it's all said and done, why not merge GM with Chrysler, so that the union isn't competing with itself?
yay! My ford stock is over 5 dollars!
Quote from: Neil on May 27, 2009, 09:27:19 AM
Since Obama is going to ensure that the UAW owns 80% of GM before it's all said and done, why not merge GM with Chrysler, so that the union isn't competing with itself?
When all is said and done, there will not be a GM, so the point is moot.
Quote from: Ed Anger on May 27, 2009, 09:37:35 AM
yay! My ford stock is over 5 dollars!
I have Ford stock too :hug:
Quote from: Neil on May 27, 2009, 09:27:19 AM
Since Obama is going to ensure that the UAW owns 80% of GM before it's all said and done,
The Union just agreed to 17.5% :contract:
Tell me again why the union, who is in large part responsible for driving these companies into the ground, should get anything?
There is zero credible business reason to make these deals for the union. None. They ahve no leverage, no credibility, and they bring nothing to the table that a re-organized GM needs, and plenty that they do not.
This is nothing more than federal welfare for union employees.
Quote from: Berkut on May 27, 2009, 11:09:01 AM
Tell me again why the union, who is in large part responsible for driving these companies into the ground, should get anything?
There is zero credible business reason to make these deals for the union. None. They ahve no leverage, no credibility, and they bring nothing to the table that a re-organized GM needs, and plenty that they do not.
This is nothing more than federal welfare for union employees.
Don't they bring to the table their labor and experience as the workforce of GM?
Quote from: Caliga on May 27, 2009, 07:31:57 AM
There's a ticker thing on CNN this morning that says GM will likely file for bankruptcy this week. :yeah:
It seems inevitable now:
QuoteGM bondholders turn down debt swap
By TIM HIGGINS • FREE PRESS BUSINESS WRITER • May 27, 2009
General Motors failed in its attempts to trade bondholder debt for shares in the automaker, the company announced this morning.
The defeat, while not surprising given bondholders' criticisms of the proposal, makes bankruptcy even more likely.
Getting unsecured debt holders to accept a 10% stake in GM in exchange for the $27 billion they are owed was a key part of GM's plans to restructure its debt outside of court.
President Barack Obama has given GM until Monday to restructure or else it faces bankruptcy reorganization. GM is surviving on $19.4 billion in federal loans.
The deadline for tendering the debt was late Tuesday night.
"The principal amount of notes tendered was substantially less than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the U.S. Department of the Treasury , to meet the debt reduction objectives under its viability plan, or to meet the minimum tender condition of the exchange offers as required by the U.S. Treasury," the company said in a statement.
GM said its board of directors will meet to discuss GM's next step.
@ Berkut
*shrug* Doesn't matter. The company is going to fail anyway. Another nail in the commie coffin. :)
Quote from: Berkut on May 27, 2009, 11:09:01 AM
Tell me again why the union, who is in large part responsible for driving these companies into the ground, should get anything?
There is zero credible business reason to make these deals for the union. None. They ahve no leverage, no credibility, and they bring nothing to the table that a re-organized GM needs, and plenty that they do not.
This is nothing more than federal welfare for union employees.
Because they in fact do have leverage (they are a debtor of GM after all and get a say in bankruptcy) and can bring something to the table that the new GM needs (i.e. labour peace), and they certainly do have credibility with the administration?
Quote from: alfred russel on May 27, 2009, 11:12:40 AM
Don't they bring to the table their labor and experience as the workforce of GM?
Not really valuable. We have a Ford plant in Louisville (the F-250 and Explorer models are made here) and I've met probably a dozen people who have worked there. The unanimous opinion is that a monkey could be trained to do 90% of the jobs there in like 20 minutes.
Quote from: alfred russel on May 27, 2009, 11:12:40 AM
Quote from: Berkut on May 27, 2009, 11:09:01 AM
Tell me again why the union, who is in large part responsible for driving these companies into the ground, should get anything?
There is zero credible business reason to make these deals for the union. None. They ahve no leverage, no credibility, and they bring nothing to the table that a re-organized GM needs, and plenty that they do not.
This is nothing more than federal welfare for union employees.
Don't they bring to the table their labor and experience as the workforce of GM?
The employees might, but you don't need a union to hire them.
Quote from: Caliga on May 27, 2009, 11:14:42 AM
Quote from: alfred russel on May 27, 2009, 11:12:40 AM
Don't they bring to the table their labor and experience as the workforce of GM?
Not really valuable. We have a Ford plant in Louisville (the F-250 and Explorer models are made here) and I've met probably a dozen people who have worked there. The unanimous opinion is that a monkey could be trained to do 90% of the jobs there in like 20 minutes.
Okay. So if we are not going to scrap the plants GM and shut down the company, how do you plan on getting a nonunionized workforce in there?
Quote from: Barrister on May 27, 2009, 11:13:49 AM
Quote from: Berkut on May 27, 2009, 11:09:01 AM
Tell me again why the union, who is in large part responsible for driving these companies into the ground, should get anything?
There is zero credible business reason to make these deals for the union. None. They ahve no leverage, no credibility, and they bring nothing to the table that a re-organized GM needs, and plenty that they do not.
This is nothing more than federal welfare for union employees.
Because they in fact do have leverage (they are a debtor of GM after all and get a say in bankruptcy) and can bring something to the table that the new GM needs (i.e. labour peace), and they certainly do have credibility with the administration?
They do not have "credibililty" with the admin, they simply have bought political capital with them. Not the same thing.
And GM does not need their "labor peace" there are tens of thousands of unemployed auto workers who would be happy to get a job, so why deal with all the hassle of the union when you don't need to? Of course you would not - if in fact your business decisions were being driven by business needs, rather than political bullshit.
And sure, they are a debtor - so let them fail along with GM. It is what they deserve. Reorg GM, tell the UAW to take a long walk of a short pier, tear up all those ridiculous union contracts, and start hiring PEOPLE instead of unions.
Quote from: alfred russel on May 27, 2009, 11:16:49 AM
Quote from: Caliga on May 27, 2009, 11:14:42 AM
Quote from: alfred russel on May 27, 2009, 11:12:40 AM
Don't they bring to the table their labor and experience as the workforce of GM?
Not really valuable. We have a Ford plant in Louisville (the F-250 and Explorer models are made here) and I've met probably a dozen people who have worked there. The unanimous opinion is that a monkey could be trained to do 90% of the jobs there in like 20 minutes.
Okay. So if we are not going to scrap the plants GM and shut down the company, how do you plan on getting a nonunionized workforce in there?
Post an ad in the newspaper. I heard there were some unemployed people in Detroit who would like jobs.
And there is the cool thing about this plan: If they suck, are lazy, and don't show up for work...you can replace them! Holy shit! What an insane idea!
Quote from: Berkut on May 27, 2009, 11:20:07 AM
Quote from: alfred russel on May 27, 2009, 11:16:49 AM
Quote from: Caliga on May 27, 2009, 11:14:42 AM
Quote from: alfred russel on May 27, 2009, 11:12:40 AM
Don't they bring to the table their labor and experience as the workforce of GM?
Not really valuable. We have a Ford plant in Louisville (the F-250 and Explorer models are made here) and I've met probably a dozen people who have worked there. The unanimous opinion is that a monkey could be trained to do 90% of the jobs there in like 20 minutes.
Okay. So if we are not going to scrap the plants GM and shut down the company, how do you plan on getting a nonunionized workforce in there?
Post an ad in the newspaper. I heard there were some unemployed people in Detroit who would like jobs.
And there is the cool thing about this plan: If they suck, are lazy, and don't show up for work...you can replace them! Holy shit! What an insane idea!
So you want the government, who basically is just now taking over the company, to have as its first major policy breaking one of the largest and most successful unions in the country?
Quote from: Berkut on May 27, 2009, 11:18:29 AM
Quote from: Barrister on May 27, 2009, 11:13:49 AM
Quote from: Berkut on May 27, 2009, 11:09:01 AM
Tell me again why the union, who is in large part responsible for driving these companies into the ground, should get anything?
There is zero credible business reason to make these deals for the union. None. They ahve no leverage, no credibility, and they bring nothing to the table that a re-organized GM needs, and plenty that they do not.
This is nothing more than federal welfare for union employees.
Because they in fact do have leverage (they are a debtor of GM after all and get a say in bankruptcy) and can bring something to the table that the new GM needs (i.e. labour peace), and they certainly do have credibility with the administration?
They do not have "credibililty" with the admin, they simply have bought political capital with them. Not the same thing.
And GM does not need their "labor peace" there are tens of thousands of unemployed auto workers who would be happy to get a job, so why deal with all the hassle of the union when you don't need to? Of course you would not - if in fact your business decisions were being driven by business needs, rather than political bullshit.
And sure, they are a debtor - so let them fail along with GM. It is what they deserve. Reorg GM, tell the UAW to take a long walk of a short pier, tear up all those ridiculous union contracts, and start hiring PEOPLE instead of unions.
Exactly how do you figure that GM can just disband the UAW merely because it is going through bankruptcy?
Plenty of unionized companies go through bankruptcy, and if/when they emerge thei're always still unionized.
Quote from: alfred russel on May 27, 2009, 11:23:20 AM
So you want the government, who basically is just now taking over the company, to have as its first major policy breaking one of the largest and most successful unions in the country?
Considering that "most successful" union is what is driving the company into bankruptcy and its existence is what makes it impossible for GM to succeed, yeah, I think that is a fine idea.
Although it would not be the Administration breaking the union, it would be the bankruptcy of GM that would do so - the Administrations roll is simply one where they do not elect to 'save" the union at the expense of the company, taxpayers, and consumers.
Quote from: Barrister on May 27, 2009, 11:25:53 AM
Exactly how do you figure that GM can just disband the UAW merely because it is going through bankruptcy?
Plenty of unionized companies go through bankruptcy, and if/when they emerge thei're always still unionized.
Always? Really? Every single time?
GM doesn't need to disband the UAW, they just need to quit hiring their shitty workers.
You guys are like an ER doctor with a patient dying of a giant fucking parasite attached to their brain sucking away their lifeblood trying to figure out how they can save the parasite once the patient dies.
Quote from: Berkut on May 27, 2009, 11:30:25 AM
You guys are like an ER doctor with a patient dying of a giant fucking parasite attached to their brain sucking away their lifeblood trying to figure out how they can save the parasite once the patient dies.
I'd rather think that we're ER doctors who notice that the patient has an INOPERABLE brain tumour, and so we're trying to figure out what else we can do to save the patient. Going on about how the patient would be better off without a brain tumour isn't helpful if we have no means to remove it.
And yes Berk - I am unaware of even a single incident where an established company, with an established union, managed to break that union as part of bankruptcy.
Quote from: alfred russel on May 27, 2009, 11:12:40 AM
Quote from: Berkut on May 27, 2009, 11:09:01 AM
Tell me again why the union, who is in large part responsible for driving these companies into the ground, should get anything?
There is zero credible business reason to make these deals for the union. None. They ahve no leverage, no credibility, and they bring nothing to the table that a re-organized GM needs, and plenty that they do not.
This is nothing more than federal welfare for union employees.
Don't they bring to the table their labor and experience as the workforce of GM?
Given the depths to which they've brought the company, I would say that labour and experience are worthless.
Quote from: Barrister on May 27, 2009, 11:32:59 AM
Quote from: Berkut on May 27, 2009, 11:30:25 AM
You guys are like an ER doctor with a patient dying of a giant fucking parasite attached to their brain sucking away their lifeblood trying to figure out how they can save the parasite once the patient dies.
I'd rather think that we're ER doctors who notice that the patient has an INOPERABLE brain tumour, and so we're trying to figure out what else we can do to save the patient. Going on about how the patient would be better off without a brain tumour isn't helpful if we have no means to remove it.
Then it is hopeless, since it is the tumor killing the patient to begin with, and the doctors should spend their time and energy saving patients that can actually be saved, rather than trying to figure out how to keep the patient on life support because they love that tumor so much.
Which is my point - the actions of the Obama administration is making it clear they care a lot more about the UAW than they do about GM, and as far as I am concerned, this entire endeavor is nothing more than a way to shovel billions of dollars to the UAW.
Do you guys seriously not get that, at least in the U.S., organized labor = organized crime? :huh:
Quote from: Berkut on May 27, 2009, 11:27:35 AM
Quote from: alfred russel on May 27, 2009, 11:23:20 AM
So you want the government, who basically is just now taking over the company, to have as its first major policy breaking one of the largest and most successful unions in the country?
Considering that "most successful" union is what is driving the company into bankruptcy and its existence is what makes it impossible for GM to succeed, yeah, I think that is a fine idea.
Although it would not be the Administration breaking the union, it would be the bankruptcy of GM that would do so - the Administrations roll is simply one where they do not elect to 'save" the union at the expense of the company, taxpayers, and consumers.
You realize that would involve massive protests, pickets, Jesse Jackson speeches, Congressional hearings, and probably another Michael Moore film?
Reagan is either a giant hero or villian (depending on your political persuasion) for breaking the air traffic controllers, who were on an illegal strike and arguably endangering the public. As controversial as that was (and is), there is no way any administration is ever going to force the UAW to leave GM.
Quote from: Berkut on May 27, 2009, 11:09:01 AM
Tell me again why the union, who is in large part responsible for driving these companies into the ground, should get anything?
Because they are a massive creditor and provide a critical service to the debtor?
Quote from: alfred russel on May 27, 2009, 11:49:35 AM
Reagan is either a giant hero or villian (depending on your political persuasion) for breaking the air traffic controllers, who were on an illegal strike and arguably endangering the public. As controversial as that was (and is), there is no way any administration is ever going to force the UAW to leave GM.
No, you're right, of course. The Democratic Party has been deep throating organized labor since the days of FDR.
except for the Reagan-era Hard Hat Republicans. they were national heroes, all of them.
Quote from: The Minsky Moment on May 27, 2009, 11:51:14 AM
Quote from: Berkut on May 27, 2009, 11:09:01 AM
Tell me again why the union, who is in large part responsible for driving these companies into the ground, should get anything?
Because they are a massive creditor and provide a critical service to the debtor?
They provide no service to GM though. Nothing. Nada. Zilch. Zippo.
They are a parasite in fact. They harm GM. This is a classic case of them being the problem, not the solution.
If they are a creditor, then fine. Let them get in line with the other creditors, and they can get their pittance along with the other creditors, and GM can hire back whatever employees they need when (and if) they come out of bankruptcy.
GM does not need the UAW, but the UAW must have GM, and the billions of dolalrs Obama is shoveling to them.
Quote from: Caliga on May 27, 2009, 11:52:06 AM
Quote from: alfred russel on May 27, 2009, 11:49:35 AM
Reagan is either a giant hero or villian (depending on your political persuasion) for breaking the air traffic controllers, who were on an illegal strike and arguably endangering the public. As controversial as that was (and is), there is no way any administration is ever going to force the UAW to leave GM.
No, you're right, of course. The Democratic Party has been deep throating organized labor since the days of FDR.
And that is what this is all about. It is revolting. Nothing short of simple government theft from the taxpayers to their political masters. Bailing out the UAW helps nobody but the UAW. It doesn't help GM, it doesn't help Americans, it doesn't help the economy.
Quote from: Caliga on May 27, 2009, 11:52:06 AM
Quote from: alfred russel on May 27, 2009, 11:49:35 AM
Reagan is either a giant hero or villian (depending on your political persuasion) for breaking the air traffic controllers, who were on an illegal strike and arguably endangering the public. As controversial as that was (and is), there is no way any administration is ever going to force the UAW to leave GM.
No, you're right, of course. The Democratic Party has been deep throating organized labor since the days of FDR.
It isn't just a democratic thing: republicans may be less generous but a republican administration wouldn't try to break the UAW either.
