At some point, I truly thought the press would discuss the US government's role in the trouble that GM (and all automaker's) has been having. Of course though, the "trendy" thing to do is to blame the mega corporation even though Ford's CEO (already wealthier than anyone needs to be) had stopped accepting a salary until things improved years ago, and Automaker CEO pays when in comparison to other companies pail in comparison. Like the Financial corporation CEO who could not articulate why he deserved 80m in pay over the last few years, even though his company was asking for billions in bail out cash. I've been disappointed.

I'm not going to say that the corporations are without fault though. But I will say the legions of white collar pencil pushers probably do more harm than good to GM's bottom line. The company is here to provide cars and trucks. But when the company is spending 350 million USD to improve the quality of their interiors and the ending result is still the laughing stock of the industry, you simply have to question what the hell is going on. Granted interiors have improved drastically, after sitting in an Impala a few days ago, I was very shocked at the amount of cheap plastic. Also, it has to be brought into question why the company can develop an entire vehicle like the Solstice/sky for the same amount it uses to do the 1997-1998 update for the F-body camaro and firebird. You look at it and wonder if anyone there is looking at the same thing I am and saying "there's something wrong over here, and something right over here, let's find out what went wrong there and never do that again". Granted, I do expect a lot of capital to be put into a halo vehicle like the new Camaro, something that is meant to bring people into the showroom, but I also think valuable lessons could be learned from the Kappa development and the final development of the Camaro could be lower. We'll see as I have not heard any dollar figures attributed to the development of the new Camaro. I'm not saying GM is not at fault, but they were basically set up.

I'm not even talking about EPA or safety, although I sincerely believe that you can make a car as safe as you want the driver is ultimately responsible. Instead of forcing GM to spend billions of dollars putting 38 air bags and intelligent ABS, and this that and the other thing, why not teach people how to drive correctly and safely? This alone would cut down on accidents and fatal accidents by a huge margin. There are a host of factors that affect GM's bottom line well beyond it's control. The cost of health care alone could effectively make or break GM. Take out every penny that goes towards healthcare including legacy and health insurance, and GM might be profitable. Now, I place this blame on the government because most of this money goes towards administration and health insurance administration, and very little pays for actual health care. Also, when GM's health insurance is paying for drugs that cost 30 dollars a pill, so that drug company CEO can make 120m a year, that is out of the hands of GM. However the government can have a say in that. Alternatively, you have Universal Health care. Simply eliminate the cost of health care entirely from GM, and that would make a huge difference on their bottom line. Then you have retirements, if the government had kept it's word with Social Security, it would pay enough for people to retire and their GM retirement plan could have been simple, and just fluff compared to SSI.

When you minimize GM retirement costs, Such as a 401k without matching, or perhaps giving shares to employees, taking the cost burden away from GM, and take away health care costs, you have an entirely different story.

However there are other factors directly attributed to the Government, one of these factors is the financial sector. This was not caused by GM, yet the effects have put millions of people in financial crisis, and caused them to be unable to buy new vehicles. GM might have been better prepared for this had they not had to pay such high retirement and health care costs, but we simply don't know because it did not happen. They might have had a stay of execution allowing them to tool down and cut production enough before hand to keep alive. however GM is a type of company geared so that if they are not making and selling millions of units, they are not profitable (going back to the legions of white collar pencil pushers).


In my eyes, the US government, the press and the people of the US are looking down on GM for not being prepared for what none of us have been prepared for, not even the government. The banks put us into this crisis in the first place with practices that are only now being investigated and called unscrupulous, but at the time it was happening and making a few people billionaires, no one cared and much of it was covered up. Granted internal and external factors contributed to the "perfect storm" we have causeing the turmoil at GM, I don't think placing the entire blame on GM is fair at all.

- B

 

You forgot to mention the tax breaks and incentives that foreign car manufacturers got from our government to build factories here. If anything, the home team should be getting a break, not foreign manufacturers.

Also, the senators that were against the bailout of GM and Chrysler all have, or are trying to get, foreign car manufacturers' factories in their home states. Talk about a conflict of interest.

