Sam, GM’s market cap right now is $1.65 billion. We the people are fronting them how many times over the company’s complete market cap? It’s not “their” business; it’s “ours”. They can ask how high or they can close shop.
Sounds like they deserve a retention bonus!
More Administration brilliancy. This business stuff is simple. Here’s the plan:
Is that all? You’d think they could have found a way to cure cancer in there somewhere.
It really is brilliant. All GM has to do is have a large positive cashflow while investing enough money to make the best cars in the world, achieve full competitiveness with its competitors, significantly restructure its manufacturing, retail channel, and make the most fuel efficient cars in the biz. Because, as the administration so helpfully points out, that’s what people want.
Child’s play, really.
The major drain in capital went to retirement benefits and those were negotiated by top notch union representatives who threatened economic sanctions against GM.
It has nothing to do with capitalism. Toyota is extremely capitalistic, and it managed to look to the future while making money. The real problem is with dumb CEOs who in their arrogance can drive a company into a hole and get rewarded for it. That and a lickspittle board who keeps telling him he’s doing a great job. These are the kinds of guys who are all for competition except when it applies to them.
In socialism, when you have this kind of jerk in the government, you don’t have anyone else out there eating his lunch, so you’re stuck with it. The only problem with American capitalism is that we need more of it - and the threat isn’t the government, the threat is the oligarchs in the corner office.
Still not impressed. It’s the job of management to negotiate workable deals with unions and still keep their companies afloat. In this case, it seems that GM management just recklessly handed out early retirement packages to all and sundry to try to shrink their union workforce as much as possible. And when that policy made their worker/retiree ratio unsustainable, they tried to blame it all on the union.
Sam, if you’re going to quote selectively from administration documents, could you at least provide links so that other posters can read the context?
Actual link to document quoted by Sam
Here are the sentences preceding the bullet points you just quoted.
So there you go, Sam: the administration is going to be working with the private sector experts whose performance you put so much faith in! Now, doesn’t that make you feel much better?
It really is funny sometimes to see the tenacity of the libertarian shibboleths that anything done by the private sector must be automatically being done as well as possible, and anything done by the government must be automatically being done as badly as possible. This is the kind of attitude that contributes to the craven CEO-worship that Voyager rightly condemns.
Excuse me, THEIR business? We just bought it fair and square, buddy.
The article identified one healthy bank returning the money and five unnamed banks with intentions to pay it back. There has yet to be a CEO and executive board willing to go down with the corporation in a defiant display of guts and free market glory.
So? Whether Obama does it or a bankruptcy court judge does it, some government official is going to be injecting himself into GM’s board room. Obama doesn’t want GM to go the Chapter 7 (liquidation) route, and while we can debate the merits of that, quit acting like there’s magic alternative out there where the government won’t be running GM. The Obama administration will in the end probably exert far less control over GM operations than any bankruptcy judge would.
It’s a goal. Given that GM has fallen over at the first hurdle of “Make a product people want”, I’m not sure it hurts any to remind them what they’re supposed to be doing.
Last-resort nationalisation has worked in Britain (albeit sometimes painfully) and is better than the alternative. If the firm is deemed “too big to fail” there must be another penalty to replace closure or else poor market behavior is rewarded. Having the government take the failing business over, restructure it via arms-length administrators and re-sell it is a tolerable solution with a stabilizing effect on the markets.
It is frequently the case that the union has the upper hand in these negotiations, and the best deal management can get is still not a good one. In 1998 the UAW struck GM over job security and cost GM $500M per week.
It’s almost ironic that many of the same people who tend to consistently promote increasing the power of unions are also apt to blame management for not having negotiated tougher deals with the union if things later go south.
But it’s actually not inconsistent. As previous, many people have an unrealistic idea of the great power of Big Corporations versus the union Little Guys. So they think the union needs more legal ammunition, and simultaneously tend to think management can do whatever it wants, and if it doesn’t get a better deal it’s because they were incompetent.
I think if you follow the history of GM and the other car companies, you will observe that these companies did not just hand anything out willy-nilly. All these retirement packages, jobs banks and other related matters were negotiated in detail with a very powerful and demanding union.
That completely misses the point. There’s nothing automatically good about people in the private sector or bad about people in government, and I don’t know that anyone ever claimed otherwise. But the same person when operating in a private sector system is more apt to focus on business and bottom line that he would in government where political considerations intrude.
Even leaving that aside, it’s not clear what advantage the companies get out of additional expertise. To the extent that you believe, as many apparently do, that the car companies reached this sorry state because they for some reason decided to only hire morons to work for them then I guess any change is good, and this presumably explains the mindset of people who regard this as a positive. But if you think it’s largely the result of structural problems, there’s no reason to assume that the new government people will add anything other than politics.
And from the perspective of people who thought the government should never have gotten tangled up with this tar baby to begin with, the more the government gets involved, the bigger the bill is that is ultimately going to be paid by the taxpayers.
Of course a big part of the auto troubles is due to the economic problems. It is difficult to get car loans. Jobs are disappearing and wages dropping. All auto makers are in trouble, union and non union.
Henry Ford gets part of the credit for inventing the middle class and paying workers enough to be auto customers. That is rapidly changing.Wages are dropping and a car represents a year or more of income. There are a lot of factors all heading down at the same time. Then American dealerships have been a black mark for the big 3. Buying and servicing a car has always been an adversarial experience. They didn’t fix things because they could pretty much get away with anything. Now everything needs to be fixed at once. Thats American business for you. They have to forced to improve.