Quote from: alfred russel on May 27, 2009, 12:02:57 PM
Quote from: Caliga on May 27, 2009, 11:52:06 AM
Quote from: alfred russel on May 27, 2009, 11:49:35 AM
Reagan is either a giant hero or villian (depending on your political persuasion) for breaking the air traffic controllers, who were on an illegal strike and arguably endangering the public. As controversial as that was (and is), there is no way any administration is ever going to force the UAW to leave GM.
No, you're right, of course. The Democratic Party has been deep throating organized labor since the days of FDR.
It isn't just a democratic thing: republicans may be less generous but a republican administration wouldn't try to break the UAW either.
Who is trying to break anyone?
Quote from: Berkut on May 27, 2009, 11:44:18 AM
Then it is hopeless, since it is the tumor killing the patient to begin with, and the doctors should spend their time and energy saving patients that can actually be saved, rather than trying to figure out how to keep the patient on life support because they love that tumor so much.
Yes. Your idea, though, which is to amputate the head to get rid of the tumor, is a non-starter.
QuoteWhich is my point - the actions of the Obama administration is making it clear they care a lot more about the UAW than they do about GM, and as far as I am concerned, this entire endeavor is nothing more than a way to shovel billions of dollars to the UAW.
I am not quite so sure as you, but I think it is going to be moot anyway, as I don't think GM will survive bankruptcy anyway, and thus its contracts will be nullified.
Libertarian Socialism would solve all these problems.
Quote from: grumbler on May 27, 2009, 12:05:32 PM
Quote from: Berkut on May 27, 2009, 11:44:18 AM
Then it is hopeless, since it is the tumor killing the patient to begin with, and the doctors should spend their time and energy saving patients that can actually be saved, rather than trying to figure out how to keep the patient on life support because they love that tumor so much.
Yes. Your idea, though, which is to amputate the head to get rid of the tumor, is a non-starter.
No, my idea is more like an intensive bit of chemo that will certainly kill the tumor, and might kill the patient. But then, the patients disease is fatal anyway, so no real loss.
This is preferable to simply sticking the patient on expensive life support indefinitely in an effort to keep the tumor happy as long as possible.
Quote from: Berkut on May 27, 2009, 11:55:54 AM
They provide no service to GM though. Nothing. Nada. Zilch. Zippo.
This is just silly.
GM employs over 60,000 workers, even after taking into account the huge cuts scheduled for this year. Many of those workers have specialized skills as electricians, millwrights, designers, technicians, machinists, etc. Many have extensive plant-specific knowledge of the existing factory layouts and equipment. There is no way that a workforce of that nature and size can be replaced by placing newspaper want-ads. Nor is mass recruitment of the greater Detroit lumpenproletariat as a kind of latter day Leninist "industrial army" a serious proposal.
GM is going through a Chapter 11 reorg. it is absolutely essential that the company continuing operating as best it can as a going concern during this process, and that it emerge as quickly as possible. To break the union would take months and force a long shut-down of operations while the company, in the full throes of one of the most complex corporate reorganizations in history, attempts to reconstitute a massive 60K workforce from scratch (in the face of what would certainly be a very aggressive picket operation) It would be completely and utterly insane. The reorganized company would die a dozen additional deaths before the union was broken.
I am no great fan of the UAW, but one must take reality as one finds it and make the best of it.
Quote from: The Minsky Moment on May 27, 2009, 12:16:33 PM
GM is going through a Chapter 11 reorg. it is absolutely essential that the company continuing operating as best it can as a going concern during this process, and that it emerge as quickly as possible.
What I am hearing, though, is that the bondholders want to convert the Chapter 11 into a Chapter 7. They can do it, as I understand, by refusing to accept the Ch 11 plan.
That would probably be the best thing, in the long run. Viable elements of GM could be picked up and revived, without having to carry the burden of the non-viable portions.
Quote from: The Minsky Moment on May 27, 2009, 12:16:33 PM
Quote from: Berkut on May 27, 2009, 11:55:54 AM
They provide no service to GM though. Nothing. Nada. Zilch. Zippo.
This is just silly.
GM employs over 60,000 workers, even after taking into account the huge cuts scheduled for this year. Many of those workers have specialized skills as electricians, millwrights, designers, technicians, machinists, etc. Many have extensive plant-specific knowledge of the existing factory layouts and equipment. There is no way that a workforce of that nature and size can be replaced by placing newspaper want-ads. Nor is mass recruitment of the greater Detroit lumpenproletariat as a kind of latter day Leninist "industrial army" a serious proposal.
You don't have to replace anyone though - just hire them right back. It's not like they have any real choice in the matter.
Quote
GM is going through a Chapter 11 reorg. it is absolutely essential that the company continuing operating as best it can as a going concern during this process, and that it emerge as quickly as possible.
Even if that means it re-emerges with the exact same problems that drove it into bankruptcy to begin with?
Quote
To break the union would take months and force a long shut-down of operations while the company, in the full throes of one of the most complex corporate reorganizations in history, attempts to reconstitute a massive 60K workforce from scratch
Again, not at all from scratch. Indeed, I would guess that bulk of their employees would be the exact same people.
Quote
(in the face of what would certainly be a very aggressive picket operation) It would be completely and utterly insane. The reorganized company would die a dozen additional deaths before the union was broken.
I disagree. Who is going to picket? All the people who are out of jobs? Let them. They won't picket for long. And Obama is all about stomping on people rights, so he can just send in the National Guard to break them. After all, he is willing to demand that executives be fired, why not workers?
Quote
I am no great fan of the UAW, but one must take reality as one finds it and make the best of it.
And the reality is that the UAW is being subsidized by the American taxpayer to the tune of billions, for no purpose other than to take care of the UAW.
If it cannot be done without selling out GM and the American taxpayer to the UAW, then it isn't worth doing. Let GM fail. Certainly cannot imagine how anyone would support letting the UAW blackmail not just GM, but me and you by threatening to destroy both the company and their employees jobs if they don't get a sweetheart multi billion dollar kickback.
Quote from: grumbler on May 27, 2009, 12:24:39 PM
Quote from: The Minsky Moment on May 27, 2009, 12:16:33 PM
GM is going through a Chapter 11 reorg. it is absolutely essential that the company continuing operating as best it can as a going concern during this process, and that it emerge as quickly as possible.
What I am hearing, though, is that the bondholders want to convert the Chapter 11 into a Chapter 7. They can do it, as I understand, by refusing to accept the Ch 11 plan.
That would probably be the best thing, in the long run. Viable elements of GM could be picked up and revived, without having to carry the burden of the non-viable portions.
No chance that will be allowed to happen.
Quote from: Berkut on May 27, 2009, 12:33:42 PM
You don't have to replace anyone though - just hire them right back. It's not like they have any real choice in the matter.
Of course they have a choice - they stick with the union and call the company's bluff.
QuoteEven if that means it re-emerges with the exact same problems that drove it into bankruptcy to begin with?
Is it seriously your contention that the UAW was the sole source of the GM's problems? That is not even close to the truth. It's not like unions in Germany (to take one example) are entirely comatose. Hell - in Germany under law the union gets 50% of the supervisory board seats. Yet somehow the executives of VW managed to avoid making horrible decisions and running their company into the ground.
Quote from: The Minsky Moment on May 27, 2009, 02:09:37 PM
Quote from: Berkut on May 27, 2009, 12:33:42 PM
You don't have to replace anyone though - just hire them right back. It's not like they have any real choice in the matter.
Of course they have a choice - they stick with the union and call the company's bluff.
And GM hires someone else who is just as qualified and likely works a lot harder. Everyone wins! Except the lazy union pukes, of course.
The alternative (paying the lazy union pukes with my tax dollars) is considerably worse.
Quote from: grumbler on May 27, 2009, 12:24:39 PM
What I am hearing, though, is that the bondholders want to convert the Chapter 11 into a Chapter 7. They can do it, as I understand, by refusing to accept the Ch 11 plan.
That would probably be the best thing, in the long run. Viable elements of GM could be picked up and revived, without having to carry the burden of the non-viable portions.
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.
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.
Quote from: The Minsky Moment on May 27, 2009, 02:09:37 PM
Is it seriously your contention that the UAW was the sole source of the GM's problems? That is not even close to the truth. It's not like unions in Germany (to take one example) are entirely comatose. Hell - in Germany under law the union gets 50% of the supervisory board seats. Yet somehow the executives of VW managed to avoid making horrible decisions and running their company into the ground.
So as long as there is some union somewhere that hasn't run a company into the ground, it cannot be the case that the UAW has a significant role to play in running GM into the ground?
The "horrible" decisions made by GM mostly have to do with bending over for the UAW time and time again.
Quote from: Berkut on May 27, 2009, 02:20:29 PM
And GM hires someone else who is just as qualified and likely works a lot harder.
If GM had the magic wand to make things like this happen, they wouldn't have needed government aid in the first place. They just could just built those neat flying cars from the Harry Potter books and made a mint.
Quote from: The Minsky Moment on May 27, 2009, 02:21:15 PM
Quote from: grumbler on May 27, 2009, 12:24:39 PM
What I am hearing, though, is that the bondholders want to convert the Chapter 11 into a Chapter 7. They can do it, as I understand, by refusing to accept the Ch 11 plan.
That would probably be the best thing, in the long run. Viable elements of GM could be picked up and revived, without having to carry the burden of the non-viable portions.
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.
That is so *perfect*!
GM sucks hind tit (largely because they cannot compete on labor), so we bail them out. Now the taxpayer is a stockholder, so we are a "potential loser" in the process, so of course we have to pour in billions upon billions more so as to avoid this potential losing, and of course a large portion of that money ends up in the pockets of the UAW, who somehow manage to come out of the entire deal with their cherry contracts intact AND a huge ownership in the company, because we all know how well the UAW can run GM, and how it is in the taxpayers best interest for UAW to get tens of billions of dollars.
And all the people who invested in GM? Why, fuck them. As long as the union doesn't lose any money, who cares about the people who actually own GM?
There is no possible problem that can be worse than this solution.
Quote from: The Minsky Moment on May 27, 2009, 02:23:08 PM
Quote from: Berkut on May 27, 2009, 02:20:29 PM
And GM hires someone else who is just as qualified and likely works a lot harder.
If GM had the magic wand to make things like this happen, they wouldn't have needed government aid in the first place. They just could just built those neat flying cars from the Harry Potter books and made a mint.
No, they couldn't, because they are locked into the union Obama is sacrificng the American taxpayer for and their idiotic contracts that pay people $80k/year to sweep the floor. Or not sweep the floor.
Quote from: alfred russel on May 27, 2009, 12:36:27 PM
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.
Quote from: grumbler on May 27, 2009, 02:31:26 PM
Quote from: alfred russel on May 27, 2009, 12:36:27 PM
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.
From the point of view of the secured bond holders there is no real incentive to convert to unsecured shareholdings. If AR is correct the US government will not allow GM to fail and the investment of the bondholders will remain secure and if there is a liquidation of assets they will likely recover their investment.
Quote from: Berkut on May 27, 2009, 02:27:03 PM
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.
QuoteAnd all the people who invested in GM?
The nature of risk capital is that there is risk. I read the papers. And sure, I noticed a couple years ago when GM bonds were paying huge fat interest premiums over solid AAA corporates (not to mention treasuries). I watched as that yield premium widened and widened. Did I buy? No because I didn't want to take the default risk. Others were willing to run that risk.
You place your bets and you takes your chances.
Quote from: The Minsky Moment on May 27, 2009, 02:37:14 PM
You place your bets and you takes your chances.
Unless, of course, you are a UAW employee. Then you get billions from the government to protect your sweetheart deal, at any and all expense.
Quote from: grumbler on May 27, 2009, 02:31:26 PM
Quote from: alfred russel on May 27, 2009, 12:36:27 PM
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.
Quote from: The Minsky Moment on May 27, 2009, 02:37:14 PM
Quote from: Berkut on May 27, 2009, 02:27:03 PM
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.
Quote from: The Minsky Moment on May 27, 2009, 02:21:15 PM
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.
QuoteNor 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.
Quote from: alfred russel on May 27, 2009, 02:43:42 PM
Quote from: grumbler on May 27, 2009, 02:31:26 PM
Quote from: alfred russel on May 27, 2009, 12:36:27 PM
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.
Quote from: grumbler on May 27, 2009, 02:46:18 PM
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!
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?
Quote from: grumbler on May 27, 2009, 02:46:18 PM
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.
Quote from: Zanza2 on May 27, 2009, 03:00:01 PM
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.
Quote from: Zanza2 on May 27, 2009, 03:00:01 PM
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.
Quote from: Barrister on May 27, 2009, 03:04:29 PM
Quote from: grumbler on May 27, 2009, 02:46:18 PM
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.
Quote from: Berkut on May 27, 2009, 02:45:00 PM
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?
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.
Quote from: Admiral Yi on May 27, 2009, 03:05:16 PMI 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.
Quote from: Berkut on May 27, 2009, 03:26:34 PM
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.
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!
Quote from: Zanza2 on May 27, 2009, 03:30:42 PM
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.
Quote from: Zanza2 on May 27, 2009, 03:30:42 PM
Quote from: Admiral Yi on May 27, 2009, 03:05:16 PMI 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.
Chrysler may turn out to be the multinational corporate version of a suicide bomber, taking out Fiat, Daimler and the American taxpayer along with it.
Quote from: alfred russel on May 27, 2009, 03:35:58 PM
Chrysler may turn out to be the multinational corporate version of a suicide bomber, taking out Fiat, Daimler and the American taxpayer along with it.
:lmfao:
Quote from: Berkut on May 27, 2009, 02:45:00 PM
The "health care trust" is taking a huge hit? Boo-fucking-hoo.
It is property - an obligation that the company accrued over many years. I don't see how one can say with a straight face that surrendering $20 billion of cash is not a concession.
Quote from: Berkut on May 27, 2009, 03:33:47 PM
Quote from: Zanza2 on May 27, 2009, 03:30:42 PM
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.
While I'm with you in theory, that doesn't seem to be the way it is going to work. On the news I heard that the total amount that is going to be given to the automakers is about $100 billion. If Chrysler and GM don't turn around, do you really think Obama will let them fail after investing so much money?
Quote from: alfred russel on May 27, 2009, 03:42:10 PM
Quote from: Berkut on May 27, 2009, 03:33:47 PM
Quote from: Zanza2 on May 27, 2009, 03:30:42 PM
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.
While I'm with you in theory, that doesn't seem to be the way it is going to work. On the news I heard that the total amount that is going to be given to the automakers is about $100 billion. If Chrysler and GM don't turn around, do you really think Obama will let them fail after investing so much money?
Of course not, which is why he wants to give the UAW so much money.
Quote from: The Minsky Moment on May 27, 2009, 03:41:56 PM
Quote from: Berkut on May 27, 2009, 02:45:00 PM
The "health care trust" is taking a huge hit? Boo-fucking-hoo.
It is property - an obligation that the company accrued over many years. I don't see how one can say with a straight face that surrendering $20 billion of cash is not a concession.
It isn't if they are going to get a lot more than that back. How much taxpayer money has been poured into UAWGM? How much more will be?
Quote from: grumbler on May 27, 2009, 02:46:18 PM
Someone who wanted to produce cars, for instance, would buy car or parts factories
Let's put aside the BB issue - namely that it isn't obvious that there is any buyer out there who would want to purchase an entire auto line from GM at a price above zero. Let's assume such buyers exist and will pay. If GM went through a standard liquidation, it isn't clear that such a sale could be easily effected.
For the sake of example only, take the Silverado plant in Ohio. It may be the case that one secured creditor controls the land the plant sits on. Another controls the building and some of the physical plant. Another may control some of key equipment leases. Another controls the Chevrolet logo and branding elements. And so forth. So the prospective future Silverado manufacturer has to somehow negotiate with all these potential stakeholders simultaneously, and put together a new work force of several thousand people (or renegotiate with the existing workers), and manage to get all these deals done quickly enough that the plant doesn't suffer from too much down time, wastage, or vandalism.