 

 

I was not done yet, and was going to mention the tax breaks as well as the lower wages paid by foreign makers. However Ford received quite a substantial tax break to build a plant here in Illinois, so it is not entirely one-sided. I was not aware of the track record and placement of votes vs factory placement in the US, but I don't doubt it one bit. Senators not looking out for the US, andf merely looking out for their own state is a dangerous road.

I had to take my wife to 4 different stores today to look for one thing.
There is actually a lot more I am going to mention, but the train of thought was derailed.

 

What would happen IF an Electronics American company went to the Japanese or Korean government and said:" Ok, we want to build a factory to build plasma televisions and sell them in your market. We will pay your people LESS than the other workers at Samsung or Panasonic and oh yeah, it would be nice if you gave us money to get started and btw we will sell our tvs for significantly less than your existing domestic brands.

I think they'd tell us to take a walk.

I like to use this analogy to explain to people that don't understand the troubles in our domestic auto industry and the unfair advantages that the foreign automakers have by getting US government grants/tax breaks and the fact that they have lower legacy costs or structural costs.

Companies such as Hyundai can now be VERY aggressive with pricing, offer a similar or superior product for a lower price because of this and steal market share. Sadly, it might take a total collapse of the American manufacturing sector for the politicians to wake up!

For these people it's just easier to blame the companies and their unions for all their woes.

 

i agree with you guys 100%. i would also like to add that i will never own a foreign car. my wife and i have a total of 3 GM cars in my driveway. the newest is a 1998 cavalier, the oldest a 1989 camaro. all three are very reliable and usually only require minor repairs and maintenance. the perception of the general public is often times unfair. no one cheers for the hometeam anymore. what is wrong with the country. you arent considered "normal" unless youre driving a toyota. it makes me sick. i hate toyota and wish they would go back from which they came.

 

I don't think they'd tell us to take a walk, they'd probably use some much more colorful words.

Another thing that people rarely take into consideration is the fact that Hyundai has 90% of it's development is done in Korea, and the cost to do so is much lower there. For one, other countries take care of their own first. Granted this gives them an advantage at home, but then they come here and have an advantage here, based upon how much they contribute to campaigns. Of course, bring this up to the politicians themselves and they pretend it does not happen. Even Communist countries like China pour a lot of revenue INTO their automakers to enable them to compete with other companies, instead of tax them to death. They also tax imports heavier than exports, the exact opposite of the US, another advantage.

However, to say it is unfair for people to blame the Unions and the Companies itself, is only partially correct. The companies have had a hand in their own fates, as well as the unions, but to mention them without calling attention to everything involved is like saying that the government had no imput whatsoever.

While I have pointed at the government, the fact that money controls the interest of the government, makes the points I will make below completely absurd and impossible. To that extent, the government should have people in committees who legally cannot have any financial ties to the industries they observe and report on. Anyway, on to the point, the government should have taken a step back to ask if their treatment of the foreign automakers was equal to the treatment of US automakers. Additionally, they should have stepped further back to see if the Foreign automakers had laws and development costs at their home equivalent to those paid by US companies here. Finally, they should look at ALL factors that help or hurt ALL US manufacturing companies and therefore manufacturing jobs. For example, if we could have 20 million manufacturing jobs if we are competitive, but only actually have 2 million because we are not competitive, the government should look into this and find out why.

Additionally, you can step back and say well the unions had very strong lobbying power and they could have used that power to fight for things other than pay and benefits for the workers. While I do understand they are there to protect the workers, but if they do this regardless of the effects to the company (as they've done) it does end up hurting the companies. For example, when they come to the table saying we need higher pay because of health care costs and higher cost of living, including higher home prices....... Then the Senate's industry commitee member involved with the talks takes that back to the senate and says we are in danger of losing jobs because the cost of health care and housing is rising more than pay levels. Then when the Union reps from other industries come back with the same information, the senate can call into question the housing and healthcare industry.

