TOO Z MAXX

Next time try to make a comment without your smartass bs added to it. Key words are if gm closed its doors. I dont think that would have happened. Unless you worked for the Bush admin or were a big wig at GM, who knows what deals were going on behind the scenes. Why is it that all these other companies go bankrupt and come back, but for some reason this could never happen with GM?

jg95z28

What smartass bs?

If GM had filed for bankruptcy liquidation, which is where it was headed if the bailout did not happen, all of its suppliers that were owed payment would have lost money and probably been forced into liquidation themselves. It would have been an avalanche affect impacting the entire industry. Only a white knight coming to GM's rescue with a huge bag of cash could have stopped that from happening. As was the case, that role was taken by the US and Canadian governments and others. Had they not stepped up, the most likely scenario would have been the Chinese coming to the rescue and buying up GM and all their patents and technology.

Would that have been a better scenario?

5thgen69camaro

Actually General Motors Corporation did file chapter 11 and even renamed Liquidation Motors.

https://www.mlcguctrust.com/Page.aspx?Name=Home

How would the Chinese or anyone else for that matter buying GM with no bailout be any worse than Italian Fiat buying Chrysler after their bailout?

jg95z28

The Chinese owning 100% of GM is far scarier than Fiat owning less than half of Chrysler.

El Duce

With this whole argument people always seem to make 2 claims, that one, if GM would have gone away all the other suppliers etc would have been wiped out and it would have destroyed the whole industry. This is incorrect unless you assume that they were going to go through liquidation and not restructuring. That makes no sense given their hard assets and business. Lets say you own a typewriter business, then you would have to likely liquidate because typewriters are not in demand and there would be no point in restructuring. GM and the product they were creating had demand and it could be a viable business, and that's how you restructure. Even K-Mart could restructure. All of these doomsday predictions are based off an event that wasn't going to happen in either case.

And two, by saying it would have been worse it basically asking anybody somebody to prove the unprovable. That's almost like quoting a stat like "jobs saved," which is impossible statistic to prove either way . . . doesn't stop people from citing it though.

guionM

I once performed CPR on a guy having a heart attack in Hawaii. The guy lived.

Some years ago, one late night (4am-ish) I came across a car that had slammed into a tree on this empty road north of San Diego. The guy's head had clearly gone through the windshield and probably hit the tree. He was covered in blood. I called 911 and about a minute after I got there, the guy stopped breathing. I couldn't get to him, and his body had to be cut out of the car.

Using your logic, should I say if I hadn't given CPR to the guy in Honolulu, he'd be just fine without it?

Again, using that same logic, there was no point in calling 911 with the guy that slammed his 5.0 into that tree.

In both instances, I had the power to act, and I did. To go back and say I don't know what would have happened and therefore shouldn't have acted is irresponsible, and wrong on so many levels I can't even begin to catagorize them.

Here was an instance where the economy was in just as clear danger. No offense, but I'm guessing the President of the United States has a bit more information than does a poster on an enthusiasts website. If he's being shown the country's facing 21% unemployment if he doesn't act and it's explained far better and in greater detail than anything I'm able to do, and he's the only person able to act, not acting would be akin to my walking by a heart attack victim and saying he should have taken better care of himself, or driving by that Mustang and letting someone else call 911 since the guy was going to die anyway.

It's easy to later say what wouldn't happen after the problem's fixed. Many people are like that.

Some people have the philosophy that when there's something wrong you don't use your ability to fix it. Fortunately for humankind, there aren't many like that. And again, as someone who was not a Bush fan, I have to say I really respect the man for doing what needed to be done, and showing that rare quality..... Leadership!

Here's a few things to consider El Duce.

First, the Value of GM was in negative numbers. The market value of GM at the time was far less than it's assets & GM had ammassed a debtload that was so massive that banks had cut off credit to GM. To continue to raise capital, GM started selling bonds. Recap: GM was indebted to banks & bondholders to a value that was far higher than the value of the company. If you were a stockholder, whatever little value your stocks had would have been wiped out completely and then some... actually... a lot.... if GM had to suddenly repay everything by selling off it's assets. Unlike Ford, GM was in no position to recover in 2, 4, 8, or even 10 years in a good economy.