Not saying it's impossible, but I would not underestimate the challenge. It's a lot of potential time and expense before even a single car is produced and sold, and all for the dubious privilege of producing Silverados.
Quotepeople wanting to finance car purchases would pick up GMAC
GMAC is already a separate company - GM only owns 10 percent now, most of it is government owned.
People who want to finance car purchases don't need GMAC. They just need to be a bank or a finance company. The GMAC brand may have some value, although even that is pretty questionable at this point. The existing GMAC book of business is probably a net loser which is why the government took it over in the first place.
Quote from: Berkut on May 27, 2009, 03:45:23 PM
It isn't if they are going to get a lot more than that back.
All they are getting is a 17.5 percent equity stake in a company that presently has no equity value.
Quote from: The Minsky Moment on May 27, 2009, 03:57:42 PM
Quote from: Berkut on May 27, 2009, 03:45:23 PM
It isn't if they are going to get a lot more than that back.
All they are getting is a 17.5 percent equity stake in a company that presently has no equity value.
Which is a lot more than 0% equity stake in a company that has no value, or the debt from said company.
And obviously, once you liquidate all the other stockholders (you know, the ones who actually have equity NOW), the new GM would presumably be worth something after being reorganized, and the Government pours in another hundred billion. UAWGM would presumably be worth at least the money Obama has promised to give them, right?
If GM is truly worth nothing now, then their "health care fund" is worth nothing as well. So why do they deserve to get something in return for nothing, when the fact that it is all worth nothing is largely their fault anyway?
Quote from: alfred russel on May 27, 2009, 03:35:58 PMChrysler may turn out to be the multinational corporate version of a suicide bomber, taking out Fiat, Daimler and the American taxpayer along with it.
Daimler's last exposure to Chrysler will be $700 million in this quarter. After that, Daimler only has business relations with Chrysler like with every other company. They have already paid billions, but they got out now.
Quote from: Berkut on May 27, 2009, 03:32:04 PM
Why is everyone so terrified of the UAW having a fit?
I think it is because everyone else understands both the practical and legal ramifications of doing what you are suggesting.
Just noticed this article on the Economist website. :bowler:
QuoteFrom the archive
On a clear day you can still see General Motors
Dec 2nd 1989
From The Economist print edition
The 1990s will be General Motors' toughest decade. Is the world's biggest manufacturer heading for break-up or oblivion?
SOON after General Motors's chairman, Mr Roger Smith, drives the first car off the assembly line of his company's Saturn plant in Spring Hill, Tennessee next summer, he will ride off into a comfortable retirement. The company he leaves behind faces a bleaker future.
During his nine-year reign at the top of the world's biggest carmaker, Mr Smith has spent billions of dollars and overseen huge reorganisations to little avail. Crippled by a sclerotic bureaucracy, GM watched helplessly as its share of the all-important American car market tumbled from 46% in 1980 to barely 35% this year. Now Japanese carmakers are set to boost their production in America just as GM cuts back still further. If the once-mighty GM can not find a way to reverse its slide, the next decade might be the company's last. By the turn of the century, break-up or bankruptcy (and the inevitable government rescue) could well be the fate of a company which was once America's proudest manufacturer.
Saturn will be the key to GM's survival. At first, GM arrogantly dismissed Toyota and other Japanese competitors as merely makers of little cars that got lucky in an oil crisis. When GM belatedly woke up to the Japanese challenge, it exhibited the big-company knee-jerk reaction: throw truckloads of money at the problem. Many of the billions it spent on robots and other new technology have been wasted. Saturn is the attempt of a chastened GM to re-invent carmaking from a "blank sheet of paper". Yet if Saturn is a success, the immense task of transforming the rest of the company's vast empire still lies ahead. If Saturn is a flop, GM will face naked the remorseless advance of the Japanese.
By the mid-1990s the so-called Japanese "transplant" factories in the United States and Canada will be making more than 2m vehicles a year in addition to the cars the Japanese import (now limited to 2.3m vehicles). With new-car sales in America set to fall below 10m this year, the industry is already haunted by overcapacity. Even worse for GM, Japanese transplants can build cars for an estimated $500-800 cheaper than many American-owned plants. Because their cars are better designed and marketed, the Japanese also frequently avoid offering the $1,500 discounts which are destroying the profit margins of American competitors.
Saturn is supposed to close the efficiency gap, which has resulted in GM's North American car operations losing an estimated $300m in the third quarter this year. Throughout the 1980s, GM has invested $80 billion modernising its operations worldwide (nearly three times its present market capitalisation). That spending includes some of the $2.5 billion to buy EDS to mastermind a group-wide computerisation drive. GM then spent $700m buying back GM shares from EDS's founder Mr Ross Perot as the price of ousting the outspoken critic from GM's board. Another $5.2 billion went to buy Hughes Aerospace in a yet-to-be-proved attempt to feed more space-age technology into carmaking.
Yet much of the advanced technology GM acquired at such high cost hindered rather than improved productivity. Run-away robots started welding doors shut at the new Detroit-Hamtramck Cadillac plant. Luckily for Ford and Chrysler, poverty prevented them from indulging in the same orgy of spending on robots. After wrenching management changes, some of Ford's factories are now achieving near-Japanese levels of productivity.
Saturn will use some of the most advanced manufacturing technology available, but will concentrate on the more effective use of people. GM had to resort to a joint venture with Toyota to learn that people are what count in manufacturing. Despite this benefit, the joint-venture factory in California has shown that GM's fundamental weaknesses remain.
Saturn is to be run as a separate company within GM, free of the smothering embrace of Detroit. But even with all its advantages, Saturn's future is not guaranteed because the Japanese are racing still further ahead. They are opening research-and-design centres in America to become fully integrated carmakers there. They are also moving into the market for luxury and performance cars. In the 1990s Honda could overtake Chrysler as America's third-biggest car company. If that happens, the biggest loser will be the American company with the most to lose: GM.
Mr Smith remains unruffled. He says a lot of GM's problems have been put right and that the company is now well positioned. Its spending has gone to build new plants or to modernise old ones. But he cannot expect to run the plants at full capacity. More probably, as the chart indicates, GM's market share has been permanently eroded. So more plant closures will be needed. By the mid-1990s one in four of its 130,000 managers may have lost their jobs. The company has already cut its worldwide payroll by 100,000 since 1981 to some 750,000.
With sales last year of $110 billion—roughly equivalent to the GDP of Taiwan—and worldwide production at 8m vehicles, still twice Toyota's level, GM could keep cutting back for years as the Japanese expand. But continued "down-sizing" will inevitably provoke a crisis, forcing a traumatic overhaul of the company's baroque corporate structure, says Mr James Womack, director of the International Motor Vehicle Programme—a worldwide five-year car industry study being conducted by the Massachusetts Institute of Technology. Ford faced such a crisis in the early 1980s and survived. "Ford went right to the edge and looked over," recalls Mr Womack. "Ford realised it had to start worrying about how to avoid the abyss rather than electing the next president." If GM's moment of truth comes later, rather than sooner, it might not survive intact.
Mr Smith's re-organisations have swept away some feudal dynasties at GM. But he failed to address a deeper, cultural malaise, says Ms Maryann Keller, a Wall Street motor-industry analyst. In her recent book, "Rude Awakening", Ms Keller says Mr Smith found himself hopelessly entangled in a complex corporate culture that resisted change. He did little to control the power of central-office staff over operating divisions or the finance staff over the entire company. Under Mr Smith, a finance man, GM's bean counters continued to rule. For too long, says Ms Keller, GM has "hidden behind a manipulation of the numbers rather than facing its problems head on."
GM points to its record net profit in 1988 of $4.9 billion, up 37% from 1987, as proof of recovery. But Ms Keller says that GM's record year was due more to accounting changes than to the sale of cars. Even if GM's profits recover for another year or two, she warns, "the victory is bound to be short-lived unless change occurs at the very core of its corporate culture."
If the critics are correct, Mr Smith's successor will have to undertake a wholesale reorganisation of GM management to reverse the company's decline. The chances of such a reformer emerging are not impossible (witness the surprise arrival of Russia's Mr Mikhail Gorbachev), but they are slim. When the puffs of smoke from the company's Detroit headquarters appear, the final choice of the next chairman will largely be that of the strong-willed Mr Smith himself. An outsider can be ruled out almost entirely: top management at GM is a closed shop. Even those who have joined late in their careers have found themselves unable to make the final cut. Mr Elmer Johnson, a Chicago lawyer, headed back home last year after a brief stint as an executive vice president. He harboured ambitions of being the reformer who launched GM's perestroika.
The next chairman is likely to come from among half a dozen loyal, long-term GM executives. At the top of everyone's list is 56-year-old Mr Robert Stempel, who became president a little more than two years ago. Mr Stempel is a big, blunt-talking man with a strong background in engineering—the proverbial "product man".
That makes him an attractive choice. GM desperately needs new products. It claims plenty are coming, but the company is still struggling to shed its image as a builder of mediocre, look-alike cars—at least in America. In Europe, where new investment has paid off better, a string of successes was reflected in the $2.7 billion which international operations added to GM's profit last year. Yet the battle for market share in Europe is increasing with the formation of a single EC market and with coming competition from East European exports. DRI, an economic-forecasting group, also thinks that a two-year decline in West European car sales will start next year.
GM has tried to give its American cars more flair by reorganising their production into two self-contained business units: Buick-Oldsmobile-Cadillac and Chevrolet-Pontiac-GM Canada. Something much more drastic is needed. If Mr Smith's Saturn project is not that something, GM could end its days as a decaying monument to the glory days of American manufacturing.
Quote from: The Minsky Moment on May 27, 2009, 03:54:39 PM
Let's put aside the BB issue - namely that it isn't obvious that there is any buyer out there who would want to purchase an entire auto line from GM at a price above zero. Let's assume such buyers exist and will pay. If GM went through a standard liquidation, it isn't clear that such a sale could be easily effected.
For the sake of example only, take the Silverado plant in Ohio. It may be the case that one secured creditor controls the land the plant sits on. Another controls the building and some of the physical plant. Another may control some of key equipment leases. Another controls the Chevrolet logo and branding elements. And so forth. So the prospective future Silverado manufacturer has to somehow negotiate with all these potential stakeholders simultaneously, and put together a new work force of several thousand people (or renegotiate with the existing workers), and manage to get all these deals done quickly enough that the plant doesn't suffer from too much down time, wastage, or vandalism.
Not saying it's impossible, but I would not underestimate the challenge. It's a lot of potential time and expense before even a single car is produced and sold, and all for the dubious privilege of producing Silverados.
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 would have preferred my government to not have thrown away the money of mine they have already invested in a worthless corporation, but those are sunk costs. Supporting a Chapter 11 filing that increases the near-zero-value asset's value by 30% or whatever a great expense makes no sense to me.
Quote from: grumbler on May 27, 2009, 05:19:04 PM
I would have preferred my government to not have thrown away the money of mine they have already invested in a worthless corporation, but those are sunk costs. Supporting a Chapter 11 filing that increases the near-zero-value asset's value by 30% or whatever a great expense makes no sense to me.
That is really it. Is this investment by tax payers in the US and Canada - dont forget we are paying a proportional share of this - getting any value other then saving the skins of the current politicians who can say that they at least tried.
I bet Berkut is a lot of fun at the labor day parade.
<International Brotherhood of Jazz dancers, Pastry chefs and Nuclear Technicians local 643 is throwing candy from a float>
"Daddy, can I get that candy"
"Oh sure, take the candy from the guy getting paid $75 an hour to sweep floors. I'm sure they can afford it. Those people are parasites. That candy will make you lazy and shiftless"
"Can I get any candy?"
"Well when we get our Bitter Randian parade together. But I don't think anyone will be throwing candy. Nature of the beast I suppose."
QuoteOh, 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.
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.
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.
Yeah, I'm sure GM will prove to be a solid investment. :)
Quote from: garbon on May 27, 2009, 09:04:15 PM
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.
And I think you are wrong.
Quote from: MadImmortalMan on May 27, 2009, 07:06:57 PM
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.
Quote from: garbon on May 27, 2009, 09:10:58 PM
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.
aka kick the ball down the road. Haven't we done enough of that?
Quote from: dps on May 27, 2009, 09:20:31 PM
Quote from: MadImmortalMan on May 27, 2009, 07:06:57 PM
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.
Quote from: Razgovory on May 27, 2009, 09:26:13 PM
Quote from: dps on May 27, 2009, 09:20:31 PM
Quote from: MadImmortalMan on May 27, 2009, 07:06:57 PM
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.
Quote from: garbon on May 27, 2009, 09:25:09 PM
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.
Quote from: DontSayBanana on May 27, 2009, 07:58:52 PM
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.
Quote from: DontSayBanana on May 27, 2009, 09:09:21 PM
Quote from: garbon on May 27, 2009, 09:04:15 PM
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?
Quote from: DontSayBanana on May 27, 2009, 09:22:55 PM
Quote from: garbon on May 27, 2009, 09:10:58 PM
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.
QuoteYou 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.
Quote
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.
Quote
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.
Quote from: DontSayBanana on May 27, 2009, 09:58:14 PM
Quote from: garbon on May 27, 2009, 09:25:09 PM
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.
But this entire plan is nothing more than a shortcut - a desperate attempt to circumvent the market consequences, and it isn't going to work anyway. It is just pouring good money after bad.
There is no slash and burn treatment - there is the do nothing, spend no hundreds of billions, and let the market sort itself out treatment. Government intervention is not the answer. Nancy Pelosi cannot run GM any better than the other failures who have been running GM. If she could, she would be making $20 million a year running some gigantic multinational, rather than screwing up the country.
Why We Should Suspend GM Trading:
QuoteCramer: Suspend GM Shares
Posted By: Tom Brennan | Web Editor
cnbc.com| 27 May 2009 | 09:14 PM ET
You might think, with bankruptcy a virtual inevitability at this point, that General Motors shares would stop trading. After all, the stock's chance for recovery is slim, if not completely hypothetical. But that hasn't been the case. U.S. exchanges continue to peddle GM to glossy-eyed investors hoping for a dramatic turnaround. To say that this outraged Cramer would be an understatement.
He called GM stock "practically valueless," a "charade," a "pretend piece of paper" that may pay off "years down the road," but only "if GM ever starts making a lot of money." Owners of common shares are in "huge, gargantuan, probably indescribable trouble," Cramer said, adding, "there's basically no way for them to win."
"If ever there was a screwed-up game," Cramer said, "selling people shares of GM's current common stock is it."
General Motors on Tuesday saw what might have been its only chance of escaping bankruptcy disappear, as bondholders rejected the company's shares-for-debt offering. Now the government's June 1 restructuring deadline will be all but impossible to meet. Also, going forward the majority of GM's shares will be held by Washington – up to 69% – with the United Auto Workers union holding 17.5%. In the end, common stockholders would own just 1% of the company.
Why then does this charade continue? Because just like AIG , Fannie Mae and Freddie Mac , GM boosts volume on the New York Stock Exchange. Put simply, brokers and exchanges benefit from the trading.
"And in their desire to make just a bit more money," Cramer said, "they've made a joke of the market."
Worst of all, the Securities and Exchange Commission is doing nothing to prevent this. Nor is any other government agency. That's no surprise, though, because Washington is "completely oblivious to the day-to-day trading of all stocks," Cramer said. Apparently it's not in anyone's interest to get rid of these zombie stocks, "except the public's interest." And the public is "duped daily in the market, as these stocks are fitting treats for investors who don't know what they're doing."We should be going out of our way to protect these investors, Cramer said, "if we ever want to get to a place where the market can be embraced by everyone, not just the...sharks that dominate it."
video link:
http://www.cnbc.com/id/15840232?video=1134838543&play=1 (http://www.cnbc.com/id/30964639/)
Quote from: dps on May 27, 2009, 09:49:40 PM
Uh, yeah, that's what I'm saying. MIM seemed to be arguing otherwise.