I do also blame the housing industry for the rapid inflation of home prices as well as property values, causing US workers to need more money, more than US companies can afford to pay. When I lived in Niles Illinois, I saw a home I considered a fixer upper, a potential investment. This house had a roof that was damaged, a garage that was falling over, a chain link fence that looked 30 years old, a huge stump in the ground and a small lot. I'd estimate it to be maybe 1600 sq ft. I would guess the house needed 50k in repairs to be presenatable. I called and asked for the price, 485,000 dollars. So, in order to buy this home, you'd pay over 2300 a month if you put 80k down (Do YOU have 80k just laying around?), but actually if you worked in the cost of repairs, you'd be paying 0ver 2600 a month for the mortgage alone, then over 600 a month for property taxes. No wonder manufacturing workers want 50 dollars an hour, they want to own a home. Here in Crest Hill, it is a little better, but the jobs available in the area are warehouse jobs to make 8-9 dollars an hour. How people are expected to buy a home for 230,000 dollars on 8-9 dollars an hour is beyond me. What also does not help is the fact that Rent needs to be high enough for the owner to pay the mortgage and taxes, so people renting cannot afford to save up to buy a home. The usual argument I hear after I say this is people need to go to school and get better jobs. Well then in effect you want to eliminate the lower class, not possible. We cannot have a system that only cares for the upper class and constantly leaves out the lower class. Government programs only go so far. What about having home builders take surveys of the actual incomes and building homes at a rate that directly coincides with the incomes? For example, if you have 10 people making Combined incomes under 90k, for everyone making over 1m, you need to make 5 homes for people making under 90k for every one you make for people making over 1m. Or something to that effect, just a thought.

As a direct result of the housing and land inflation, you have millions of homes that people can't afford to buy. Supply and demand will dictate the drop in home prices, but to facilitate that you need to increase the number of jobs, the pay, and still find a way to lower the cost of living. However a huge factor in the high mortgage payment truly is the bank, which charges 150% over the princimple in interest for a loan when they only needed 10% of the princimple amount in their possession at the origination of the loan. So, for 10,000 dollars in their possession, they can loan out 100,000 dollars, and charge 250,000 dollars. Granted this is over 30 years, but this was created to cause "controlled inflation" by the FED. However the fed is controlled by the banks. As a result we have a financial industry that has taken advantage of the APR system (created by banks in the first place) that allows them to make huge profits while showing a loss. When Bank CEO's and hundreds or thousands of executives are making hundreds of millions of dollars in salaries and prominant banks are popping up like weeds, they are not controlling inflation, they are taking from the average person and making a few people extremely wealthy. I've often suggested a flat interest rate between 20 and 40 percent. This would lower mortgage payments substantially, I would suggest this at least for primary mortgages.


Simply, this is a coulda woulda shoulda situation. However the blame is not being placed where it should be, so the couldas wouldas and shouldas we are hearing are all wrong. Even still, instead of simply blaming people or organizations, it should be studied very closely, in full. The results should show us what to do in the future. Instead, what we have today is the blame being placed on GM and other automakers, while the government swoops in and scolds them, and dangles money over their heads. I'm sorry but if the fat cat A-holes who have been ripping off the US people for the past 50 years can get bailed out without question, why are we questioning GM and Chrysler?

I've been writing to all of my reps for a couple of years now asking them to deeply consider publicly funded campaigns, taking all private and corporate money out of politics, period. I know this sounds like higher taxes, but what we spend in Iraq in one day, would cover all elections for a year. Also, after we get money out of elections, and eliminate lobbying, then taxes will fall when things even out, more jobs are created, spending is more responsible, etc etc.

And to think, I tried to be considered for Obama's Senate seat, Blago is an ***.

 

A lot of Toyotas are built in the US, your Camaro was not. Some argue that the capital goes back to Japan for Toyota, while the capital for the Camaro comes back to the US, yes to a certain extent. This country's economy was built on manufacturing jobs, not high level executive jobs.

I'm sorry but simply looking at the badge tells you nothing about where cars are made, for example the Korean built and developed Chevrolet Aveo, or the Hyundai Sonata built in the US, or the Toyota Camry built in Ohio. And God forbid you mention that a large number of Harley Davidson parts are actually manufactured in China.

