I think it's funny how it is okay for the government to "invest" in new roads to create temporary construction jobs, invest in a "green ecomomy" to create vaporjobs, or "invest" in healthcare for everyone....but it is the end of the world if we have to "invest" what amounts to government lunch money to stablize/correct an industry that provides milions of people jobs and healthcare.

 

Plenty of people are saying that's not okay, either.

And a billion dollars is not lunch money.

 

Apparently they are not the majority. Not saying I agree either..but our politicians are put there because we elected them.

Relatively speaking it is. Again...we are talking loan gaurentees....not outright handouts.

 

Whether a majority of people vote for an elected official is a different question form whether he acts the way the majority wants.

Poll: Frustration Growing Over Bailouts
"Fifty-three percent disapprove."
http://cbs5.com/national/bailout.fru....2.960934.html

I wish they would act the way their constituents want them to...don't you?


A billion is huge by any measure. And a "loan guarantee" to an insolvent company is a handout.

 

That company would STILL be selling suits, and making money instead of being extinct.

There is a far higher percentage of people out there that don't wear XL sizes, and it takes less material (and therefore, less costs) to sell the same suit at the same price.... not to mention that it simplifies production.

So.... yes.... That does make alot of sense.

The problem it seems you have seems to center around being deathly afraid that the "government" will dictate GM make cars that you yourself might not want.

But it's almost as if you are completely missing one small but very central detail..... GM's alternative is...... Death....almost 3 months ago!!!

Branden, business is about being solvent, and making profit. It's about finding better ways to make the same or better quality product. To be honest, no one gives 2 hoots about the deeper meaning of government operations or reasoning as long as you get through whatever regulation you must (or condition of whatever loan you have from whoever you have it from). You make your money, you pay back your debtors, then if you can branch out into other areas profitably, that's what you do.


Again.... plenty of sense.



Recapping, GM ran itself so poorly that:

1. It's stock lost 90% of it's value in a year, and over 75% of it's value in a decade.

2. GM's market share plunged from 28% to 18% the past decade.

3. GM started from behind, engaged in a slow and steady improvement strategy at a time when competition heated up in the marketplace.

4. GM's credit rating became so bad that they had to resort to selling junk bonds to raise necessary cash.

5. GM spent a large part of the past decade sheding car models without replacements while expecting (bizzarely) to actually increase market share.

6. GM was obviously in deep trouble by their own hand even before last summer when gas topped out near $5 per gallon.


There is almost an endless list of examples of how GM got to this point on their very own.... not a very convincing case of GM being able to fix itself.




But regardless as to how GM got here, or what idealogy one brings to the table of this discussion, there are very blunt facts to face:


A. GM was going to run out of money on or around January 1st.

B. If GM ran out of money January 1st, THERE WOULD BE NO GM ON JANUARY 2ND.

C. If there was no GM on January 2nd, every single issue, point, argument, debate, position, or fear you or anyone else may have about the government involvement in GM would be absolutely and completely moot....there would be no GM to talk about.

D. The government steped in and gave GM taxpayer money just as GM ran out of their own money... and had no way of getting money from anyone else at any intrest rate.

E. GM is here today ONLY because of money from the federal government.



Regardless as to what you or anyone may speculate what GM might sell in the future, at the end of the day, the fact that GM is still here period (regardless as to whatever reason) is the result of taxpayer money.


Again, anyone thinking this is wrong is free to buy something other than GM since without government money, GM would not be here (and neither would the Camaro).

However, the opportunity to buy a Camaro (or Tahoe... or Suburban... or Lucerne... or Corvette... or whatever) would not exist if GM didn't become a federally subsidized company.


It may not be comfortable to come to that realization, but this gives GM a chance to survive, become profitable again, save alot of jobs, pay off it's runaway debt, and in the end turn out to perhaps be a far better company.... a chance it most certainly wouldn't have otherwise.


This is one of those perhaps rare situations in life where one has to adjust their beliefs in relation to the facts in either one direction or another because both can't coexist.

 

and the Proletariat rises up.......

Mr. Wagoner has in hand a contract that was freely negotiated by Mr. Wagoner or his barrister and the Board of Directors of General Motors. The Board of Directors were rightfully and legally elected by the stockholders and they possess the ability to negotiate management contracts on behalf of the stockholders.

Even if one could identify the most liberal, activist court in the land and challenge the validity of Mr. Wagoner's contract in that court, said court would dismiss that challenge in a matter of milliseconds.

A valid contract is NOT a handout.