While not disagreeing with you gentlemen, I should point out that the rational method of ignoring sunk costs is almost never used. Ever. As in, I've never seen it happen. Somebody's reputation or ego is always sunk in with those costs, so they can't be allowed to sink. If you know what I mean.
The suitors for Opel apparently want about 200-300k Euro per Opel employee from the German government.
At that price, we can also finance a couple years of unemployment.
It's a ridiculous demand, that's probably at least 4 or 5 years of salaries paid in advance!
According to Wiki, Opel has 25,103 employees. That would mean 5,020,600,000 euros at 200,000 per employee, or 7,530,900,000 euros at 300,000 :face:
Actually, I reread that article and that was only the first attempt by the suitors. Now they want much less.
But apparently the American and German governments don't cooperate well on Opel, so for now there is no solution.
Unless they find one, Opel will be insolvent together with GM on Monday.
Good old EU is entering the ring, it seems...
http://online.wsj.com/article/BT-CO-20090528-704822.html
Quote
BRUSSELS (Dow Jones)--Economy and industry ministers from European Union countries and E.U. commissioners will meet Friday in Brussels to discuss the sale of General Motors Co.'s (GM) unit Adam Opel GmbH, a spokesman for the European Commission told Dow Jones Newswires.
The meeting will take place at 1500 local time, the commission's industry spokesman Ton Van Lierop said Thursday.
"There has to be a good exchange of information and a level playing field of information and that is the purpose of tomorrow's meeting," Van Lierop said later Thursday during a press conference. The commission hasn't invited any representative from GM to participate in the meeting, he said.
The commission was called to action by the Belgian government, which Wednesday sent a letter to the commission, asking it to ensure any resolution to the future of Opel is fair to all European countries where GM has operations. Belgium is particularly concerned about the future of an Opel plant it hosts.
Quote from: Berkut on May 27, 2009, 10:43:19 PM
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?
The state did not wrest control from the owners. The owners went begging cap in hand to the state to rescue them from their giant hole of an investment.
Let's not forget that if the Feds had taken a hard line, pretty much all these investors would have been wiped out and there would be no one to complain about preferential union treatment now.
If you need someone else to pay the piper, you lose the ability to call the tune.
Quote from: The Minsky Moment on May 28, 2009, 09:42:02 AM
Quote from: Berkut on May 27, 2009, 10:43:19 PM
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?
The state did not wrest control from the owners. The owners went begging cap in hand to the state to rescue them from their giant hole of an investment.
Let's not forget that if the Feds had taken a hard line, pretty much all these investors would have been wiped out and there would be no one to complain about preferential union treatment now.
The Feds are taking a hard line - the only people they will rescue is the precious, precious members of the UAW.
Frankly, I could not care less about the investors - they took their chances, and tough shit if they lose their money - as long as they lose their money as a result of the market, rather than as a result of the government stepping in and snatching whatever equity they ahve left in order to hand it over to the union, along with a hundred billion dollars or so of our money.
I don't think the UAW deserves protection anymore than the investors. I don't think the Fed should bail out the investors or the Union. If they mut bial out the company, then do so in a fashion that shows you really want to save the company, which means telling the UAW to shove it. What they are doing makes it clear they are not there to save GM, they are there to save UAW. And the means to doing that is siezing the comany from its current owners and turning it over to the workers.
Lenin would love this. We don't even need to shoot anyone this time around though - the masses will cheer on Obama as he nationalizes the auto industry.
Quote from: The Minsky Moment on May 28, 2009, 09:42:02 AM
Quote from: Berkut on May 27, 2009, 10:43:19 PM
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?
The state did not wrest control from the owners. The owners went begging cap in hand to the state to rescue them from their giant hole of an investment.
Let's not forget that if the Feds had taken a hard line, pretty much all these investors would have been wiped out and there would be no one to complain about preferential union treatment now.
If you need someone else to pay the piper, you lose the ability to call the tune.
To be fair, the owners (shareholders) were basically wiped out by market forces, so their representatives (management) going to the government begging for help shouldn't necessarily infringe on the rights of the creditors who are in a position to inherit the remains of the company. They still have a basis to complain about preferential union treatment and the de facto nationalization of the company.
Quote from: Berkut on May 28, 2009, 09:49:23 AMalong with a hundred billion dollars or so of our money.
For $100 bn you could buy Honda. I bet that would be a better investment for the American taxpayer. :P
Quote from: Berkut on May 28, 2009, 09:49:23 AM
The Feds are taking a hard line - the only people they will rescue is the precious, precious members of the UAW.
Frankly, I could not care less about the investors - they took their chances, and tough shit if they lose their money - as long as they lose their money as a result of the market, rather than as a result of the government stepping in and snatching whatever equity they ahve left in order to hand it over to the union, along with a hundred billion dollars or so of our money.
I don't think the UAW deserves protection anymore than the investors. I don't think the Fed should bail out the investors or the Union. If they mut bial out the company, then do so in a fashion that shows you really want to save the company, which means telling the UAW to shove it. What they are doing makes it clear they are not there to save GM, they are there to save UAW. And the means to doing that is siezing the comany from its current owners and turning it over to the workers.
Lenin would love this. We don't even need to shoot anyone this time around though - the masses will cheer on Obama as he nationalizes the auto industry.
I must admit that, in all of this ranting about "bailing out the UAW" I have never caught sight of the actual complaint that you have about the UAW trading $20 billion of so in GM obligations to the union pension and medical fund for a 20% or so stake in GM for said funds. This is pretty much exactly the same deal that the bondholders turned down. The union accepted such a shitty deal because it had little option, not because it was so powerful.
While I oppose the continued investment of taxpayer funds in the life support costs for a corpse, it isn't because the union is a minority beneficiary of the largess. I am far less happy about losing my own money than I am about the unions getting a tiny piece of what I lose.
Quote from: alfred russel on May 28, 2009, 09:57:16 AM
To be fair, the owners (shareholders) were basically wiped out by market forces, so their representatives (management) going to the government begging for help shouldn't necessarily infringe on the rights of the creditors who are in a position to inherit the remains of the company. They still have a basis to complain about preferential union treatment and the de facto nationalization of the company.
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.
Quote from: The Minsky Moment on May 28, 2009, 10:13:05 AM
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.
Quote from: The Minsky Moment on May 28, 2009, 10:13:05 AM
Quote from: alfred russel on May 28, 2009, 09:57:16 AM
To be fair, the owners (shareholders) were basically wiped out by market forces, so their representatives (management) going to the government begging for help shouldn't necessarily infringe on the rights of the creditors who are in a position to inherit the remains of the company. They still have a basis to complain about preferential union treatment and the de facto nationalization of the company.
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.
I don't disagree--but there is a minority of creditors claiming they would have gotten more.
Quote from: grumbler on May 28, 2009, 10:26:27 AM
Quote from: The Minsky Moment on May 28, 2009, 10:13:05 AM
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.
Quote from: grumbler on May 28, 2009, 10:26:27 AM
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.
Quote from: grumbler on May 28, 2009, 10:26:27 AM
Quote from: The Minsky Moment on May 28, 2009, 10:13:05 AM
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.
Quote from: alfred russel on May 28, 2009, 10:37:49 AM
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.
Quote from: Berkut on May 27, 2009, 03:26:34 PM
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?
Quote from: The Minsky Moment on May 28, 2009, 10:49:59 AM
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.
Quote from: Sheilbh on May 28, 2009, 11:27:20 AM
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.
QuoteSecond, 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.
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.
Quote from: DGuller on May 28, 2009, 12:47:10 PM
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
Quote from: DGuller on May 28, 2009, 12:47:10 PM
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.
Quote from: ulmont on May 28, 2009, 12:50:23 PM
Quote from: DGuller on May 28, 2009, 12:47:10 PM
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.
Quote from: alfred russel on May 28, 2009, 12:57:37 PM
Quote from: ulmont on May 28, 2009, 12:50:23 PM
Quote from: DGuller on May 28, 2009, 12:47:10 PM
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.
There was a GOP Congressman who lost his dealership, IIRC. That probably started the rumor.
Quote from: grumbler on May 28, 2009, 11:40:01 AM
Quote from: Sheilbh on May 28, 2009, 11:27:20 AM
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. :huh:
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?
Quote from: Hansmeister on May 28, 2009, 08:01:50 PM
And what, pray tell, happened to United Airlines in the end. :huh:
You don't know? :huh: What fucking planet have you been living on?
Quote from: KRonn on May 28, 2009, 09:33:30 PM
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?
Well, as far as Chrysler is concerned, the government shouldn't have bailed them out the 1st time, 30 years ago or so.
Quote from: grumbler on May 28, 2009, 09:40:45 PM
Quote from: Hansmeister on May 28, 2009, 08:01:50 PM
And what, pray tell, happened to United Airlines in the end. :huh:
You don't know? :huh: What fucking planet have you been living on?
Tsch, tsch... since when the Moon is a planet?
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.filmschoolrejects.com%2Fimages%2Fironsky_art3_nazi_ufo-590x309.jpg&hash=b6d8962026740ecbff160dfb847dcf00f0efee30)
Yes, United ended up in Chapter 11-land. So did Continental Airlines (twice), US Airways (twice), Delta Air Lines, Northwest Airlines... in 2006 over half the industry's seating capacity was on airlines that were in Chapter 11. Airlines are fragile things, there is nothing so easy to cut as airline tickets for both businesses and families, and, to be honest, I foresee another brutal round of mergers, closures and general upheaval in the sector during the next years.
Virgin America :wub:
Opel has apparently lost all suitors. Fiat definitely, Magna most likely. GM (and the US government which participates in the talks) is adding unreasonable demands all the time.
The German government has now made a calculation that shows that it is cheaper for the government (cash, not prestige) to let Opel liquidate.
Quote from: Alatriste on May 29, 2009, 01:45:52 AM
Yes, United ended up in Chapter 11-land. So did Continental Airlines (twice), US Airways (twice), Delta Air Lines, Northwest Airlines... in 2006 over half the industry's seating capacity was on airlines that were in Chapter 11. Airlines are fragile things, there is nothing so easy to cut as airline tickets for both businesses and families, and, to be honest, I foresee another brutal round of mergers, closures and general upheaval in the sector during the next years.
If governments wouldn't step in to prevent the collapse of major airlines, the industry wouldn't be as fragile.
Quote from: alfred russel on May 29, 2009, 06:39:58 AM
Quote from: Alatriste on May 29, 2009, 01:45:52 AM
Yes, United ended up in Chapter 11-land. So did Continental Airlines (twice), US Airways (twice), Delta Air Lines, Northwest Airlines... in 2006 over half the industry's seating capacity was on airlines that were in Chapter 11. Airlines are fragile things, there is nothing so easy to cut as airline tickets for both businesses and families, and, to be honest, I foresee another brutal round of mergers, closures and general upheaval in the sector during the next years.
If governments wouldn't step in to prevent the collapse of major airlines, the industry wouldn't be as fragile.
That's Theology, not Economy.
Let's see... we have an industry with
a) Very high public profile (a single accident can have dramatic consequences; Hindenburg tickets, anyone?)
b) Extremely high dependence on oil prices (these days airlines are suffering because they bought fuel when price was highest; of course they were getting it cheaper before, but in any case high prices mean huge problems for airlines... that they often aren't in synchrony with gas price on the street is no consolation)
c) Easily prescindible products (both businesses and families can very easily fly less often, fly economy class rather than business, and/or fly nearer... or stop flying at all)
d) Very costly vehicles from a very limited range of makers, with years long lags before delivery (meaning all too often you buy planes when you have high profits and plan for expansion, but only receive them when you don't want them anymore)
e) High dependence on highly qualified, expensive and not easily replaceable personnel (pilots, ATCs...)
f) High dependence on general political and economic climate (9-11, anyone?)
How would a non intervention policy help solve these problems?
That's the wrong question: how does intervention policy help solve all these problems?
Not at all. It rather excerbates them by keeping airlines that are not able to cope with them on their own alive.
Quote from: Zanza2 on May 29, 2009, 07:49:16 AM
That's the wrong question: how does intervention policy help solve all these problems?
Not at all. It rather excerbates them by keeping airlines that are not able to cope with them on their own alive.
Shush you, it is a matter of faith that government intervention can fix any problem, and failures of a business to cope with market realities is really just a failure of government.
We find your lack of faith in these principles disturbing.
I am always bemused by the idea that simply pointing out a problem is considered to be sufficient argument that some proposed fix in fact will work. GM is going bankrupt, therefore giving tens of billions of dollars to the UAW and propping them up is a good idea.
It is classisc:
1. Oh noes! GM is going into the shitter!
2. Give them insanely large amounts of taxpayer money!
3. ???
4. Profit!
How this intervention will actually achieve the goal is not important - simply doing
something, anything is needed! And hey, if we can push our ideological (or as Ally puts it, their theological) agenda at the same time, and nationalize a major industry, then so much the better.
GM is dead. Even the best case result of this intervention is simply going to be that we end up with a essentially new, government owned, union run automobile company that the government will then prop up with more and more regulations to "protect" our investment from those nasty market vagaries mentioned.
Quote from: Alatriste on May 29, 2009, 07:14:40 AM
How would a non intervention policy help solve these problems?
Every industry has problems. The reason the airline industry's problems always seem to become fatal is that the airlines make the same mistake every economic cycle - they over-invest in capacity at the top of the economic cycle (and agree to fat deals with the unions to service that capacity) in order to milk short-term profits, only to make them wholly unviable when the cycle dips, as it inevitably does.
Non-intervention deters that behavior and resolves its consequence by permanently terminating the worst offenders.
The alternative is to be honest that the airline market just doesn't work and re-regulate it. But the socialization of losses and privitization of gains system we have going now is the worst of both worlds.
Quote from: Zanza2 on May 28, 2009, 10:01:10 AM
Quote from: Berkut on May 28, 2009, 09:49:23 AMalong with a hundred billion dollars or so of our money.
For $100 bn you could buy Honda. I bet that would be a better investment for the American taxpayer. :P
You're a genius! :w00t:
Quote from: Alatriste on May 29, 2009, 07:14:40 AM
Quote from: alfred russel on May 29, 2009, 06:39:58 AM
Quote from: Alatriste on May 29, 2009, 01:45:52 AM
Yes, United ended up in Chapter 11-land. So did Continental Airlines (twice), US Airways (twice), Delta Air Lines, Northwest Airlines... in 2006 over half the industry's seating capacity was on airlines that were in Chapter 11. Airlines are fragile things, there is nothing so easy to cut as airline tickets for both businesses and families, and, to be honest, I foresee another brutal round of mergers, closures and general upheaval in the sector during the next years.
If governments wouldn't step in to prevent the collapse of major airlines, the industry wouldn't be as fragile.
That's Theology, not Economy.
Let's see... we have an industry with
a) Very high public profile (a single accident can have dramatic consequences; Hindenburg tickets, anyone?)
b) Extremely high dependence on oil prices (these days airlines are suffering because they bought fuel when price was highest; of course they were getting it cheaper before, but in any case high prices mean huge problems for airlines... that they often aren't in synchrony with gas price on the street is no consolation)
c) Easily prescindible products (both businesses and families can very easily fly less often, fly economy class rather than business, and/or fly nearer... or stop flying at all)
d) Very costly vehicles from a very limited range of makers, with years long lags before delivery (meaning all too often you buy planes when you have high profits and plan for expansion, but only receive them when you don't want them anymore)
e) High dependence on highly qualified, expensive and not easily replaceable personnel (pilots, ATCs...)
f) High dependence on general political and economic climate (9-11, anyone?)