 

You may be right that GM is not to blame. It's arguable. But, if your question is what the government's role is to fund, finance, or save a private company - the answer is none. That's not the way our economy or government is meant to work, and there's no authority in the Constitution to spend tax money that way.

If I want my money to go into GM, I'll buy stock in the company. The government's role in GM should be none.

 

I'm not sure where you got this from,not from my post.

I did not make a statement as to what should be done other than we need to learn from our mistakes, all of them. From the mistakes made by GM, the unions and the government, we could effectively figure ou thow to keep this from happening to this extent in the future.

Do I feel the government should give them money? If we give the irresponsible finance companies hundreds of billions yet ignore GM's pleas for help, who has been irresponsible to a much lesser degree, our country is totally messed up. In that regard, I don't think the banks should have been given a blank check.

 

It's not from your post. It's from my post. Just making conversation.


I really don't think you can prevent private companies from failing in the future. In a free market, there are winners and losers. Unless the government wants to take responsibility for all the private companies.

The banks shouldn't have been given money, and neither should GM. This money doesn't come out of thin air - it's our money. In effect, they're forcing all of us to give our money to private companies, and there's no authority under the law to do so.

Whether it turns out to be a good thing or a bad thing...it just shouldn't be done at all. I'll tell you what's 'messed up'...taking one person's money and giving it to a company - any company.

 

mmmmkay


No, they can't prevent a private company from failing, nor should the government take that role. However when you are talking about GM, Chrysler and Ford (not this quarter but maybe next) you are talking about an entire industry, not just a private company.

Well, that's your opinion. IMHO had the government allowed the banks to fail, we'd be watching the dollar value plummet like a rocket going full speed towards earth.

I agree, but had the government listened to and protected the people instead of those who give them the most campaign contributions, we would not be in this situation today. Simply allowing everything to fail would be a catastrophic failure of the US economy. The influx of cash might just have bought us a little time.

This was not your money. A small part of it was at one time, a very small part. It was the government's money. The worst part is not that they spent tax money, the worst part is we don't know how the industry will change, or if it will at all. As I stated before, the mortgage industry and the housing industry both inflate home prices, they both benefit, who suffers? Home buyers.

 

Actually, it's not just my opinion. It's the law. Nowhere in the Constitution or federal law does it say the federal government can take tax dollars to prop up private companies or industries.


1. And maybe that's what needs to happen. Borrowing just puts off the inevitable.

2. As it turns out, it looks like this wasn't the case, anyways. Citibank is going to show a profit this quarter. And half the banks out there are healthy. Some of these banks were just better off dead, and they went into full spin mode to make us think they shouldn't die.



The government doesn't have any money. It can only take money from the citizens.

It's a free market. Supply and demand. So the home buyers are just as much to blame for the inflated home prices. And the companies suffered, too. Not that this has anything to do with bailouts to banks/GM.

 

Ok, but does it say anywhere in there that they cannot?

I disagree. I've already stated why, the whole catastrophic failure thing.

You're right, the only companies in REAL crisis are the companies who bought these mortgages from the initial lenders at a figure probably about 70 cents on the dollar amount the bank would make over the entire life of the mortgage. These are full of cash from huge pension funds, but also from high paid execs and CEOs.

And if it does not, there is no government.

Home buyers are to blame to an extent yes, but not everyone has been buying homes. If you don't buy a home, house prices (usually) don't go down. You rent and throw your money away, watching property and home values rise. Also, if home builders and mortgage lenders both inflate home prices on the average, do you think everyone will simply stop buying? I do think a lot of home buyers should have taken a step back and said "it should not be worth this much", however, the more they pay for their home now, the more it will be worth in 30 years, or 40 years. This is the way people are trained to think, so if they can somehow manage to do it, they will.

I think this does have a lot to do with the bail outs and GM. Home prices have risen, directly causing the Unions such as the UAW to demand more money, causing GM to have to pay higher wages.

 

Yes, the 10th Amendment.

I don't disagree with your other points.