(POL) Time to let General Motors go bankrupt?

[SirFozzie]

I know what the effects will be, but now they're coming out and asking for another $30 Billion, and if they don't get it, they will be bankrupt by March? Maybe it's time to stop shoveling money into the mouth of the company and let it go...

http://www.reuters.com/article/bonds...47593820090217


DETROIT, Feb 17 (Reuters) - General Motors Corp (GM.N) said on Tuesday it could need a total of up to $30 billion in U.S. government aid -- more than doubling its original aid -- and would run out of cash as soon as March without new federal funding.

The request for additional aid from the top U.S. automaker came in a restructuring plan GM submitted to U.S. officials on Tuesday.

The GM restructuring plan of more than 100 pages was posted on the U.S. Treasury Web site.

The request came on the same afternoon that No. 3 U.S. automaker Chrysler requested an additional $5 billion from the current $4 billion in U.S. government aid, saying it expected the brutal downturn in the U.S. market to run another three years. [ID:nN17319117]

GM also said it had not reached deals with bondholders and its major union to reduce some $47 billion in debt but would work to reach those agreements by the end of March.

In response to signs of a prolonged slump in demand for new cars and trucks, the automaker also said it would step up cost-cutting, reducing its global workforce by 47,000 jobs this year and cutting five additional U.S. plants by 2012.

In addition, GM said it would cut its U.S. workforce by another 20,000 jobs by 2012 with most of those reductions coming earlier.

GM has been kept afloat since the start of the year with $13.4 billion in loans from the U.S. Treasury. Its expanded aid request for up to $30 billion includes a $7.5 billion credit line in the event that the autos market remains depressed.

Critics of the bailout of GM and its smaller rival Chrysler LLC have urged the government to consider financing a court-supervised restructuring for the two ailing automakers in bankruptcy.

GM said its own analysis of the costs and risks of a bankruptcy filing would require more than $100 billion in financing that could have to be provided by the U.S. government.

GM requested an unprecedented U.S. government bailout in December and had pegged its funding need then at up to $18 billion.

But the automaker has faced a deep slide in sales outside its long-slumping home market in the weeks since and GM said its revised restructuring plan would take aim at loss-making overseas units as well.

GM also said it would plan to phase out its Saturn brand by the end of 2011 and make a decision on whether to sell or just wind down its Hummer SUV brand by the end of the current quarter. (Editing by Matthew Lewis)

[RainMaker]

Are the effects really going to be that bad? Bankruptcy seems like a good way to get them out of some bad contracts.

[JonInMiddleGA]

RM, I don't think the kind of bankruptcy they're looking at is the sort you recover from. It's more the kind that's final & the doors close immediately afterwards. And among other problems there is that if they go away then the original set of government loans don't get paid back either.

I'd say the most obvious answer to giving them any more cash would be to (as much as I hate this idea in numerous ways) nationalize the company and just take it over. Problem there is that there doesn't seem to be any way they'll ever recover enough to pay off the existing debt they have so obligating the government to the full load doesn't seem like a reasonable plan either.

To the original question, at this point all we're doing is delaying the inevitable I think, so the choices seem to be to take the hit now or take it later after having thrown billions down the drain trying to keep the Titanic from sinking.

[RainMaker]

I don't think them going completely under is as apocalyptic as some make it sound. Demand in the industry won't diminish, it'll just see market share transfer. Smart companies will be the benefactors of their failure, exactly how our system should be. Those other companies will sell more cars and have to hire more people.

If anything, it'll be a good thing for the country in the long run. A lesson to investors and even employees. It also purges our economy from a poorly run company.

[Flasch186]

Im not sure letting one fail would be devastating that you couldnt recover in a fairly short amount of time however letting all 3 fail might be.

[wade moore]

Well, Ford hasn't failed - they didn't even need bailout money. So, at least one isn't failing.

[Buccaneer]

Originally Posted by wade moore

Well, Ford hasn't failed - they didn't even need bailout money. So, at least one isn't failing.

One?? A lot more than that.

It appears the non-Union Honda plant in Greensburg, Indiana (that's USA) is doing ok

Originally Posted by 11/2008

ABC News reports:

Detroit may be in the doldrums, but Greensburg, Ind., is celebrating its shiny new auto plant.

Honda Motor Co. opened a new factory in the town of 12,000 in October, bringing jobs and hope.