How would a non intervention policy help solve these problems?
If several major carriers actually permanently went under, the players left would have less competition and be under less pricing pressure. That would make them more financially stable, which would make the industry less fragile.
Whether that is good for consumers and the public as a whole is debatable, but I'd still put government intervention as one of the top reasons the industry is fragile.
Quote from: The Minsky Moment on May 29, 2009, 08:04:42 AM
Quote from: Alatriste on May 29, 2009, 07:14:40 AM
How would a non intervention policy help solve these problems?
Every industry has problems. The reason the airline industry's problems always seem to become fatal is that the airlines make the same mistake every economic cycle - they over-invest in capacity at the top of the economic cycle (and agree to fat deals with the unions to service that capacity) in order to milk short-term profits, only to make them wholly unviable when the cycle dips, as it inevitably does.
Non-intervention deters that behavior and resolves its consequence by permanently terminating the worst offenders.
The alternative is to be honest that the airline market just doesn't work and re-regulate it. But the socialization of losses and privitization of gains system we have going now is the worst of both worlds.
Industries that have very high fixed costs, sell commodities, and must determine capacity years in advance are tough places to make money. The nature of business is optimism, and the result is excess supply without significant variable costs to reduce.
Quote from: alfred russel on May 29, 2009, 08:23:20 AM
Industries that have very high fixed costs, sell commodities, and must determine capacity years in advance are tough places to make money. The nature of business is optimism, and the result is excess supply without significant variable costs to reduce.
That's a polite way to put it.
Another way to put it is that in the presence of the separation of ownership and management, there is an incentive to maximize profits during the up phases to secure the maximum possible bonus and option comp, even at the expense of harming firm prospects in the future.
Quote from: alfred russel on May 29, 2009, 08:23:20 AMIndustries that have very high fixed costs, sell commodities, and must determine capacity years in advance are tough places to make money. The nature of business is optimism, and the result is excess supply without significant variable costs to reduce.
There are those airlines that are able to manage it though. As long as it does not lead to consolidation that results in a monopoly or other market distortion, I don't see any reason at all to support ailing airlines.
Quote from: alfred russel on May 29, 2009, 08:23:20 AM
Industries that have very high fixed costs, sell commodities, and must determine capacity years in advance are tough places to make money. The nature of business is optimism, and the result is excess supply without significant variable costs to reduce.
Agreed. Commodity producers with high fixed costs are really challenging the free market assumption. I'm fairly convinced that for those markets, competition can actually become destructive rather than constructive, like we are taught to assume in Econ 101. It's not like it's easy to lay low during the good times either, because then you'll have the same fixed costs, and all your clients with reckless competitors.
Quote from: DGuller on May 29, 2009, 10:26:49 AM
Quote from: alfred russel on May 29, 2009, 08:23:20 AM
Industries that have very high fixed costs, sell commodities, and must determine capacity years in advance are tough places to make money. The nature of business is optimism, and the result is excess supply without significant variable costs to reduce.
Agreed. Commodity producers with high fixed costs are really challenging the free market assumption. I'm fairly convinced that for those markets, competition can actually be destructive rather than constructive, like we are taught to assume in Econ 101. It's not like it's easy to lay low during the good times either, because then you'll have the same fixed costs, and all your clients with reckless competitors.
Econ 101 would say that investors would recognize this and make capital more scarce for these industries, imposing a prevention of overcapacity. But for some reason, people keep investing in airlines...
Quote from: alfred russel on May 29, 2009, 10:29:36 AM
Econ 101 would say that investors would recognize this and make capital more scarce for these industries, imposing a prevention of overcapacity. But for some reason, people keep investing in airlines...
Probably because the government is likely to step in and help them recover losses.
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Should've spent the money on lottery tickets.
Quote from: Barrister on May 29, 2009, 10:54:51 AM
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Should've spent the money on lottery tickets.
When the jackpot hits 200 million, I will.
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Company saved <> common shareholders saved.
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Lol Ed, the bankruptcy is going forward on either Sunday or Monday.
Quote from: DGuller on May 29, 2009, 11:02:25 AM
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Company saved <> common shareholders saved.
It is petty cash to me, so we'll see if my crazy investor-fu pays off. :)
Quote from: DGuller on May 29, 2009, 10:26:49 AM
Agreed. Commodity producers with high fixed costs are really challenging the free market assumption. I'm fairly convinced that for those markets, competition can actually become destructive rather than constructive, like we are taught to assume in Econ 101. It's not like it's easy to lay low during the good times either, because then you'll have the same fixed costs, and all your clients with reckless competitors.
Oil companies have high fixed costs and produce a commodity, yet we don't see periodic collapses of oil companies.
And most airlines lease their planes these days I believe.
Quote from: Admiral Yi on May 29, 2009, 11:47:35 AM
Oil companies have high fixed costs and produce a commodity, yet we don't see periodic collapses of oil companies.
And most airlines lease their planes these days I believe.
The fluctuation isn't quite so major for oil producers. Oil has a shelf life, so they don't have to write off unsold product immediately, unlike with sales of dated materials such as dated car models or seating tickets. Also, it's much easier to project and account for maintenance during the life cycle of leased equipment owned by oil producers than it is to project and account for the cost of leasing entire fleets of airliners- I think you'll find a closer comparison in petroleum transporters than in the oil producers.
Quote from: Ed Anger on May 29, 2009, 11:04:46 AM
Quote from: DGuller on May 29, 2009, 11:02:25 AM
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Company saved <> common shareholders saved.
It is petty cash to me, so we'll see if my crazy investor-fu pays off. :)
I suggest investing your next $800 in Tim. :)
Quote from: jimmy olsen on May 29, 2009, 12:09:36 PM
Quote from: Ed Anger on May 29, 2009, 11:04:46 AM
Quote from: DGuller on May 29, 2009, 11:02:25 AM
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Company saved <> common shareholders saved.
It is petty cash to me, so we'll see if my crazy investor-fu pays off. :)
I suggest investing your next $800 in Tim. :)
Even at this point, GM is probably a better investment.
Quote from: Admiral Yi on May 29, 2009, 11:47:35 AM
Oil companies have high fixed costs and produce a commodity, yet we don't see periodic collapses of oil companies.
And most airlines lease their planes these days I believe.
A leased plane isn't necessarily all that different from a purchased plan financed with debt.
Oil companies are a great comparison and you have a good point. My explanation would be that in the past the oil industry was notorious for boom and bust cycles, but the current limitations on supply prevent too much production.
Quote from: alfred russel on May 29, 2009, 12:44:31 PM
Oil companies are a great comparison and you have a good point. My explanation would be that in the past the oil industry was notorious for boom and bust cycles, but the current limitations on supply prevent too much production.
But another explanation is that the better oil companies have very good management.
There is a similar dynamic in the steel industry (which also has issues of state support) - but the better managed companies seem to survive and even increase share.
Quote from: The Minsky Moment on May 29, 2009, 01:03:48 PM
Quote from: alfred russel on May 29, 2009, 12:44:31 PM
Oil companies are a great comparison and you have a good point. My explanation would be that in the past the oil industry was notorious for boom and bust cycles, but the current limitations on supply prevent too much production.
But another explanation is that the better oil companies have very good management.
There is a similar dynamic in the steel industry (which also has issues of state support) - but the better managed companies seem to survive and even increase share.
Better managed companies do better in any industry, but do you think that industries have better management than other industries?
I tend to think that the major problem with the airlines is oversupply, which isn't going to be much of a problem for the oil industry if OPEC can exercise price control, or more importantly the known supply of oil available for production at a reasonable cost is limited to a significant degree. Oil companies can also hedge their risks to a greater degree than airline companies.
It looks like Monkeybutt made the right call:
QuoteJesse Jackson to hold rally in Lansing
As General Motors begins an expected bankruptcy Monday, the Rev. Jesse Jackson will lead a rally at the state Capitol to promote fairer trade policies he said will help bring manufacturing jobs back to the U.S.
The rally will cap a three-day swing by Jackson through Michigan to highlight the state's economic ills, which he told reporters today are linked to unfair trade and Wall Street greed that have sent jobs overseas.
Jackson will be joined in the noon rally by Lansing Mayor Virgil Bernero, who's become something of a national media figure on behalf of the Detroit three automakers, especially GM, which has a large presence in Lansing.
Also expected at the rally are Detroit Mayor Dave Bing, U.S. Sen. Debbie Stabenow, U.S. Rep. John Conyers, television judge Greg Mathis and representatives of the United Steelworkers of America.
"We need a comprehensive reindustrialization policy that is linked to reinvestment so American can reasonably compete," Jackson said in a conference call this morning from his Rainbow PUSH Coalition headquarters in Chicago.
Jackson said cars with advanced technology that should be assembled in the U.S. are being built in Europe and South America. He said low wages in China, Malaysia and other developing nations are the result of worker exploitation and child labor, and that the U.S. should demand fair worker policies from countries from which it buys products.
Bernero, who joined the call, said the U.S. cannot prosper without a strong manufacturing sector. He said a survival plan for GM that ships jobs overseas would harm the U.S., not help.
"I'm one who thinks protectionism isn't a dirty word," Bernero said. "We're not talking about closing our borders; we're talking about an even playing field. We want protection for fair trade, not isolation."
He added, "The middle class is being eroded, and Wall Street is aiding and abetting it."
Saturday, Jackson will hold events in Benton Harbor, Kalamazoo and Muskegon. On Sunday, he plans to visit several churches in Detroit and Flint.
Jesse Jackson is involved; we're saved. :)
Quote from: alfred russel on May 29, 2009, 12:44:31 PM
A leased plane isn't necessarily all that different from a purchased plan financed with debt.
Surely it must be easier to not renew a lease than to unload a plane in a buyer's market.
Quote from: alfred russel on May 29, 2009, 12:41:09 PM
Quote from: jimmy olsen on May 29, 2009, 12:09:36 PM
Quote from: Ed Anger on May 29, 2009, 11:04:46 AM
Quote from: DGuller on May 29, 2009, 11:02:25 AM
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Company saved <> common shareholders saved.
It is petty cash to me, so we'll see if my crazy investor-fu pays off. :)
I suggest investing your next $800 in Tim. :)
Even at this point, GM is probably a better investment.
So cruel :weep:
Quote from: Admiral Yi on May 29, 2009, 01:49:55 PM
Quote from: alfred russel on May 29, 2009, 12:44:31 PM
A leased plane isn't necessarily all that different from a purchased plan financed with debt.
Surely it must be easier to not renew a lease than to unload a plane in a buyer's market.
Checking on Delta, they have leased aircraft under contracts that don't expire until 2025 and have over $13 billion in mandatory future lease payments, almost half of which are after 2013. They have another $2.9 billion in commitments to buy new aircraft, a portion ($130 million) of which extends after 2013. They have long term commitments that are not going to be easy to break.
Quote from: jimmy olsen on May 29, 2009, 12:09:36 PM
Quote from: Ed Anger on May 29, 2009, 11:04:46 AM
Quote from: DGuller on May 29, 2009, 11:02:25 AM
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Company saved <> common shareholders saved.
It is petty cash to me, so we'll see if my crazy investor-fu pays off. :)
I suggest investing your next $800 in Tim. :)
get a job.
Quote from: Ed Anger on May 29, 2009, 03:11:56 PM
Quote from: jimmy olsen on May 29, 2009, 12:09:36 PM
Quote from: Ed Anger on May 29, 2009, 11:04:46 AM
Quote from: DGuller on May 29, 2009, 11:02:25 AM
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Company saved <> common shareholders saved.
It is petty cash to me, so we'll see if my crazy investor-fu pays off. :)
I suggest investing your next $800 in Tim. :)
get a job.
I just did, now do you want to send the money by cash or by check?
Quote from: jimmy olsen on May 30, 2009, 01:42:40 PM
Quote from: Ed Anger on May 29, 2009, 03:11:56 PM
Quote from: jimmy olsen on May 29, 2009, 12:09:36 PM
Quote from: Ed Anger on May 29, 2009, 11:04:46 AM
Quote from: DGuller on May 29, 2009, 11:02:25 AM
Quote from: Ed Anger on May 29, 2009, 10:49:25 AM
I just bought a 1000 shares of GM @ .88. Goes down, no big loss. Company saved, potential profit.
Company saved <> common shareholders saved.
It is petty cash to me, so we'll see if my crazy investor-fu pays off. :)
I suggest investing your next $800 in Tim. :)
get a job.
I just did, now do you want to send the money by cash or by check?
For somebody with a supposed masters degree, you can be quite dense sometimes.
To repeat: Get a job hippie.
Quote from: Ed Anger on May 29, 2009, 11:04:46 AMe
It is petty cash to me, so we'll see if my crazy investor-fu pays off. :)
It's not looking good. Chapter 11 Monday they're saying. I'd dump it if you get any bounce at all. I bet it hits just a couple cents pretty quickly. Maybe short it to offset.
Ed, next time you have a yen to throw away some money, go to militaryhistorypress.com (http://militaryhistorypress.com) and do it there, please. :cool:
Quote from: MadImmortalMan on May 30, 2009, 07:00:11 PM
Quote from: Ed Anger on May 29, 2009, 11:04:46 AMe
It is petty cash to me, so we'll see if my crazy investor-fu pays off. :)
It's not looking good. Chapter 11 Monday they're saying. I'd dump it if you get any bounce at all. I bet it hits just a couple cents pretty quickly. Maybe short it to offset.
Good luck finding shares to short--a guy I know has been trying to short the stock for the past year but his broker can't find any shares.
Quote from: alfred russel on May 30, 2009, 09:08:43 PM
Good luck finding shares to short--a guy I know has been trying to short the stock for the past year but his broker can't find any shares.
No shares or no puts? I can't imagine a situation in which there would be no shares to short sell.
Quote from: Admiral Yi on May 30, 2009, 09:26:05 PM
Quote from: alfred russel on May 30, 2009, 09:08:43 PM
Good luck finding shares to short--a guy I know has been trying to short the stock for the past year but his broker can't find any shares.
No shares or no puts? I can't imagine a situation in which there would be no shares to short sell.
No shares. I don't short things often--would that be unusual for a company flirting with bankruptcy?
QuoteGM bankruptcy filing expected 6 a.m. Monday
David Shepardson / Detroit News Washington Bureau
The Obama administration will name a veteran turnaround expert as chief restructuring officer for General Motors Corp., which plans to file for bankruptcy protection about 6 a.m. Monday in New York, but the U.S. Treasury Department will not remove Fritz Henderson as CEO.
Al Koch, a managing director at AlixPartners LLP, will be named chief restructuring officer Monday, a government official familiar with the matter said, and will help to wind down GM's "bad" assets that it plans to leave behind in bankruptcy.
The administration plans to give Henderson a vote of confidence just two months after the president's top auto adviser, Steven Rattner, fired Rick Wagoner as CEO. President Barack Obama will address the nation at 11:55 a.m. from the grand foyer of the White House on GM's restructuring -- the same place he has twice addressed the nation on the auto industry since March 30.
Meanwhile, the Obama administration was working to finalize the details of a deal with GM's European unit Opel. German Chancellor Angela Merkel called Obama on Friday to discuss the issue.
The German government chose Canadian auto parts manufacturer Magna International Inc. to buy Opel's assets and Germany will provide short-term financing to GM.
Under the agreement, Magna will get a 20 percent stake in Opel and Sherbank -- a bank controlled by the Russian government -- will receive a 35 percent share. GM will keep 35 percent and the final 10 percent will be held by Opel employees.