 

So now GM stands for Governement Motors I guess? Oh I'm sure they will do a wonderful job running this company since they've done such a great job with their own goverment programs. I mean the Postal service is a thriving entity right now......oh wait...they are going to run out of money this year.. Uhhh Lets try Social Security...another booming program....oh wait...thats the biggest ponzi-like scheme ever! Someone help me out here.....has the gov't run anything well besides the military?



Colin

 

I am really, really hoping that Washington is smart enough (for once) and humble enough (for once) to realize they know nothing about the inner workings of the industry and how to build cars, and allow GM and Chrysler to put good people in place and stay out of their way as much as possible. But yeah, knowing our "leadership" like we all do I'd say the chances aren't good.

 

I'm sure we are all hoping but don't bet your life savings on it. Most of these career politicians on both sides of the aisle have not run any sort of business what so ever so how are they supposed to run a company the size of Government Motors? And who's to say that Wagoner wasn't the right man for the job?

“Never let Government and Business get in bed together, neither will get a good night’s sleep”. - Ronald Reagan

Colin

 

Both GM and Chrysler have a pretty poor track record of actually doing that. There are a couple diamonds in the rough (Lutz, Iaccoca), but overall...

 

I am a big fan of Lutz.

 

Me too. I'm sad that he's leaving.

 

The Postal Service is only a Quasi-Governmental entity. Their budget is funded entirely by postage. High gas prices ate into their profits last year (they were profitable just a couple of years ago) and now with the tight economy bulk mail (where the USPS makes most of their money) such as fliers, catalogs, etc. is way down.

The Postal Service is just as much a victim of the rapid decline in the economy as a lot of private businesses out there.

 

They certainly won't do worse than GM, Colin..... in fact, early indications are that they actually have a pretty good grasp of what GM's problems really are.

Bits and pieces are starting to surface about what was wrong with GM's plan and the administration forcing Wagoner out.

Some key points that not only forced GM to redo their plan but also helped forced Wagoner out:

1. GM's plan was based on extimates that their market share would only fall another couple of points, despite the fact that they were selling off or shutting a large portion of their divisions (the Oldsmobile & Pontiac syndrome: elmininate vehicles without replacements and expect it not to affect market share).

2. An unrealistic assement as to how much they would be able to sell each car for that failed to take into account the industry's need (especially GM's history) of heavily subsidizing their cars through incentives. GM left that part out.

3. GM's plan had little reference in dealing with underperforming dealers, that drag down the company and good GM dealers (those familiar with GM's hands off approach to some Pontiac scalpers called dealers may feel deja vu at that point).

4. GM's Volt diverted resources from other cars under development and will not be financially viable. GM's money would have been better spent developing more profitable "green technology".

5. To deal with legacy costs and to repay GM's curent and additional debt as they restructure, General Motors would need to sell an additional 900,000 vehicles annually. Not simply an unlikely event in good economic times, a certain impossibility in a lingering recession with a modest or even good recovery.


It's worth noting that the automotive task force didn't resort to forcing out Nardelli, and gave Chrysler 30 days simply to merge with Fiat, and left open the possibility of merging with another automaker (Nissan?) if a deal with Fiat fell apart...... Yet, with GM, the CEO was asked to resign, the board of directors have been shaken up, GM's plan has been shot full of holes, and GM was given 60 days to come up with a better plan or face bankruptcy.

There's alot more story to what happened than what we seem to be aware of.

The Auto Task Force is full of financial guys and bankruptcy experts, not career polititians. That's why this task force is getting quite a bit of respect (if not 100% agreement) from all sides.

Remember... it was the career polititians that (following public opinion) refused to help the US auto industry...... while secretly supporting supplying cash and breaks for imports to set up shop here.

 

Iaccoca was a great manager, and a very, very clear realist. He distained BS, and was a straight talker. The first person who walked into his office attempting to sell him on an idea that cutting models would increase market share, or that they would make more money while continuing heavy incentives would likely be thrown through Iaccoca's office window. Yet, that seems to be what GM's upper management bought into the past 10 years.

Bob Lutz came to GM with more experience with the car business in his little finger than most everyone else could gather in their lifetime. He came to GM full of fire, and simply excellent product ideas that if followed would have come on line at the exact time GM really needed them. Yet, he was forced to spend his entire time doing things that GM should have been able to do on it's own, like improve quality & design, and integrate it's global operations.


What is simply dumbfounding right now that the brightest automotive star in the US industry is an aerospace guy who by the end of the year would have likely presided over turning a small, struggling car company into the largest US carmaker, and by the time the dust settles, perhaps the globe's largest single brand automotive entity.

Not bad for a company that just a few years ago was "shrinking to become profitable without being concerned about sales numbers".