Honda CEO Takeo Fukui flew in from Tokyo for the plant’s dedication ceremony Monday, eager to take advantage of the trouble American automakers are in.

“At Honda, we always understand that challenging times … represent opportunity,” Fukui said.

Honda’s new plant in Greensburg represents the “other” American auto industry — the U.S. plants owned by foreign carmakers. Unlike the American “big three” automakers — GM, Ford and Chrysler — the foreign-owned companies are not looking for bailouts. Instead, they are expanding to places like Greensburg.

“This is an American-made automobile. Hoosiers make it,” said Adam Huening, news editor of the Greensburg Daily News. More than 900 nonunion employees were hired to work in the plant and expect to turn out 200,000 Honda Civics per year, including some powered by natural gas. The plant, which costs $550 million, will likely grow to employ 2,000 workers.

Unlike the American big three, Japanese automakers are not saddled with enormous costs for retirees. Their younger, mostly nonunion American workers get paid far less.

At Honda, workers receive about $44 an hour, including benefits, while GM employees receive $73.

….

In places like San Antonio, Georgetown, Ky., and West Point, Ga., 15 foreign-owned assembly plants and dozens of supporting factories have been built in the United States. Most of them are in southern states without auto union traditions, and like Indiana’s new Honda plant, they are designed for flexibility.

[wade moore]

Originally Posted by Buccaneer

One?? A lot more than that.

It appears the non-Union Honda plant in Greensburg, Indiana (that's USA) is doing ok

Well sure, Bucc. We all know we're not talking about foreign-owned car plants in the US.

I agree with where you're going there, but we all know that's not what we're talking about here.

[Buccaneer]

Originally Posted by wade moore

Well sure, Bucc. We all know we're not talking about foreign-owned car plants in the US.

I agree with where you're going there, but we all know that's not what we're talking about here.

What we're talking about here is throwing money at a failed (or at least, obsolete) business model. GM and Chrysler would not have to disappear, they could be bought out.

[wade moore]

Don't get me wrong, I'm on the "let the market take it's course" side of things.

That being said, I also recognize that that solution could cause a lot of pain to a lot of people that will not go away quickly.

Yeah, the could be bought out - but who would want to buy those awful money pits?

[Philliesfan980]

Please tell me that people putting together cars aren't the ones making an annual salary of $151,840 (including benefits) at GM.

[molson]

If the US sucks at the car business, it should get get out of the car business. The government nationalizing this industry is only going to make us even WORSE at the car business.

In a global economy, the worst thing you can to is dedicate capital and resources to areas where you suck. It makes no sense.

[Surtt]

Originally Posted by molson

If the US sucks at the car business, it should get get out of the car business. The government nationalizing this industry is only going to make us even WORSE at the car business.

In a global economy, the worst thing you can to is dedicate capital and resources to areas where you suck. It makes no sense.

Where do you think we should dedicate capital and resources to?

[DaddyTorgo]

Originally Posted by Surtt

Where do you think we should dedicate capital and resources to?

guns and bombs. and semiconductors.

[Galaxy]

Originally Posted by wade moore

Well sure, Bucc. We all know we're not talking about foreign-owned car plants in the US.

I agree with where you're going there, but we all know that's not what we're talking about here.

Isn't that the main problem with Ford, GM, and Chrysler? I don't see how this is not included in any discussion.

[RainMaker]

Originally Posted by wade moore

Don't get me wrong, I'm on the "let the market take it's course" side of things.

That being said, I also recognize that that solution could cause a lot of pain to a lot of people that will not go away quickly.

Yeah, the could be bought out - but who would want to buy those awful money pits?

Pain is unavoidable in life. It's part of the business world. There will always be winners and losers. It sucks, but it's a lesson learned for those who invested in a company run by incompetent fools.

[AgustusM]

I don't pretend to have any expertise to offer anything more than a completely uniformed opinion, but it seems to me that it the natural order of things is for business conditions to change, for the strong and profitable to innovate and thrive and for the weak to fail and go away.