GM is expected to file for court protection from creditors under section 363(b) of the U.S. Bankruptcy Code. The Treasury Department plans to buy the automaker's "good assets" and provide GM with an additional $30.1 billion to operate while in bankruptcy, boosting the government's total investment in GM to about $50 billion.
The Treasury will hold an initial stake of 72.5 percent in GM, but will give some of that equity to Canada in exchange for an estimated $9 billion in Canadian financing for GM. The United Auto Workers health care trust fund will own 17.5 percent of GM.
Koch will oversee the sale or liquidation of other GM assets like Saturn, Hummer and 14 plants GM plans to close by the end of next year.
The White House auto task force planned to brief members of Congress late this evening on a conference call and Obama was expected to personally brief some senior members of Congress.
The White House had worked to orchestrate GM's filing to coincide with Chrysler LLC's departure from bankruptcy, which had been expected on Friday, to help reassure Americans that an auto bankruptcy can be surgical. U.S. Bankruptcy Judge Arthur Gonzalez may rule on Monday or Tuesday on Chrysler's sale.
Sorry, Monkeybutt, but it looks like investing $800 in Tim and/or millitary history books would have been a better idea. :(
@Ed: You didn't read my post? :cry:
Quote from: citizen k on May 27, 2009, 11:03:57 PM
Why We Should Suspend GM Trading:
QuoteCramer: Suspend GM Shares
Posted By: Tom Brennan | Web Editor
cnbc.com| 27 May 2009 | 09:14 PM ET
You might think, with bankruptcy a virtual inevitability at this point, that General Motors shares would stop trading. After all, the stock's chance for recovery is slim, if not completely hypothetical. But that hasn't been the case. U.S. exchanges continue to peddle GM to glossy-eyed investors hoping for a dramatic turnaround. To say that this outraged Cramer would be an understatement.
He called GM stock "practically valueless," a "charade," a "pretend piece of paper" that may pay off "years down the road," but only "if GM ever starts making a lot of money." Owners of common shares are in "huge, gargantuan, probably indescribable trouble," Cramer said, adding, "there's basically no way for them to win."
"If ever there was a screwed-up game," Cramer said, "selling people shares of GM's current common stock is it."
General Motors on Tuesday saw what might have been its only chance of escaping bankruptcy disappear, as bondholders rejected the company's shares-for-debt offering. Now the government's June 1 restructuring deadline will be all but impossible to meet. Also, going forward the majority of GM's shares will be held by Washington – up to 69% – with the United Auto Workers union holding 17.5%. In the end, common stockholders would own just 1% of the company.
Why then does this charade continue? Because just like AIG , Fannie Mae and Freddie Mac , GM boosts volume on the New York Stock Exchange. Put simply, brokers and exchanges benefit from the trading.
"And in their desire to make just a bit more money," Cramer said, "they've made a joke of the market."
Worst of all, the Securities and Exchange Commission is doing nothing to prevent this. Nor is any other government agency. That's no surprise, though, because Washington is "completely oblivious to the day-to-day trading of all stocks," Cramer said. Apparently it's not in anyone's interest to get rid of these zombie stocks, "except the public's interest." And the public is "duped daily in the market, as these stocks are fitting treats for investors who don't know what they're doing."We should be going out of our way to protect these investors, Cramer said, "if we ever want to get to a place where the market can be embraced by everyone, not just the...sharks that dominate it."
video link:
http://www.cnbc.com/id/15840232?video=1134838543&play=1 (http://www.cnbc.com/id/30964639/)
In the end we all are share holders of the new GM. Well except the filthy euros.
Quote from: Grey Fox on June 01, 2009, 07:06:43 AM
In the end we all are share holders of the new GM. Well except the filthy euros.
No problem we dont want your shitty cars anyway...
Quote from: Grey Fox on June 01, 2009, 07:06:43 AM
In the end we all are share holders of the new GM. Well except the filthy euros.
Excluding those Euros who buy US treasuries...one might say they're kinda in on it.
And the Chinese...and Japan...and....
Quote from: Mr.Penguin on June 01, 2009, 07:08:00 AM
No problem we dont want your shitty cars anyway...
Neither do we, which is why GM finds itself in this situation. :)
Quote from: Grey Fox on June 01, 2009, 07:06:43 AM
In the end we all are share holders of the new GM. Well except the filthy euros.
Some of us will have to pay for GM Europe aka Opel/Vauxhall though...
I have thought about this, long and hard, and I have reached the following conclusion: The USA was too soft on the Axis powers in World War 2, and that is why the large automakers are in trouble. Had the USA paved over the malcontented countries who made war, this would have never happened, and the glorious days of the American Prosperity could have continued unchallenged for 1000 years.
Quote from: PDH on June 01, 2009, 08:22:22 AM
I have thought about this, long and hard, and I have reached the following conclusion: The USA was too soft on the Axis powers in World War 2, and that is why the large automakers are in trouble. Had the USA paved over the malcontented countries who made war, this would have never happened, and the glorious days of the American Prosperity could have continued unchallenged for 1000 years.
:nelson:
Quote from: PDH on June 01, 2009, 08:22:22 AM
I have thought about this, long and hard, and I have reached the following conclusion: The USA was too soft on the Axis powers in World War 2, and that is why the large automakers are in trouble. Had the USA paved over the malcontented countries who made war, this would have never happened, and the glorious days of the American Prosperity could have continued unchallenged for 1000 years.
Had that gone down, the English would have probably stepped up once American cars were revealed as terrible. Besides, not all the Axis powers make great cars that sell in North America. Look at Italy and France.
QuoteNew GM to dissolve 2,100 dealers
By Justin Hyde • Free Press Washington Staff • June 1, 2009
General Motors Corp. will pare 2,100 dealers from its business, and has until July 10 to complete the remix of its assets in bankruptcy court paid for by the Obama administration, according to filings today.
In an affidavit, GM Chief Executive Fritz Henderson also reveals that the company looked for investments from foreign governments and considered selling OnStar, but was unable to do either as the economy collapsed last year, leaving the Obama administration plan as the only choice.
"There simply is no viable alternative," Henderson said in the filing. "There is no other sale, or even other potential purchasers, present or on the horizon."
Under the plan GM will sell "substantially all" of its assets to a new company that's owned by the U.S. and Canadian governments, the UAW health-care trust fund and bondholders. The U.S. government will lend $30.1 billion, with the Canadian and Ontario governments pitching in an additional $9.5 billion.
For the first time, Henderson said the new GM will accept 4,100 dealer contracts out of 6,000, leaving 2,100 in the old company. GM had sent letters earlier this month to 1,100 dealers, saying their contracts would be ended by late next year.
Henderson said the new GM would sign "deferred termination agreements" with most of the dealers targeted for closure, giving them up to 17 months' notice, to ease their hardship.
The plan will allow "thousands of dealerships to survive, while providing for an orderly wind-down of those dealerships not being retained," Henderson said. "The alternative to the exercise of sound business judgment is that the Company would liquidate – and all dealerships would cease to be GM dealerships."
Henderson said GM's sorry finances and the weakening economy had left it with no other choices to survive. It had talks with "foreign entities" and sovereign wealth funds about investing in the company, but no accords were reached.
Henderson said GM first broached the idea with Daimler of buying Chrysler in 2007 as a cost-saving move. But after some talks, GM decided a deal "would only exacerbate GM's exposure to a dwindling U.S. automotive market with mounting costs and supplier concerns," and it quit negotiations.
While GM restarted talks in August 2008, the economic collapse the following month locked down corporate credit, and GM pulled out in November.
Henderson said GM also considered selling OnStar, believing it could get $2 billion to $4 billion.
I had no idea so many GM dealerships had donated to John McCain's campaign.
;)
I believe that's about a third of GM's network.
So Frank Stronach and Magna have a deal where they'll own 20% of Opel, while the Russians will own 35%, GM 35%, and the union 10%.
Good God, what are they thinking? Your co owners are the Russian government, unions, and GM? I'm hard pressed to think which of the three is the most competent.
chain of command. Stronach says the deal will work because Magana will be making the vital decisions:
QuoteAlthough Magna will hold a minority position in Opel, Stronach stressed his company will provide "the industrial leadership."
"Absolutely, otherwise it doesn't work," he said after flying home to Aurora from Austria earlier in the day. http://www.thestar.com/business/article/643386
Quote from: Grey Fox on June 01, 2009, 07:06:43 AM
In the end we all are share holders of the new GM. Well except the filthy euros.
I want to sell my share plz.
Quote from: Barrister on June 01, 2009, 11:11:29 AM
So Frank Stronach and Magna have a deal where they'll own 20% of Opel, while the Russians will own 35%, GM 35%, and the union 10%.
Good God, what are they thinking? Your co owners are the Russian government, unions, and GM? I'm hard pressed to think which of the three is the most competent.
it's an excellent trap: the Russkies will inevitably use this to screw over the Europeans. When they do so they'll come over as the bad guys (yet again) and even more europeans will be convinced that Russia needs to be nukes now rather than tomorrow.
Quote from: MadImmortalMan on June 01, 2009, 12:59:16 PM
Quote from: Grey Fox on June 01, 2009, 07:06:43 AM
In the end we all are share holders of the new GM. Well except the filthy euros.
I want to sell my share plz.
Me too, but no buyers. :(
Quote from: MadImmortalMan on June 01, 2009, 12:59:16 PM
Quote from: Grey Fox on June 01, 2009, 07:06:43 AM
In the end we all are share holders of the new GM. Well except the filthy euros.
I want to sell my share plz.
I saw Romney on TV pushing the idea that rather than the government and union keep the shares, they should be distributed to taxpayers and union members.
Apart from other reasons this won't happen, after putting in $50 billion the past few months, each income taxpayer should get about $1k in stock--the actual value would be so much less it would be a flashing neon light of how poor government policy has been thus far.
Quote from: alfred russel on June 01, 2009, 01:17:26 PM
I saw Romney on TV pushing the idea that rather than the government and union keep the shares, they should be distributed to taxpayers and union members.
Apart from other reasons this won't happen, after putting in $50 billion the past few months, each income taxpayer should get about $1k in stock--the actual value would be so much less it would be a flashing neon light of how poor government policy has been thus far.
I think it's wrong to judge GM by its ability to generate profits or returns to investors. It hasn't been about that for a long, long time.
Quote from: DGuller on June 01, 2009, 01:30:30 PM
I think it's wrong to judge GM by its ability to generate profits or returns to investors. It hasn't been about that for a long, long time.
It also shouldn't be judged by its ability to manufacture vehicles, effectively market its offering, innovate its product, distribute its product efficiently, provide a stable work environment, manage its company benefits competently, manage its finances competently, reduce its impact on the environment, spin good public relations, or map out a coherent restructuring plan.
In all fairness, it should be judged primarily on its ability to lobby in Washington. On that basis it is crusing right along just fine.
Quote from: The Minsky Moment on June 01, 2009, 01:37:44 PM
Quote from: DGuller on June 01, 2009, 01:30:30 PM
I think it's wrong to judge GM by its ability to generate profits or returns to investors. It hasn't been about that for a long, long time.
It also shouldn't be judged by its ability to manufacture vehicles, effectively market its offering, innovate its product, distribute its product efficiently, provide a stable work environment, manage its company benefits competently, manage its finances competently, reduce its impact on the environment, spin good public relations, or map out a coherent restructuring plan.
In all fairness, it should be judged primarily on its ability to lobby in Washington. On that basis it is crusing right along just fine.
It is ironic that in the end it is the organization that is the worst enemy of GM, and the primary cause of its destruction, that ends up wielding the political power to "save" it.
I tossed out the $50 billion figure without looking up how much it really was--it turns out the number is more like $70 billion ($19.4 billion provided already, $50 billion bankruptcy financing). And the government has indicated that this may not be the end.
That is an unbelievable amount of money. AIG lost more, but it is easy to imagine how you can lose enormous sums when you make the decision to wager as much as you can without an ability to pay potential losses. I think an industrial company's achievement of losing so much money may stand above AIG's lofty standard.
I was talking to a co-worker who used to live in D.C. and worked for some union with offices like 2 blocks from the White House (she said they were right around the corner from the AFL-CIO headquarters). She confirmed it was run by the Mafia. :)
So when you stop to think about $70 billion (plus more to Chrysler)--is this really still a defensible policy? If auto demand is off by about 50%, GM & Chrysler disappearing wouldn't threaten our ability to get cars. You could do so much else with that money, including giving 1 million workers $70k. At least then the other automakers would be in better shape.
Quote from: alfred russel on June 01, 2009, 02:43:20 PM
If auto demand is off by about 50%, GM & Chrysler disappearing wouldn't threaten our ability to get cars.
But the other manufacturers are mostly "Japanese" :mad:
The irony of course is that most Japanese cars sold here are built here.
Quote from: Caliga on June 01, 2009, 02:48:25 PM
But the other manufacturers are mostly "Japanese" :mad:
The irony of course is that most Japanese cars sold here are built here.
And in our efforts to save Chysler, we are turning it over to the Italians.
Quote from: Caliga on June 01, 2009, 07:26:54 AM
Quote from: Mr.Penguin on June 01, 2009, 07:08:00 AM
No problem we dont want your shitty cars anyway...
Neither do we, which is why GM finds itself in this situation. :)
GM sells tons of cars, it's all of it's other expenses that have destroyed it.
Hillbillies rejoice!
QuoteGM expected to keep its stake in auto racing
By MIKE BRUDENELL • FREE PRESS SPORTS WRITER • June 1, 2009
General Motors Corp. is expected to continue its long-time involvement in auto racing as the Detroit carmaker retools after bankruptcy.
A company spokesman said today he didn't expect budget cuts to GM Racing's program, which had already been scaled back earlier in the year.
GM supports teams in NASCAR, NHRA, ALMS and short-track racing. It provides marketing support and vehicles to racetracks around the country, including Michigan International Speedway in Brooklyn, where the LifeLock 400 NASCAR Sprint Cup race will be held June 14.
GM also provides cash and technical aid to race teams like Hendrick Motorsports in Charlotte, N.C., who field Jeff Gordon, Jimmie Johnson, Mark Martin, Dale Earnhardt Jr. and Brad Keselowski of Rochester Hills.
Rick Hendrick, owner of Hendrick Motorsports, spoke out on GM's bankruptcy announcement in a statement today.
"Since I was a kid, Chevy has represented the highest level of performance," said Hendrick, who runs the Chevy Impala SS in Sprint Cup. "I've never wanted to race anything else, and I have every confidence that we will continue to celebrate victories together for many more seasons to come."
Between them, Gordon and Johnson have won seven series championships in Chevrolets for Hendrick.
Quote from: jimmy olsen on June 01, 2009, 02:56:42 PM
GM sells tons of cars, it's all of it's other expenses that have destroyed it.
If GM's market share today was the same as it was in like 1970, do you think GM would be going under?
Quote from: alfred russel on June 01, 2009, 02:43:20 PM
So when you stop to think about $70 billion (plus more to Chrysler)--is this really still a defensible policy? If auto demand is off by about 50%, GM & Chrysler disappearing wouldn't threaten our ability to get cars. You could do so much else with that money, including giving 1 million workers $70k. At least then the other automakers would be in better shape.
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?
Quote from: Caliga on June 01, 2009, 02:59:22 PM
Quote from: jimmy olsen on June 01, 2009, 02:56:42 PM
GM sells tons of cars, it's all of it's other expenses that have destroyed it.
If GM's market share today was the same as it was in like 1970, do you think GM would be going under?
While it will likely never get back to those levels, before the latest crisis it was neck and neck with Toyota for most vehicles sold.
Quote from: alfred russel on June 01, 2009, 01:59:46 PM
I tossed out the $50 billion figure without looking up how much it really was--it turns out the number is more like $70 billion ($19.4 billion provided already, $50 billion bankruptcy financing). And the government has indicated that this may not be the end.
