GM/Chrysler on verge of Bankruptcy

[charter.rights]

In order to get a subsidy someone lobbied - and that someone got what was wanted. It does not make sense that governement would have all the power to "call the shots" - apparently some one called the shots and government responded. Everyone from welfare clients to industrial executives are all dipping into the public purse...maybe this is the begining in the development of a more fair playing field for all? Bankruptcy should never be an option...besides if they stiff the creditor who would that creditor be?

Bankruptcy is ALWAYS (and should ALWAYS) be an option. Bad business venture should never be propped up by taxpayers' money. Just as well, companies protected by government should not have the liberty of keeping the bad managers that took the company into debt. They should be booted and the government should require third-party management.

Creditors take risks. There are no guarantees and so if a company fails the creditors are on the hook. If the risk is too great then the money should not have been invested in the first place. Bad management = bad decisions.

[Wilber]

As far as it has to go before it recovers on it's own.

That's what was done during the Great Depression and it took WWII to end it. Perhaps we should try something different this time. Not sure exactly what, but something different.

[Oleg Bach]

Bankruptcy is ALWAYS (and should ALWAYS) be an option. Bad business venture should never be propped up by taxpayers' money. Just as well, companies protected by government should not have the liberty of keeping the bad managers that took the company into debt. They should be booted and the government should require third-party management.

Creditors take risks. There are no guarantees and so if a company fails the creditors are on the hook. If the risk is too great then the money should not have been invested in the first place. Bad management = bad decisions.

That's pretty hard nose stuff. For the average person bankruptcy causes a bit of damage to the reputation. I suppose higher up the scale bankrupcty is a jubalee of forgiveness. There was a very old tradtion where every once in a while all debts are forgiven and everyone gets a fresh start. If bad managers get a new chance - they may succeed second time around - but it's doubtful.

What's going to hurt is that a lot of these people you want to be disposed of will be deepy embarassed...who was to know that decisions made 20 years ago to flood the domestic market with imports would reap such havoc on our own industry? Were these decisions made by the same group of people that were in charge of the domestic operation? If there is any connection then it was the greed factor - and stupidy lazyness and greed brought these fellows to their knees --- you all loved them when they generated you good returns...now that they have taken a stumble - you want to abandon these men and woman who managed.

You must ask one question in order to make what you have said a fair suggestion - would these people bail you out in a crisis? Probably not or maybe so.. If they had no respect for the nation that generated them great comfort and wealth - then perhaps no respect should be returned as they enter a vulnerable state - sounds like there is a lot of spite for these failures - decisions should not be made in anger. The scope of bad management is broad and governments were fully aware of what was taking place - and they did not have the will to force a re-structuring then...so all are to blame...private and public sector..we should move forward and forget the past - what are we to do - re-tool the plants and the people? I suggest you leave them in place and let them have their companies - smaller and of higher quality. To destroy management with no real experienced replacements will take to long - we do not have the luxury of time.

[charter.rights]

That's pretty hard nose stuff. For the average person bankruptcy causes a bit of damage to the reputation. I suppose higher up the scale bankrupcty is a jubalee of forgiveness. There was a very old tradtion where every once in a while all debts are forgiven and everyone gets a fresh start. If bad managers get a new chance - they may succeed second time around - but it's doubtful.

What's going to hurt is that a lot of these people you want to be disposed of will be deepy embarassed...who was to know that decisions made 20 years ago to flood the domestic market with imports would reap such havoc on our own industry? Were these decisions made by the same group of people that were in charge of the domestic operation? If there is any connection then it was the greed factor - and stupidy lazyness and greed brought these fellows to their knees --- you all loved them when they generated you good returns...now that they have taken a stumble - you want to abandon these men and woman who managed.

You must ask one question in order to make what you have said a fair suggestion - would these people bail you out in a crisis? Probably not or maybe so.. If they had no respect for the nation that generated them great comfort and wealth - then perhaps no respect should be returned as they enter a vulnerable state - sounds like there is a lot of spite for these failures - decisions should not be made in anger. The scope of bad management is broad and governments were fully aware of what was taking place - and they did not have the will to force a re-structuring then...so all are to blame...private and public sector..we should move forward and forget the past - what are we to do - re-tool the plants and the people? I suggest you leave them in place and let them have their companies - smaller and of higher quality. To destroy management with no real experienced replacements will take to long - we do not have the luxury of time.