[DaddyTorgo]

what about the trickle-down effects on the small & medium businesses who supply these automakers with every single component of the car? they're all fucked also then. it has an economic impact far beyond just the unionized workers (who are wayyy overpaid) and the companies themselves

[Anthony]

oh stop with that tired point already. what happens to the secondary medium/small companies is the same thing that happens to Mom and Pop stores when WalMart and KMart come to town. they slowly get phased out and or they move on to other things. or, gasp, they offer competitive bids to make parts for existing car companies. you remember competition? i know its a long lost idea from the past, from a time when the government didn't prop up failed businesses.

[Buccaneer]

Originally Posted by DaddyTorgo

what about the trickle-down effects on the small & medium businesses who supply these automakers with every single component of the car? they're all fucked also then. it has an economic impact far beyond just the unionized workers (who are wayyy overpaid) and the companies themselves

There is a demand for 15,000,00 vehicles to be sold this year in the US (estimating down a little from 2008). Of course, not all are new vehicles. Auto suppliers would still need to supply many parts for a lot of those vehicles, including those for foreign cars. Any bailouts of the Detroit automakers would have to include the suppliers but they don't have to keep supplying GM or Chrysler parts, or whatever brands they become.

[JPhillips]

The unionized workers are by no means way overpaid. Their salaries are a bit higher, but compare favorably to non-union plants. The excess cost is largely due to legacy health and retirement costs. Costs that foreign plants don't share as greatly due to nationalized healthcare in their home countries and a short time span in the U.S., which limits the number of retirees.

The best bailout for the auto companies and large swathes of American business is single-payer healthcare.

[Buccaneer]

Originally Posted by Anthony

oh stop with that tired point already. what happens to the secondary medium/small companies is the same thing that happens to Mom and Pop stores when WalMart and KMart come to town. they slowly get phased out and or they move on to other things. or, gasp, they offer competitive bids to make parts for existing car companies. you remember competition? i know its a long lost idea from the past, from a time when the government didn't prop up failed businesses.

You know, folks talk about me living in the past. At least I can recognize obsolescent buggy whips from my childhood.

[DaddyTorgo]

Originally Posted by JPhillips

The unionized workers are by no means way overpaid. Their salaries are a bit higher, but compare favorably to non-union plants. The excess cost is largely due to legacy health and retirement costs. Costs that foreign plants don't share as greatly due to nationalized healthcare in their home countries and a short time span in the U.S., which limits the number of retirees.

The best bailout for the auto companies and large swathes of American business is single-payer healthcare.

fair enough. i didn't differentiate that i was talking about the legacy health & retirement costs, but i certainly recognize that those are the bulk of the excess cost for those companies

[DaddyTorgo]

Originally Posted by Anthony

oh stop with that tired point already. what happens to the secondary medium/small companies is the same thing that happens to Mom and Pop stores when WalMart and KMart come to town. they slowly get phased out and or they move on to other things. or, gasp, they offer competitive bids to make parts for existing car companies. you remember competition? i know its a long lost idea from the past, from a time when the government didn't prop up failed businesses.

and with no credit how are they supposed to meet payroll or pay for the existing materials they have purchased ad made before they run out of time and go belly-up?? they definitely can't get loans to move on to other things

in a normal economy i agree with you - just there's no wiggle-room now.

[sterlingice]

Originally Posted by Buccaneer

You know, folks talk about me living in the past. At least I can recognize obsolescent buggy whips from my childhood.

SI

[DaddyTorgo]

i'm not an advocate of writing blank checks to automakers at all, but to suggest that everything will be honky-dory if they fail is whistling past the graveyard.

[Galaxy]

Originally Posted by JPhillips

The unionized workers are by no means way overpaid. Their salaries are a bit higher, but compare favorably to non-union plants. The excess cost is largely due to legacy health and retirement costs. Costs that foreign plants don't share as greatly due to nationalized healthcare in their home countries and a short time span in the U.S., which limits the number of retirees.

The best bailout for the auto companies and large swathes of American business is single-payer healthcare.

When does Japan/Germany (and other countries with auto brands in the US) pay for the health care costs (both working and retired) of US workers in foreign-owned plants? Your confusing headquarters with plants.

[Young Drachma]

Good riddance.

[JPhillips]

Originally Posted by Galaxy

When does Japan/Germany pay for the health care costs (both working and retired) of US workers in foreign-owned plants? Your confusing headquarters with plants.

No, when costs are figured, at least in the figures I've seen, the numbers are company wide. Even if you're right, the health costs still fall greater on American automakers as a greater number of retired workers are being paid for currently.