That is an unbelievable amount of money. AIG lost more, but it is easy to imagine how you can lose enormous sums when you make the decision to wager as much as you can without an ability to pay potential losses. I think an industrial company's achievement of losing so much money may stand above AIG's lofty standard.
I read that GM's total debt is $173 bn.
Quote from: Savonarola on June 01, 2009, 02:56:48 PMQuote
"Since I was a kid, Chevy has represented the highest level of performance," said Hendrick,
:yeahright:
Quote from: Zanza2 on June 01, 2009, 03:08:50 PM
Quote from: Savonarola on June 01, 2009, 02:56:48 PMQuote
"Since I was a kid, Chevy has represented the highest level of performance," said Hendrick,
:yeahright:
Southerners don't give a shit about German cars. It is Ford or Chevy or nothing.
America is like a decaying carcass.
Quote from: Barrister on June 01, 2009, 02:59:58 PM
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.
Quote from: alfred russel on June 01, 2009, 02:43:20 PM
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.
Quote from: Ed Anger on June 01, 2009, 03:14:00 PM
Southerners don't give a shit about German cars. It is Ford or Chevy or nothing.
:lmfao: Rick Hendrik owns dozens of dealerships, selling all kinds of makes.
Quote from: Ed Anger on June 01, 2009, 03:14:00 PM
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.
Quote from: The Minsky Moment on June 01, 2009, 03:26:02 PM
Quote from: alfred russel on June 01, 2009, 02:43:20 PM
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.
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:
Quote
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.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fus.news2.yimg.com%2Fus.yimg.com%2Fp%2Ffi%2F22%2F91%2F39.jpg&hash=4551ede1d709b13aa31abb1859a90c7d8bb18336)
QuoteA bit laconic and looking every bit the just-out-of-graduate-school student
Indeed. :)
Thanks Oex.
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.
Quote from: alfred russel on June 01, 2009, 04:33:14 PMI'd know I'd feel better with JR there.
Me too, can you imagine languish mentioned in a congress hearing?!
Quote from: Ed Anger on June 01, 2009, 04:50:02 PM
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.
Quote from: alfred russel on June 01, 2009, 04:33:14 PM
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:
Quote
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.
Less baby boomers in power position the better it is.
Quote from: Hansmeister on June 02, 2009, 06:15:23 AM
You're doing a heckuva job, Brownie.
What it unfortunately reminds me of is shortly after the Iraq invasion the stories of people taking major administrative positions in Iraq who were just out of school and whose major qualifications were a connection with a group like the Heritage Foundation.
Quote from: Martim Silva on June 01, 2009, 04:04:07 PM
Toyota in Huntsville (AL), Georgetown (KY)
:cool:
Yeah, if Toyota ever went under or shut that plant down, Georgetown is toast. Basically everyone either works there or for the various parts suppliers surrounding it.
:blink:
QuoteGM sells Hummer to mystery buyer
Bankrupt automaker won't disclose details of deal to sell truck line.
By Aaron Smith, CNNMoney.com staff writer
Last Updated: June 2, 2009: 8:28 AM ET
NEW YORK (CNNMoney.com) -- General Motors Corp. said Tuesday that it has signed a deal to sell its Hummer truck unit, just one day after filing for bankruptcy.
But GM (GM, Fortune 500) would not identify the buyer nor name a price, saying only that the deal would close by the end of September.
GM had revealed in April that it was courting three serious offers for the Hummer brand. The automaker would not confirm Reuters' report that offers ranged from $100 million to $200 million.
"I'm confident that Hummer will thrive globally under its new ownership," said Troy Clarke, president of GM North America, in a press release. "And for GM, this sale continues to accelerate the reinvention of GM into a leaner, more focused, and more cost-competitive automaker."
As part of the deal, some GM plants will continue to build the Hummer brand for the new owner, at least for a while. The company said its Shreveport, La. plant will keep building Hummers for the new owner until at least 2010.
GM also said that the deal should protect more than 3,000 jobs in manufacturing and engineering, and at dealerships "around the country."
The Hummer and other large vehicles have been a drag on the U.S. auto industry since fuel prices spiked in 2008 and the recession deepened.
GM said it sold 5,013 Hummers worldwide in the first quarter, down 62% from the 13,050 that it sold in the same period the prior year.
Hummer isn't the only brand that GM is leaving behind. The automaker will also shed its Pontiac, Saturn and Saab brands and cut loose more than 2,000 of its 6,000 U.S. dealerships by next year.
That could result in more than 100,000 additional job losses if those dealerships are forced to close.
GM filed for bankruptcy Monday, just hours after Chrysler's bankruptcy process cleared a hurdle when a federal judge approved its asset sale.
The GM bankruptcy was hailed by President Obama, who wants a complete overhaul of the U.S. auto industry, even though the Chapter 11 filing is expected to result in the loss of 20,000 jobs and the closure of a dozen facilities.
won't they have to disclose full details of that transaction in bankruptcy court?
I always wanted an original Hummer (not the pussy H2 and H3), and drive it around in center of commie Ohio, Yellow Springs. Rub it in those Antioch college tard faces. USA! USA! USA!
Quote from: saskganesh on June 02, 2009, 07:56:14 AM
won't they have to disclose full details of that transaction in bankruptcy court?
My emoticon was for two reasons:
1. Exactly what you cited.
2. Who on Hod's green earth would actually want to buy the Hummer brand?
Quote from: Ed Anger on June 02, 2009, 07:59:24 AM
I always wanted an original Hummer (not the pussy H2 and H3), and drive it around in center of commie Ohio, Yellow Springs. Rub it in those Antioch college tard faces. USA! USA! USA!
You pretty much described the only reason ANYONE would buy a Hummer. But then that gets old, and you'd go broke filling the damn thing's tank up, so you'd never get another one. Car brands don't do so well when they can't earn repeat business. :)
Quote from: Ed Anger on June 02, 2009, 07:59:24 AM
I always wanted an original Hummer (not the pussy H2 and H3), and drive it around in center of commie Ohio, Yellow Springs. Rub it in those Antioch college tard faces. USA! USA! USA!
It's the American dream.
I wonder how long it will be before GM goes bankrupt a second time.
Again the really annoying thing is is that people on this board have been saying GM needs to dump most of its brands and reorganized for years. It is only now that GM does that very thing.
Quote from: Valmy on June 02, 2009, 08:03:14 AM
I wonder how long it will be before GM goes bankrupt a second time.
Again the really annoying thing is is that people on this board have been saying GM needs to dump most of its brands and reorganized for years. It is only now that GM does that very thing.
You mean chapter 7? I give it a year or so.
Quote from: Valmy on June 02, 2009, 08:03:14 AM
Again the really annoying thing is is that people on this board have been saying GM needs to dump most of its brands and reorganized for years. It is only now that GM does that very thing.
Individuals come to sensible conclusions far faster than groups do. Groups of people get stupider the larger they get. It's why government doesn't work.
Quote from: Caliga on June 02, 2009, 08:02:51 AM
Quote from: Ed Anger on June 02, 2009, 07:59:24 AM
I always wanted an original Hummer (not the pussy H2 and H3), and drive it around in center of commie Ohio, Yellow Springs. Rub it in those Antioch college tard faces. USA! USA! USA!
You pretty much described the only reason ANYONE would buy a Hummer. But then that gets old, and you'd go broke filling the damn thing's tank up, so you'd never get another one. Car brands don't do so well when they can't earn repeat business. :)
Baiting leftist 'tards NEVER gets old. NEVER.
Quote from: Valmy on June 02, 2009, 08:03:14 AM
I wonder how long it will be before GM goes bankrupt a second time.
Again the really annoying thing is is that people on this board have been saying GM needs to dump most of its brands and reorganized for years. It is only now that GM does that very thing.
It's an easy thing to say; but outside of bankruptcy it's not so easy to do. Due to franchise laws it was very expensive to dump brands. IIRC it cost GM a billion dollars to eliminate Oldsmobile.
Quote from: Savonarola on June 02, 2009, 08:10:48 AM
Quote from: Valmy on June 02, 2009, 08:03:14 AM
I wonder how long it will be before GM goes bankrupt a second time.
Again the really annoying thing is is that people on this board have been saying GM needs to dump most of its brands and reorganized for years. It is only now that GM does that very thing.
It's an easy thing to say; but outside of bankruptcy it's not so easy to do. Due to franchise laws it was very expensive to dump brands. IIRC it cost GM a billion dollars to eliminate Oldsmobile.
Which is why the original bailouts were such terrible ideas. Giving them $20 billion on some pipe dream that they were going to survive was $20 billion that was completely wasted.
If I could I would buy Hummer, as a smaller niche truck company (like it was) it should be viable. Their mistake was they got greedy and wanted to milk the good name of the original.
Quote from: alfred russel on June 02, 2009, 08:37:34 AM
Which is why the original bailouts were such terrible ideas. Giving them $20 billion on some pipe dream that they were going to survive was $20 billion that was completely wasted.
Bailing out failing companies is generally a terrible idea. It basically enables bad behavior from firms since they never have to really worry about paying the ultimate price and it enables Unions to continue to push their employers in bankruptcy since their jobs will always be protected to some extent.
The US people = the ultimate enablers.
I guess somehow it makes everybody feel better to waste tons of money to make sure GM and Chrysler die slow deaths rather than quick ones.
Maybe this bail out, bankruptcy will work - some new cars, new ideas, changes in the way the corp does business, and a smaller but more focused product line. They're restructuring and all, but won't they be retaining some of their old problems? I feel, and felt at the time, that they should have gone through a controlled bankruptcy before the first bail out. At that time they didn't seem to be doing any significant changes that would keep them going except for govt/taxpayer funds.
I'll wait and see; I hope GM makes it. But I tend to not think GM can do enough to pull them out of trouble, given how deep in they've already gotten to. And it that's the case, I wonder/worry that the government will take even more measures to keep them going. Maybe added tariffs on imports, or taxes on foreign cars made in the US. Or pressure on foreign corps manufacturing in the US to unionize, which may cause some of those corps to leave the US, costing more jobs. Or what ever else the govt cooks up, with the unintended consequences.
Quote from: Valmy on June 02, 2009, 08:03:14 AM
I wonder how long it will be before GM goes bankrupt a second time.
Again the really annoying thing is is that people on this board have been saying GM needs to dump most of its brands and reorganized for years. It is only now that GM does that very thing.
It's actually interesting that everybody always says that GM has to shrink to be competitive because in Germany they say that you need size for economies of scale. Mercedes and BMW (each builds about 1-1.4 million cars/year) are generally considered to be too small to survive alone and are now considering deeper cooperation, mostly to compete with Audi. Volkswagen-Audi (>6 million cars) are a huge group that can share development costs and exert more bargaining power in procurement. Porsche was too small but just bought the bigger Volkswagen (even if it may end up as a subsidiary of VW soon). Mercedes tried to get the necessary size by buying Chrysler and parts of Mitsubishi, but we all know how that ended. BMW tried the same with Rover in the 90s and failed.
Fiat's attempt to buy Chrysler and GM Europe was also motivated by Fiat's chairman saying that you need to build 5-7 million cars to be competitive.
Quote from: Zanza2 on June 02, 2009, 11:31:03 AM
It's actually interesting that everybody always says that GM has to shrink to be competitive because in Germany they say that you need size for economies of scale.
If you buy that argument, GM should be liquidated. If you need economies of scale to survive, and auto demand has significantly dropped, you can't preserve the economies of scale for everyone. Someone has to go.
Quote from: Zanza2 on June 02, 2009, 11:31:03 AM
It's actually interesting that everybody always says that GM has to shrink to be competitive
GM has some very profiteable brands but alot of ones that are black pits. It was simply suggested they need to drop the money losing ones and concentrate on the cars people actually buy. That may or may not have looked like building overall fewer cars.
Now they are at the point that they need to shrink simply to reduce overhead.
Quote from: Zanza2 on June 02, 2009, 11:31:03 AM
It's actually interesting that everybody always says that GM has to shrink to be competitive because in Germany they say that you need size for economies of scale. Mercedes and BMW (each builds about 1-1.4 million cars/year) are generally considered to be too small to survive alone and are now considering deeper cooperation, mostly to compete with Audi. Volkswagen-Audi (>6 million cars) are a huge group that can share development costs and exert more bargaining power in procurement. Porsche was too small but just bought the bigger Volkswagen (even if it may end up as a subsidiary of VW soon). Mercedes tried to get the necessary size by buying Chrysler and parts of Mitsubishi, but we all know how that ended. BMW tried the same with Rover in the 90s and failed.
Fiat's attempt to buy Chrysler and GM Europe was also motivated by Fiat's chairman saying that you need to build 5-7 million cars to be competitive.
In the United States smaller automotive manufacturers were either forced to merge with larger ones (Hudson) or went under (Packard and Studebaker) because they were unable to upgrade their factories and invest in new technologies.
GM is in a different position; it's factory capacity, dealership network and brands are sized from thirty years ago when it had about 40% of automotive sale in the United States. Now they have about 20%.
Quote from: Zanza2 on June 02, 2009, 11:31:03 AM
Quote from: Valmy on June 02, 2009, 08:03:14 AM
I wonder how long it will be before GM goes bankrupt a second time.
Again the really annoying thing is is that people on this board have been saying GM needs to dump most of its brands and reorganized for years. It is only now that GM does that very thing.
It's actually interesting that everybody always says that GM has to shrink to be competitive because in Germany they say that you need size for economies of scale. Mercedes and BMW (each builds about 1-1.4 million cars/year) are generally considered to be too small to survive alone and are now considering deeper cooperation, mostly to compete with Audi. Volkswagen-Audi (>6 million cars) are a huge group that can share development costs and exert more bargaining power in procurement. Porsche was too small but just bought the bigger Volkswagen (even if it may end up as a subsidiary of VW soon). Mercedes tried to get the necessary size by buying Chrysler and parts of Mitsubishi, but we all know how that ended. BMW tried the same with Rover in the 90s and failed.
Fiat's attempt to buy Chrysler and GM Europe was also motivated by Fiat's chairman saying that you need to build 5-7 million cars to be competitive.
According to Wiki GM made 8.3 million vehicles in 2008. They can shrink by quite a bit and still maintain some economies of scale.
But for as much as people are saying GM needs to shrink, I think they're more saying they need to consolidate. They may have made 8.3 million vehicles, but look how many brands it was spread over:
Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling.
If GM did a better job of sharing its technology between its own units, sold the same model in more markets, it's stand a much better shot at being profitable.
I do wonder how a quasi-independent Opel is going to survive though. Surely the issue of economies of scale applies to it.
I don't really expect Opel to be successful in the long run. They produce for the mass market (low margins) and don't have economies of scale like Volkswagen. And their market share and volume at least in Germany (and I assume elsewhere in Europe) has been constantly shrinking.
Quote from: Zanza2 on June 02, 2009, 12:13:41 PM
I don't really expect Opel to be successful in the long run. They produce for the mass market (low margins) and don't have economies of scale like Volkswagen. And their market share and volume at least in Germany (and I assume elsewhere in Europe) has been constantly shrinking.
Stronach was talking about selling cars in Russia, claiming it'll be an up and coming market, and selling and producing Opels in North America. Neither of which sounds terribly reasonable.
The Russia thing might work, however they'll probably have to move the factory to Russia too to actually pull that off. North America? No way. Unless they can leverage the GM dealer network or so.
Quote from: Barrister on June 02, 2009, 12:35:31 PM
Quote from: Zanza2 on June 02, 2009, 12:13:41 PM
I don't really expect Opel to be successful in the long run. They produce for the mass market (low margins) and don't have economies of scale like Volkswagen. And their market share and volume at least in Germany (and I assume elsewhere in Europe) has been constantly shrinking.