Again, there is no private sector option available. Unless you think some deep-pockets investor was poised to come in and inject enough cash into GM to keep it running, then it’s option was to enter bankruptcy. And when a company goes into bankruptcy, the government basically runs it until it is reorganized or liquidated.
The additional expertise was coming, any way you slice it. Right now it’s coming from the Obama administration, but otherwise it would have been coming from the bankruptcy court. Are you seriously arguing in favor of scenarios that couldn’t exist?
I don’t see the problem, Sam. You’re leaving out the critical modifier: They need to do those things if they want a handout from the government.
If you came to me looking for free money I’d have some hefty demands, too. If GM doesn’t want to do those things they can declare bankruptcy. He who pays the piper calls the tune.
Sam, you’re really, really trying to hard to raise as many criticisms of Obama as you can, and fair enough, the love-in needs some contrary voices on this board. But on this issue there’s just nothing to stick. GM wants billions upon billions in free money, seemingly endless piles of it. There are no private investors stepping up to save them. The government can damned well have the GM board of directors put on jester hats and dance for them, if that’s what pleases them.
And quite frankly, GM is such a basket case that it’s perfectly reasonable to put extreme demands on them. OUR government - the one you voted for, the one Stephen Harper is the Prime Minister of - rejected GM and Chrysler’s bailout plans, too; by all accounts, they were insulted, in fact, by the rank stupidity of the plans, but I don’t see you accusing Stephen Harper and his cabinet of trying to run GM and Chrysler. Their position is the same as Obama’s and is perfectly valid; if you guys were incompetent enough to get to thise stage, we want some REALLY substantial corrective actions to assure us we aren’t throwing this money away. And speaking as a taxpayer, I am pleased with the way they are representing me in this regard. GM and Chrysler can eiter do what they’re told or not take my money.
If they don’t like it, find the money somewhere else or declare bankruptcy.
OK, several things:
First off, we did not buy GM. We don’t own the company. Had we actually done that, no problem, I wouldn’t acre. But we didn’t. They came begging for money, it was stupidly handed to them, and they embarked on the restructuring whihc they started 30 years ago and which will - any day now! - surely yield fruit. In the meantime, Obama is somewhat haphazardly setting impossible goals and running roughshod over corporate management, which will not end well. Either they need to dump the entire team as a condition of financial help or leave it alone and let it die. I don’t care which, really, since at this point it’s just a disaster, but there’s no place for half-measures.
Second, GM was ailing even in the halcyon days of a few years ago when people really wanted SUV’s. Yes, they were doing “OK”, but that was it. Even in the midst of a huge boom, they were still slowly failing, or just barely breaking even.
Third, Ford’s genius had nothing to do with “paying auto workers enough to be middle class”. I have no idea who came up with this meme, but it needs to die quickly and painfully. He paid more because he demanded a lot more control over them and a lot more work, and he wanted the best. That was it. Sure, in a metaphorical “grand-economy” sense, we are all paying people enough for them to buy our stuff. But they key is that we are all keeping prices down as much as possible, and paying as little as possible, and (most important) getting productivity as high as possible so everyone is creating so much surplus value we have lots left over.
Unfortunately, this is inded the case. As a practical matter, once a union is created you are at their mercy, and you can lose money one way or another, but you will lose it and you have very little bargaining position. You can’t even just play for time indefinitely, because the National Labor Board will come down on you eventually.
If I start a business, then I simply will not deal with unions. if one is forme,d I just shut down that part of the business, period. it’s not about what happens today, but the sheer insecurity of it, and the fact that the headache is just not worth it. Unions are such a pain that I’d rather just quit and go find work elsewhere than have to deal with them.
The other problem is that unions have historically had very unrealistic expectations. Their golden age was the relatively brief 30-year period from 1940 to 1970, but they refused to adapt after that, preferring to view their priveleges and place as eternal. And global economic conditions changed. it’s not enough to compete with one or two other American firms. You’ve got the whole planet to worry about, and unions simply don’t add any value to the final state.
Under a bankrupcy scenario the court appointee runs it based on the dual goals of a) returning the maximum value to creditors, and preserving it as a viable company if possible. No one is under the illusion that the court brings some special business expertise that the current management didn’t have.
If you fail to pay your legal obligations you lose control of your assets to those who you owe money to. That’s not what we’re talking about here. If Obama puts in people to make sure that such value as the government has is safeguarded, that’s fine with me. But what we’re discussing is whether the new management that Obama puts in will do a better job of running GM - I don’t see any reason to assume that this is the case.
Bankruptcy courts have the option of replacing management, and they frequently do. Do you honestly think any bankruptcy court would have left GM’s current management intact? That’s highly unrealistic, because without government funds, GM would have gone into Chapter 7 liquidation, and new management is usually brought in for liquidation purposes.
No, what you were discussing was whether the government should be putting in new management, and I am pointing out that there is NO scenario under which the government will not be replacing GM’s management.
Makes no difference. I am not concerned about whether GM’s management is replaced or not. But I do think there is no reason to believe that a new set of management installed by the Feds will be any better than the one that’s in place now, and in addition, to the extent that management is subject to political commands, it’s likely that they would be worse.
I don’t think anyone is denying that Obama has every right to demand these or any other changes. The question is whether this type of thing improves the situation.
If I understand him correctly Sam (and others, e.g. me) are not saying that the Gov should have bailed out the carmakers with no conditions attached. They’re saying that the Gov should not have bailed them out altogether, and that one downside of bailing them out is having management by government.
This is beyond ridiculous. Whether or not they were bailed out, they would have been managed by the government. You are calling an inevitable fact a downside and arguing against it.