If you compare salary and current benefits the US companies aren't that far apart from foreign manufacturers. The main problem is the greater percentage of retirees.

[Anthony]

Originally Posted by DaddyTorgo

and with no credit how are they supposed to meet payroll or pay for the existing materials they have purchased ad made before they run out of time and go belly-up?? they definitely can't get loans to move on to other things

in a normal economy i agree with you - just there's no wiggle-room now.

you're a small business owner that manufactures an exhaust widget for GM. if your entire livelihood and existence depends on the financial health of one company would you not make it one of your top priorities to keep abreast of their ability to pay you? what would you do if GM was a very viable company but decided to not renew your contract to manufacture that exhaust widget and opted to do business with a similar company in China making the exact same part for much less than you?

are you really that naive to think owners of these smaller niche companies walk around with their heads in the clouds or in the sand like ostriches? how exactly do these smaller companies operate? many people like yourself make these "oh, but what about the children?!!!" arguements without there being any definitive word as to how they work and what they need in order to remain in business. it seems from day one of this auto bailout fiasco people have been talking based on assumptions. i haven't heard of any definitive report that would show all these companies make one part and supply it to one customer (one of the Big Three) and the day after one of the Big Three closes its doors these smaller companies are then forced to close up shop.

thats not simply how businesses work. you don't get to the level of owning such a company, making millions off of supplying auto parts to a huge corporation and rubbing elbows with big auto execs without knowing what exactly you would do in the event you no longer are their supplier of the part you make. or maybe this is a very volatile market with lots of small companies propping up ready to undercut existing prices just to win a contract. maybe this is an industry where you exist only as long as you are being paid to make these parts and when things get bad you sell your business or you close up shop. no one knows much about the dynamics of that niche industry but yet people like you are quick to lump them in the "do we or don't we bailout the Big Three" issue.

[Warhammer]

Originally Posted by JPhillips

The unionized workers are by no means way overpaid. Their salaries are a bit higher, but compare favorably to non-union plants. The excess cost is largely due to legacy health and retirement costs. Costs that foreign plants don't share as greatly due to nationalized healthcare in their home countries and a short time span in the U.S., which limits the number of retirees.

The best bailout for the auto companies and large swathes of American business is single-payer healthcare.

It is the union's fault because they negotiated the contracts that hung this millstone around the neck of the automakers. Of course the Big Three agreed to the terms, so both parties are guilty. To say that unions are responsible for their plight is like saying slavery didn't cause the Civil War. No matter which way you try to slice the problem, it is the root cause.

[RainMaker]

Originally Posted by DaddyTorgo

i'm not an advocate of writing blank checks to automakers at all, but to suggest that everything will be honky-dory if they fail is whistling past the graveyard.

It won't be hunky dory, it'll be crappy. People will lose jobs, people will suffer. But the alternative is much worse. The alternative is keeping a poorly run and failing business to stay afloat. If the government is going to save GM, shouldn't they go around to all the small businesses that go belly up every year? Why should any business in this country ever fail?

GM failing opens the door for successful and innovative businesses to thrive. Perhaps it opens the door for a new company that will blow everyone away.

[Ragone]

yadda yadda yadda.. so many things wrong with all of the bullshit posted here


For one thing.. there is NO union member making $73 an hour anywhere in the system of ford/gm/chrysler.. that much i can promise you.

Second of all, letting gm or chrysler go under not only affects gm employee's.. but the parts plants that supply them.. the truck drivers who deliver parts.. its a GIANT house of cards based on the table that is GM/Chrysler. You all FAIL to understand the scope and magnitude of such a colossal event.

Also consider what eliminating hundreds of thousands of jobs would do to the economy. Most of these people aren't trained to do anything else. Furthering the vicious cycle of foreclosures/unemployed/etc.

I am not a union apologist. I have worked for Ford for upwards of 10 years. I have seen all the good and bad that goes along with said union. I am a realist. But seeing the blatant hatred and vitirol posted here about good hard working people losing their jobs (oh who cares about them). This will be my final post.

Take Care guys
Ragone

[dubb93]

Originally Posted by Ragone

For one thing.. there is NO union member making $73 an hour anywhere in the system of ford/gm/chrysler.. that much i can promise you.