Second. The automobile industry is an extremely cash hungry business. You need a constant supply of cash to pay vendors and suppliers, to pay the bills on your factories to keep them running, to pay taxes, to meet payroll, and finally, to develop new models and stay competitive. GM's CEO Rick Wagoner (to his credit, and being a finance MBA), kept GM afloat most of the last decade through everything from creative financing to creative bookkeeping. GM really should have caved in by 2005 when GM's main source of income (trucks and SUVs) collaspsed. GM (like Ford and Chrysler) were making money on trucks, and losing money on cars.

GM knew the writing was on the wall by late 2007 early 2008. Wagoner tried to hook up with Ford. Ford was intrested till they took one look at GM's books. GM then looked into buying Chrysler with stock options (which they would have clearly sold off parts for needed cash). When that didn't work, that's when you saw them up on Capital Hill.

Ford was there with GM and Chrysler because the fact was that all 3 used the same suppliers. If GM and Ford crashed, it would decimate suppliers and it would risk taking Ford with it (Ford would have to serious cut or eliminate production of most of it's vehicles while they ran around the globe looking for suppliers to replace the ones they lost..... in short...bleeding lots of cash while not producing enough income to make ends meet).

When GM was on Capitol Hill in November, they said they wouldn't last through the spring without help. Chrysler said they were about to fold up shop. Turned out they both lied. While Chrysler had enough cash to tide it through at least mid 2009, GM didn't even have enough money to last into the new year. Congress wasn't going to cough up anything, and Bush flipped and gave them something to tide them over.


Now... as funny or sad... as it is, there are still people who want to say that "GM wasn't in trouble", or "we don't know" what would have happened if GM didn't get a bailout. The fact is we certainly and clearly do... because GM was a within couple of days from stopping payments to suppliers.

At that point, suppliers would have stopped sending product till payment.

Without supplies, factories stop.

When factories stop, they don't produce anything of value that can be sold.... but at the same time, the cash drain continues... even at an accelerated pace because no money is coming in.

Take a company that is burning through money already, faster than it can make it, and then take away their ability to make money, then add in investors, debtholders, bond holders, let alone the suppliers that haven't been paid, and the whole thing turns to crap extremely fast.

GM was so far in the whole already, it would have passed the point of no return within a few weeks if not a few days. And that's why Bush gave them money prior to GM's round of payments came due on January 1st 2009.

Once it looked like GM wasn't going to get any money, stockholders and debtholders would have moved immediately to stake claims against GM's assets and would have started the process of liquidation... unless GM filed under bankruptcy protection.

The reason that route wouldn't have worked (and no doubt both Bush...who has an MBA in business... and Obama got the same information) is that GM was allowed to get into a hole it could never dig itself out of. GM was simply in a position where they couldn't sell off enough of it's assets to satisfy it's debt. So, it would have been completely liquidated.

The only entity buying or loaning anything at that time was China. So, even in the best, most rosy, only-in-your-dreams scenario had China buying Chevrolet and GM's trucks, and maybe even Cadillac. But that would take over a year in court, and would have blasted the economy to kingdom come in the meantime, and you can bet that only a few factories would make it.

Saying they were "creating" something and would have "had" demand is completely pointless if you not only don't have the money to bring it into being, but you also have so much debt that no one else will lend you money.

Also, keep in mind that GM had an extremely and notoriously disfunctional bureaucracy. Getting products to the light of day was torturous in itself, but then you also had people whose sole existence in the project development cycle was to take cost out and make them the minimal acceptable. Bob Lutz's book gives plenty of examples in his own words.

Once a danger's past, there's always going to be those who are going to say "well it wasn't going to happen after all". IF it happened in the Cuban Missle Crissis of course there's going to be people who'll say it now if it conflicts with some belief or another.