Stronach was talking about selling cars in Russia, claiming it'll be an up and coming market, and selling and producing Opels in North America. Neither of which sounds terribly reasonable.
I've seen a shitload of Opels back there, in fact they were probably the most common of the foreign makes there. What's wrong with selling them in Russia?
Quote from: alfred russel on June 02, 2009, 06:53:10 AM
What it unfortunately reminds me of is shortly after the Iraq invasion the stories of people taking major administrative positions in Iraq who were just out of school and whose major qualifications were a connection with a group like the Heritage Foundation.
Me too. Though this could just be that he works in the White House, rather than that he's been appointed to oversee everything. From my understanding the staff of the President (and of Congressmen and Senators) is very often remarkably young. In which case worry about GM no more than you worry about your country as a whole :p
QuoteBuick, Cadillac, Chevrolet, Daewoo, Saab, Vauxhall
These are the only ones I even recognise and I don't think I've ever seen a Buick, Cadillac or Chevrolet. Cadillacs, especially, are associated with kitsch Americana in my imagination.
Quote from: Zanza2 on June 02, 2009, 12:52:35 PM
The Russia thing might work, however they'll probably have to move the factory to Russia too to actually pull that off. North America? No way. Unless they can leverage the GM dealer network or so.
That's what he was talking about (and GM is still a large shareholder).
And yeah GM had (and continues to have) way too many brands across the world. I dare say that companeis like VW, Toyota or Ford have it right - market one brand around the world.
Quote from: Sheilbh on June 02, 2009, 12:55:09 PM
Me too. Though this could just be that he works in the White House, rather than that he's been appointed to oversee everything. From my understanding the staff of the President (and of Congressmen and Senators) is very often remarkably young. In which case worry about GM no more than you worry about your country as a whole :p
That's because with our politicians, appearances are by far the most important thing. If you're ugly, forget it (unless you're Nancy Pelosi, for some reason :unsure: )
Quote from: Barrister on June 02, 2009, 01:01:55 PM
I dare say that companeis like VW, Toyota or Ford have it right - market one brand around the world.
None of those have a single brand, and some have shitloads of them (like VW).
Quote from: Sheilbh on June 02, 2009, 12:55:09 PMCadillacs, especially, are associated with kitsch Americana in my imagination.
That is only because you have never seen a Dodge Desoto:
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Accept no substitutes for kitscy Americana; it's the Desoto or nothing.
All three have multiple brands too. Not as many as GM though which might support the argument that GM needs to shed some of its brands.
Toyota has Lexus, Scion and Daihatsu. Ford has Lincoln, Mercury, Volvo and used to have Jaguar and Land Rover.
Volkswagen has passenger cars marqued as Volkswagen, Audi, Skoda, SEAT, Bentley, Lamborghini and Bugatti. The latter three of those don't need economies of scale as their customers just fork over a couple dozen grands more and don't care. Sales for the other are about 4 million VWs, about 1 million Audis, about 600k Skodas and about 400k SEATs. However, Volkswagen has a platform strategy which means that essentially a VW Golf = VW Jetta = Audi A3 = Skoda Octavia = SEAT Leon = Audi TT. On that platform alone, they sell about 2 million cars per year. That's huge economies of scale.
Are there any even any one marque car makers? Renault-Nissan and Peugeot-Citroen obviously not, Honda has Acura, Daimler has Mercedes-Benz, smart and Maybach, BMW has Rolls-Royce and Mini, Fiat has Lancia, Alfa Romeo, Ferrari. Hyundai and Kia perhaps? Mitsubishi?
Quote from: DGuller on June 02, 2009, 12:53:03 PM
Quote from: Barrister on June 02, 2009, 12:35:31 PM
Quote from: Zanza2 on June 02, 2009, 12:13:41 PM
I don't really expect Opel to be successful in the long run. They produce for the mass market (low margins) and don't have economies of scale like Volkswagen. And their market share and volume at least in Germany (and I assume elsewhere in Europe) has been constantly shrinking.
Stronach was talking about selling cars in Russia, claiming it'll be an up and coming market, and selling and producing Opels in North America. Neither of which sounds terribly reasonable.
I've seen a shitload of Opels back there, in fact they were probably the most common of the foreign makes there. What's wrong with selling them in Russia?
The inherent criminality of the Russian people.
Quote from: alfred russel on June 02, 2009, 06:53:10 AM
What it unfortunately reminds me of is shortly after the Iraq invasion the stories of people taking major administrative positions in Iraq who were just out of school and whose major qualifications were a connection with a group like the Heritage Foundation.
In the original Washington Post article the only "major administrative position" actually specified was that held by the guy in charge of reforming the Iraqi stock exchange. Which is hardly a major administrative position.
Quote from: Caliga on June 02, 2009, 01:14:29 PMThat's because with our politicians, appearances are by far the most important thing. If you're ugly, forget it (unless you're Nancy Pelosi, for some reason :unsure: )
I don't know. It seems to be the case in this country too. Increasingly senior aides (ie. non-civil servants) are in their late 20s, early 30s and these are people who run the government's press office, policy positions and so on. I think it's because whereas the civil service is a career being an aide is, generally, a first rung on the ladder, unless you're at the very top (Emanuel, Axelrod and the like).
Plus our leaders have got younger. It would be weird if Tony Blair, in his forties arrived with a cadre of 50-something aides. They're of a different political generation. In that context what use, in New Labour, would a bunch of people who worked with Callaghan and Foot be?
Though I think there's something in the fact that politics is still showbiz for ugly people.
I'm not sure of the reasons. It's not necessarily a problem, especially in a system like you have in the US with a weaker civil service than we have. I actually think our MPs are under-staffed and the government needs more special advisors.
Quote from: Caliga on June 02, 2009, 01:14:29 PM
That's because with our politicians, appearances are by far the most important thing. If you're ugly, forget it
You must be joking.
Hummer's tentative buyer revealed:
QuoteGM says it has a buyer for Hummer
By TIM HIGGINS • FREE PRESS BUSINESS WRITER • June 2, 2009
NEW YORK – General Motors has lined up a China machinery company as the buyer for Hummer, marking the first entry into the U.S. auto market by a Chinese company.
A person briefed the on the matter confirmed that GM has a tentative agreement to sell Hummer to Sichuan Tengzhong Heavy Industrial Machinery Co. of China.
The sale is expected to close by the end of September, and requires regulatory approval. GM did not identify the buyer or the selling price.
Selling off the off-road brand is part of GM's restructuring plan. The company is refocusing itself on four key U.S. brands. It also hopes to sell off Saab and spin off Saturn. Pontiac is being phased out.
GM today also said it had 16 interested parties in acquiring its Saturn brand. The company has said it has three interested parties in its Saab brand.
The announcement comes on the heels of GM filing for bankruptcy reorganization, a process the company hopes will allow it to quickly spin off its good parts into a new GM and leave behind bad parts in the bankruptcy process.
As part of the Hummer deal, GM has agreed to provide contract manufacturing and business services for a transitional period. It will continue building the H3 SUV at its Shreveport assembly plant through at least 2010.
"Hummer is a strong brand," Troy Clarke, GM North America president, said in a statement. "I'm confident that Hummer will thrive globally under its new ownership.
And for GM, this sale continues to accelerate the reinvention of GM into a leaner, more focused, and more cost-competitive automaker."
GM said the deal is expected to save 3,000 U.S. manufacturing, engineering and dealership jobs.
The buyer is expected to "aggressively fund future Hummer product programs," the company added.
Citi was GM's financial adviser on the deal.
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Ed, is that your car?
Quote from: Savonarola on June 02, 2009, 02:22:26 PM
Hummer's tentative buyer revealed:
Isreal has to be pissed that China is getting American military technology without buying it from them.
Quote from: Zanza2 on June 02, 2009, 04:04:35 PM
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Ed, is that your car?
No. :lol:
That is one of those pussy versions anyways.
QuoteMonday, June 8, 2009
George Will
Have we got an auto deal for you
"I," said the president, who is inordinately fond of the first-person singular pronoun, "want to disabuse people of this notion that somehow we enjoy meddling in the private sector." He said that in March, when the government already owned 80 percent of AIG, Fannie Mae and Freddie Mac. "When a difficult decision has to be made on matters like where to open a new plant or what type of new car to make, the new GM, not the United States government, will make that decision."
But the government is GM's largest shareholder, customer, tax collector, regulator, partner in determining employees' compensation, protector of dealers and pension guarantor. GM's other large owner, the United Auto Workers, is increasingly a government dependent.
Yet, Steve Rattner and Ron Bloom, two of the president's fixers of Detroit, recently wrote in USA Today that government "will play no role" in running GM. They were not under oath.
"What we are not doing -- what I have no interest in doing -- is running GM," says the president who, when not firing GM's CEO, purging its board of directors and picking new members, is designing new products (imposing fuel economy requirements that will control size, weight, passenger capacity and safety).
Washington mandates that Detroit must build cars for which there is much less demand than Washington demands that there be. Then Washington tries to manufacture demand with a $7,500 tax credit for purchasers of the electric Chevrolet Volt, supposedly GM's salvation. So, GM is to be saved by a product people will not buy without a cash incentive larger than the income tax paid by 83.4 percent of America's families.
It is reasonable to assume that GM will become profitable -- if you make unreasonable assumptions about annual vehicle sales and GM's share of the market. Besides, the government that runs Amtrak (which has lost $23 billion, in today's dollars, just since 1990) vows to make GM efficient.
But one reason Amtrak runs on red ink is that legislators treat it as their toy train set, preventing it from cutting egregiously unprofitable routes. Will Congress passively accept auto plant-closing decisions? Rattner says Washington's demure vow is: "No plant decisions, no dealer decisions, no color-of-the-car decisions."
Rattner is one-third right. Last week, under the headline "Senators Blast Automakers Over Dealer Closings," the Washington Post reported, "Because the federal government is slated to own most of General Motors and 8 percent of Chrysler, some of the senators said they have a responsibility, as major shareholders do, to review company decisions."
The pressure to politicize the economy is spreading. John Sweeney, head of the AFL-CIO, and Gerald McEntee, head of the American Federation of State, County and Municipal Employees -- which is government organized as an interest group to lobby itself -- have demanded the resignation of two directors of Citigroup. Their premise is that businesses receiving direct government subventions should conform to the wishes of the president's allies.
GM is adopting new ways to lose money: Responsive to its UAW masters, GM is moving from China to America the production of some components of one Chevrolet model. Says UAW President Ron Gettelfinger, "It should be built here if it's going to be sold here." That principle, now successfully asserted, means economic autarky -- the end of international trade, and of prosperity.
The government's $50 billion -- so far -- acquisition of the shadow of GM will injure, with unfair financial advantages, the surprisingly healthy U.S. auto company, Ford. Of course, the government does not intend that injury, any more than it intended to cause protests in Mexico over the high price of corn tortillas, a result of Washington's mandate that Americans burn corn (ethanol) in their cars.
Washington's "rescue" of GM began because GM is "too big to fail," and bankruptcy is (well, was) "unthinkable." Big? GM's market capitalization, $375.8 million on Wednesday, is about the size of California Pizza Kitchen's ($340 million) -- is it too big to fail? -- and one-eleventh that of Harley-Davidson ($4.3 billion). Fail? If GM has not already failed, New Coke was a success.
The administration is determined to prop up GM as a jobs program for the UAW and Midwestern states rich in electoral votes. This frenzy will intensify as the administration's decisions deepen the debacle.
Comparing the railroads, which are even partially exempt from antitrust legislation, and the automakers is not a good comparison.
Also, Ford is a "surprisingly healthy" company? Hardly. Land Rover and Jaguar were sold at near fire sale prices to Tata Motors, and when asked about whether they would need the bailout money, they didn't claim to be able to sustain current numbers, simply that they didn't need money as immediately as GM or Chrysler. Another thing to consider is that while Ford's sub-brands were limited, it's got arms of partnership all over the place.
EDIT: Parse this as you will, I was replying to Sav, and I'm getting kind of pissed off at the way the forum software is fucking up my quotes for me.
George Will is a weird writer.
Quote from: DontSayBanana on June 08, 2009, 08:47:43 AM
Comparing the railroads, which are even partially exempt from antitrust legislation, and the automakers is not a good comparison.
Also, Ford is a "surprisingly healthy" company? Hardly. Land Rover and Jaguar were sold at near fire sale prices to Tata Motors, and when asked about whether they would need the bailout money, they didn't claim to be able to sustain current numbers, simply that they didn't need money as immediately as GM or Chrysler. Another thing to consider is that while Ford's sub-brands were limited, it's got arms of partnership all over the place.[/s]
The point that Will was making is that giving GM and Chrysler money puts Ford at a comparative disadvantage; not that Ford is doing well. I think this detracts from Will's main point; if the government's management of the auto companies is so egregious then Ford should have an advantage over the domestic competitors.
Quote from: Savonarola on June 08, 2009, 08:59:47 AM
if the government's management of the auto companies is so egregious then Ford should have an advantage over the domestic competitors.
Not true at all, unfortunately,since the feds have external advantages that can (and will) both harm Ford even while they completely screw up running GM and Chrysler. They can pour money into bribing people to buy GM cars, which will not help GM in the long run (since it does not adress the core problem) while at the same time screwing over Ford in the short run.
It is a lose-lose-lose situation, which makes it perfect for the government.
Go go Obamateur!
Quote from: Savonarola on June 08, 2009, 08:59:47 AM
I think this detracts from Will's main point; if the government's management of the auto companies is so egregious then Ford should have an advantage over the domestic competitors.
No, not necesserily. If the government runs GM at a loss while dumping lots of cash into it, then it can simultaneously achieve both the mismanagement of the GM and the destruction of Ford.
Quote from: DGuller on June 08, 2009, 11:14:56 AM
Quote from: Savonarola on June 08, 2009, 08:59:47 AM
I think this detracts from Will's main point; if the government's management of the auto companies is so egregious then Ford should have an advantage over the domestic competitors.
No, not necesserily. If the government runs GM at a loss while dumping lots of cash into it, then it can simultaneously achieve both the mismanagement of the GM and the destruction of Ford.
I guess this proves that you have gone back to pretending not to read my posts. :(
:lmfao:
Quote from: DGuller on June 08, 2009, 11:14:56 AM
Quote from: Savonarola on June 08, 2009, 08:59:47 AM
I think this detracts from Will's main point; if the government's management of the auto companies is so egregious then Ford should have an advantage over the domestic competitors.
No, not necesserily. If the government runs GM at a loss while dumping lots of cash into it, then it can simultaneously achieve both the mismanagement of the GM and the destruction of Ford.
Fair enough; if both you and Berkut agree on anything concerning the economy it must be true.
Quote from: Savonarola on June 08, 2009, 11:36:09 AM
Fair enough; if both you and Berkut agree on anything concerning the economy it must be true.
I'm somewhat insulted by the implicit assumption that Berkut and I are on the same level when it comes to quality of economic analysis. Let my argument stand or fall on its own merits, what Berkut says is of little value.
Quote from: DGuller on June 08, 2009, 11:55:38 AM
Quote from: Savonarola on June 08, 2009, 11:36:09 AM
Fair enough; if both you and Berkut agree on anything concerning the economy it must be true.
Let my argument stand or fall on its own merits, what Berkut says is of little value.
LOL, classic DG. Apparently my arguments are good enough to force you to throw a tempter tantrum and quit arguing with me because you get thrashed so badly, so maybe the reverse here is actually true.
Tell us more about how this is all Reagan's fault again! That was some quality "analysis"!
QuoteI'm somewhat insulted by the implicit assumption that Berkut and I are on the same level when it comes to quality of economic analysis.
Hehe, I guess this is another case where we agree after all - in fact, our ability to analyze and argue a point are not at all on the same level.
See, I am not afraid to note that sometimes we agree! The power of the dispassionate mind wins again.