I think they were including benefits too. With that said I live less than 20 miles from Greensburg, IN and the numbers for honda in that article are bullshit as well. In fact Honda isn't even close to the highest paid factory in the area. I have friends who were hired on at 10-11 an hour for full time work. No wonder they are doing so well paying their employees that rate.

[JonInMiddleGA]

Originally Posted by Ragone

But seeing the blatant hatred and vitirol posted here about good hard working people losing their jobs (oh who cares about them).

That's what happens when you start dipping into people's pockets to subsidize failed companies.

My industry is dying too, it's several times a week that I hear about people I know who are losing their jobs after 20 years or more. Good, hard working people. And they've done their jobs without an organization extorting every dime it could from the employers along the way. Meanwhile we're barely hanging on ourselves and the clock is ticking louder on that every day.

So you'll just have to deal with the fact that I have absolutely no interest in
watching the rest of the country continuing pour money down a dry hole to save something that can't be saved, and through nobody's fault but its own to boot. In fact, not only do I have no desire to see it happen but if you think there's blatant hatred & vitriol now you ain't seen nothing yet if we waste even more money trying to save a patient that's already dead and has been stinking up the place for years.

[SportsDino]

GM, its terrible company leadership, has created this hole. They do not deserve a bailout. It is obvious they are piling on the bailout wagon, something easily predicted (so easy I did so back before the first auto bailout was passed).

This has nothing to do with a value judgment of unions or their members. Everyone points there, but it is the companies, politicians, and union heads who created such a situation more than the rank and file workers. Does that mean rank and file deserve X dollars per hour, no, maybe the value of their labor was not actually that high? Is it their fault for demanding and getting such a wage? No, the executives are responsible for balancing cost, revenues, and so on to generate profit... if they were building a sustainable company they would have adapted to costs and found a way to make money. Instead they sat on their butts, played the layoff boom/bust game until it ran its course and they are screwed.

Being against a bailout is not being against the workers of those companies. Arguments of 'too big too fail' do not sustain an economy anymore than the opposite of 'let everything fall to heck and sort itself out'. The interventionists just don't seem to understand that constant and excessive interference is the CAUSE of this situation, not the cure.

What should happen in an economy is another automaker should have come to be and carved out a niche among the dinosaurs, and then as the climate turned, outmaneavure and outgrow the old money and be the catalyst for new jobs (often creating more jobs than the old dinosaurs would have anyway, since the competition creates new technologies, business models, supply, or demand that fuels job expansion, while the others get into a constant cycle of layoffs to further cut costs while not cutting the corruption at the top cost that is causing the problem).

[SportsDino]

Originally Posted by JonInMiddleGA

That's what happens when you start dipping into people's pockets to subsidize failed companies.

My industry is dying too, it's several times a week that I hear about people I know who are losing their jobs after 20 years or more. Good, hard working people. And they've done their jobs without an organization extorting every dime it could from the employers along the way. Meanwhile we're barely hanging on ourselves and the clock is ticking louder on that every day.

So you'll just have to deal with the fact that I have absolutely no interest in
watching the rest of the country continuing pour money down a dry hole to save something that can't be saved, and through nobody's fault but its own to boot. In fact, not only do I have no desire to see it happen but if you think there's blatant hatred & vitriol now you ain't seen nothing yet if we waste even more money trying to save a patient that's already dead and has been stinking up the place for years.

Exactly, everyone is losing their jobs, its not 'being mean' to avoid inefficient subsidies thrown around to specific interests. Already we've seen this abused, the wealthy and dumb execs that 'must be retained for their great skill' with bonuses and whatnot taken from bailout dollars. They should have dumped the lot of them and used the money to maintain workers to weather the storm... not keep alive fossil brained fools with no risk awareness.

[JonInMiddleGA]

Originally Posted by SportsDino

Exactly, everyone is losing their jobs, its not 'being mean' to avoid inefficient subsidies thrown around to specific interests. Already we've seen this abused, the wealthy and dumb execs that 'must be retained for their great skill' with bonuses and whatnot taken from bailout dollars. They should have dumped the lot of them and used the money to maintain workers to weather the storm... not keep alive fossil brained fools with no risk awareness.

Except that it this case, there's no amount of money that's enough to put this failed business model in a position to maintain workers to any significant degree. And of all the industries that are currently struggling, I can't think of one where the rank & file share as much responsibility for the failure as the U.S. auto makers. It rests at the top as you said, but they weren't nearly as alone as in the blame as a lot of the others.