But then you have to look at the people who were involved in all this. People in the industry, the people who were involved when all this was going down. You have to actually follow the news and keep up to date. You have to actually look things up yourself, and actually read on ones own instead.

And that's why even today, even with GM and Chrysler doing better than ever, you still such gems like:

"The Volt was rushed through because it was part of the Government Bailout", or....

"Chrysler's SuperBowl Ad was an Obama campaign advertizement paid for with tax dollars", or...

"We could have lost the entire car industry, it's suppliers, and those that depend on it and it wouldn't have made the economy any worse.... in fact, it would have been better.".


When you have a clear blue sky, you can't tell someone that it's not raining, even when the proof is there's not a drop of water on the ground. The only thing you can do is throw out the facts.

The smart ones will get curious and look things up.

The others won't and instead will call you names, or try to label you.

All you can do is either laugh at 'em or feel sorry for them.

But keep in mind they don't sign your paychecks, and they don't make the decisions, and it keeps things in perspective.

Otherwise, you'll let them bring you down to their level, and then they'll beat you because they have more experience in being there.

SCNGENNFTHGEN

Yes it was. And those folks who came in after, and demanded that "changes" were required to get gov't help are a bunch of bloody morons! Perhaps someday, I can go into how they are now coming after me from every angle probably for naming them on boards such as cz28 as the rat finks they are...

guionM

Changes?

There were crackpots and morons that came in after the fact and demanded that changes be made to the setup that Obama and the Treasury Department set up. Ralph Nader coms to mind, when he made a big stink about the feds not using it's control to make GM produce electric cars and simply dictate fuel economy.

This went absolutely nowhere.

There was union pressure as well, mostly from some key rank-and-file members who believe UAW leaders sold them out, and wanting to make a name for themselves.

Again, they got nowhere.


Chrysler has now paid the government back, and the Feds have no stake in Chrysler. With GM, the Feds are waiting for GM's stock to rise so they can cash out the rest of their shares without taking any substantial losses. I personally believe that GM will be in great shape for the Feds to cash out within a year or so.




Going back to a another post I made on the thread, I've often talk about other's short term memory, and rewriting history.

Here's the biggest example of this:

Quote:

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers....

Second, management as is must go. New faces should be recruited from unrelated industries from companies widely respected for excellence in marketing, innovation, creativity and labor relations...as Walter Reuther, the former head of the United Automobile Workers...... Getting more and more pay for less and less work is a dead-end street.

....(making a point that an auto inustry CEO should) cut his pay and that of his executive team, (buy) stock in the company, and... (go) out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies especially fuel-saving designs that may not arrive for years. Starving research and development is like eating the seed corn....

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research on new energy sources, fuel-economy technology, materials science and the like that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But dont ask Washington to give shareholders and bondholders a free pass they bet on management and they lost.

The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate....

"


No, this wasn't written by some left leaning person...not by a long shot.

And of all people on the planet, one of those silly "-ism" labels don't fit either.

This is part of the op-ed Mitt Rommey wrote himself back in 2008 that's gotten so much attention lately.

In it he makes the clear distinction that a "bailout" is simply handing over money to GM and Chrysler without making any demands or requirements

Government help is something that demands conditions be met. Much like the setup and demands that actually went into effect.

You can read his whole editorial here:
Let Detroit Go Bankrupt - NYTimes.com

Of course, today, Mitt is spinning it as if he'd let GM and Chrysler crash and the country would be better off...which is sad, not only because there are people who are buying into that utter nonsense, but because he's missing a huge opportunity to say that the administration's claims of success was on a program that he himself posted in the New York times.... before the current administration!

That's how easy it is to rewrite history, and how short our collective memories actually are.

And how ridiculous politics has become.

Same idea...different spin.

kartracer13

Wow!!! I really don't know what to think about all of you.
That's all I'm going to say.