Frankly, the thing that concerns me most with what should be the GM shutdown is something that doesn't seem to get much attention at all anywhere: the impending default on their massive debt. I have to think a significant portion of that is owed to U.S. companies and I further have to believe that some of them won't survive not being paid. Granted, they ultimately have the responsibility for the decision they made to extend credit to someone that proves themselves unworthy of it but I have a lot more sympathy & concern for them than I do for the manufacturers themselves.

Meanwhile, while I'm posting anyway, to backtrack for a second

Originally Posted by molson

In a global economy, the worst thing you can to is dedicate capital and resources to areas where you suck. It makes no sense.

So where do you put that capital and those resources when there isn't enough demand for the handful of things you're still good at? Seems like the answer to that would be R&D but I think that's far from a sure thing, as R&D never is a guarantee.

[DaddyTorgo]

*shrug* why not nationalize them? at least temporarily. the government needs a domestic automaking industry, that's an absolute fact.

they need it to produce government vehicles (buy american provisions), and they need it for the Department of Defense.

There's no way they'll put the service branches at risk of having their supply cutoff by purchasing overseas, even if they could (again, buy american provisions).

They're not going to let the entire US auto industry fail. That's a fact. They simply cannot. So maybe consolidation is the answer, followed by temporary nationalization, something along the lines of: "Okay you can have your $30 billion if the government gets 51% control of the company." Government could then use the voting control in order to push alternative fuel development, have a domestic auto industry to supply its "buy american" and defense-spending, and when the economy recovers and the stock market turns around, government could sell it's 51% share for more than $30 billion and use the proceeds to pay down the motherfucking massive national debt a little.

[Mizzou B-ball fan]

Yet another mess that was easily foreseen a few months ago. Hopefully the government finally calls the bluff. This is way out of hand.

[DaddyTorgo]

I will agree though that this was easily foreseen months ago. I could have told you the day they got their first tranche of cash that they'd be back in the new administration looking for more. And part of that is because of the way the Bush administration structured it...they gave them enough money only to last until March to try to push the decision off onto the new administration.

But still...I could have told you then that they wouldn't have made meaningful restructurings or have great plans to keep themselves afloat now. They're too big...too stuck in the old way of thinking.

[DaddyTorgo]

This study, which came out on Election Day, estimates “the economic impact — in terms of jobs, compensation and tax revenues — of a major contraction involving one or more of the Detroit Three automakers,” under two separate scenarios. In both cases, there would be major short-term shocks to employment; depending on which scenario you use, a contraction of the Detroit Three would result in direct and indirect job losses of 2.5 million to 3 million in 2009.

The C.A.R. study, for its part, extrapolates to 2011 only, but it finds that a significant portion of those lost jobs (40 or 59 percent, depending on the scenario) would be recovered by that time.

[DaddyTorgo]

It's one thing to argue that you should let them go into bankruptcy and restructure, and sell off assets and continue to make cars - I'm actually okay with that. In fact that might be healthy, just like the airlines do.

It's another thing to suggest that we just allow the domestic auto-making industry to dissapear.

[Mizzou B-ball fan]

Originally Posted by DaddyTorgo

In both cases, there would be major short-term shocks to employment; depending on which scenario you use, a contraction of the Detroit Three would result in direct and indirect job losses of 2.5 million to 3 million in 2009.

Well, this should work out great then! We can use the 2.5-3.5M jobs created by the stimulus bill to offset those losses and put these people back in a job!

[DaddyTorgo]

Originally Posted by Mizzou B-ball fan

Well, this should work out great then! We can use the 2.5-3.5M jobs created by the stimulus bill to offset those losses and put these people back in a job!

lol - i know you're not being serious here, but it did make me chuckle

[JonInMiddleGA]

Originally Posted by Mizzou B-ball fan

Well, this should work out great then! We can use the 2.5-3.5M jobs created by the stimulus bill to offset those losses and put these people back in a job!

More likely that these jobs are why the so-called stimulus was heavy on expanded unemployment, health care assistance, and food stamp provisions.

And hey, maybe we'll declare them honorary first time home buyers and force banks to loan them money to buy a house with too, that seems like a good idea don't you think? They might be able to revitalize the housing industry single handed.

[Young Drachma]

Let them fail and let new companies be created in their wake. That's the America way. It's an industry due for some innovation and streamlining.

And I would be fine with streamlining American government health care because merging the bloated infrastructure of Medicare, Medicaid, VA Health Care, USPHS and the such would save us billions a year. It's lots of redundancy, for sure.

[Raiders Army]

Originally Posted by Ragone

yadda yadda yadda.. so many things wrong with all of the bullshit posted here


For one thing.. there is NO union member making $73 an hour anywhere in the system of ford/gm/chrysler.. that much i can promise you.

Second of all, letting gm or chrysler go under not only affects gm employee's.. but the parts plants that supply them.. the truck drivers who deliver parts.. its a GIANT house of cards based on the table that is GM/Chrysler. You all FAIL to understand the scope and magnitude of such a colossal event.

Also consider what eliminating hundreds of thousands of jobs would do to the economy. Most of these people aren't trained to do anything else. Furthering the vicious cycle of foreclosures/unemployed/etc.

I am not a union apologist. I have worked for Ford for upwards of 10 years. I have seen all the good and bad that goes along with said union. I am a realist. But seeing the blatant hatred and vitirol posted here about good hard working people losing their jobs (oh who cares about them). This will be my final post.

Take Care guys
Ragone

I really don't see any blatant hatred and vitirol but it may be that eye of the beholder thing. As others have said, there are other good hard working people losing their jobs. At this point, the government needs to triage businesses. I understand that it's your wife with the lifel-threatening injury, but if the doctors can't help her, why would they waste time making the effort when they could save two other lives?

[sterlingice]

Originally Posted by Dark Cloud

Let them fail and let new companies be created in their wake. That's the America way. It's an industry due for some innovation and streamlining.

No, that's how the economy should work. It's not how capitalism works, tho. And it's definitely not the American way. Where are the startups in big industries? Where are the new car companies? Everyone knew we were headed down this road years ago- it's not as if Honda and Toyota made these inroads overnight. So why, when times were "good", didn't someone start up a new American car company? Because you CAN'T.

Where are the new oil companies or new airlines or new financial firms, the "real companies"? You can't create new ones. It's not because we have too much regulation in this country. It's because we have too few. Entry barriers are so steep in most major industries because we don't break up our monopolies or oligopolies who are illegally leveraging their monopoly status. It's great for Wall Street and great if you're in that incestuous, recycled family of corporate "leaders" but ultimately screws the consumers and the workers, of which almost all of us are both.

Sure, you can create a new luxury item and make big money off it. One could almost argue computers were that way but they created an infrastructure all their own. But you're just not going to break into a big industry

But, in short- the misplaced vitriol over the last few months towards the car industry is almost laughable but, man, are they public enemy number 1. Scratch that, hell, unions and their billion dollar fat cat union members- they're the big enemy. You know, all those union workers in their mansions- they're the reason why we're in this mess.

Wait? You mean union members tend to make wages comparable to what most of us on the board make for much crappier jobs but everyone is faking the cost by including health care. Hell, then I bet almost everyone on this board makes $75K+ if they get health insurance since most companies pay around $30-40K per year towards your health costs and a damn lot of you guys are well into 6 figures.

The impotent unions have been made the enemy when they barely have power as it is. This isn't the MLBPA and unions haven't had real power since Reagan basically crushed them. But they sure as hell are one great scapegoat.

SI

[MO542]

I say let the auto makers file chapter 11 bankruptcy. Chapter 11 bankruptcy is there to give a corporation a second chance. The law allows them to declare an automatic stay; that is to hold off debtors until the business restructures. GM is laying off workers anyway, so I don’t see how giving them a loan is going to save any jobs. Also, filing bankruptcy will lessen the headache of negotiating with the union because the union contract could be void with approval of a bankruptcy judge. I just don’t understand why the government doesn’t use the laws that are already there to help a corporation out.

GM has many issues; the union is just one of them. No doubt, the union is an issue because they are paying wages higher than their competitors without adding much value. However, management has also allowed lines of cars that compete with a finite amount of buyers and are overleveraged; basically a bad business model and bad financial decision making. Thus, I think the union is a scapegoat because they are only part of the problem. Lowering the wages of union workers is only one slice of the pie that GM needs to eat to become competitive again.