There is not much wrong with the people and the factories that make cars. They are not the cause of this crash. It is the management and executive that screwed things up by taking risks - even to the point of gambling away workers pensions.

Bankruptcy is the cost of doing business. The measure of a true entrepreneur is that as one business is failing, he or she is planning another.

If the government demands third party management then the business if making cars goes back into production. You see this never was about making cars and the big three never had that in mind. Most of the money in the last20 years has been made through stock and reinvestment. It is usury on the biggest scale. And while a long time ago the kinds of credit that the stock market invested was used to float the company, the majority of large manufacturers have simply become stock brokers, where managing the money and profiting from it is more profitable than build cars of other things.

GM got sunk because it put muc of its money in GMAC. And GMAC got caught in the same scam as Freddy Mac in the US - offering belong prime mortgages. Plus they were holding car financing at 0 or sub-prime interest rate. Once they got called to start paying back out they had to lose. And since GM is a 50% stockholder in GMAC guess who gets caught with their hand in the cookie jar.

Bankruptcy must always be an option but if the big three take money from the taxpayers to the degree they are, then we get a piece of the companies and the government gets to tell them how to run their companies until they pay it all back.

[emma]

With the three top Auto Dealers in the United States, namely: General Motors (GM), Chrysler, and Ford almost at the brink of bankruptcy. Our Economy is getting worse. The Federal Government should consider creating better tax policy to bail them out. Some of them are obsessed with spending the people's money. The National Republican Congressional Committee is taking aim at newly picked Democratic candidate Scott Murphy in the 20th Congressional race, saying he owes $21,550 in back taxes and penalties in 1997 and 1998 for a company he owned, Small World Software, Inc.

Edited February 25, 2009 by emma

[Muddy]

I don`t believe in bailouts for any business but this nonsence is really sick with GM and Chrysler. Thet want you and I and the kid working at McDonalds to subsidize retired auto workers pensions! Why should ordinary folks trying to hold things together be taxed for this crap?

[August1991]

General Motors Corp. posted a $9.6-billion (U.S.) fourth-quarter loss and said it burned through $6.2-billion of cash in the last three months of 2008 as it fought the worst U.S. auto sales climate since 1982 and sought government loans to keep the century-old company running.

The nation's biggest domestic auto maker said Thursday it lost $30.9-billion for the full year and expects to state in its upcoming annual report whether its auditors believe the company remains a “going concern.” GM and its auditors must determine whether there is substantial doubt about the automaker's ability to continue it operations.

...

For the full year, GM's net loss was $53.32 per share, the second-worst annual result in the company's history. The worst loss occurred in 2007, when the Detroit-based company lost $38.7-billion, or $68.45 per share, in 2007, due largely to charges for unused tax credits.

...

GM ended last year with about $14-billion in cash, $10.5-billion less that the $24.5-billion it had at the end of 2007. The 2008 figure is close to the minimum amount of cash GM has said it needs to fund its operations.

G&M

On my calculator, $30.9 billion converts to $84.6 million a day. Unlike paper losses when a stock market falls, GM is actively destroying value. It is as if GM were burning down 250 $300,000 homes everyday.

[jdobbin]

On my calculator, $30.9 billion converts to $84.6 million a day. Unlike paper losses when a stock market falls, GM is actively destroying value. It is as if GM were burning down 250 $300,000 homes everyday.

It certainly is sick but the right wing solution to let all the auto industry liquidate is likely to cost more. Or do you disagree?

[msj]

G&M

On my calculator, $30.9 billion converts to $84.6 million a day. Unlike paper losses when a stock market falls, GM is actively destroying value. It is as if GM were burning down 250 $300,000 homes everyday.

The funny thing is that laypeople like you are really just noticing now.

GM has been burning through cash and has unsustainable liabilities built-in that were ignored by management, the unions and the shareholders for the past two or three decades.

As such, the problem snowballed to the point that only now the auditors are thinking about putting a "going-concern" note onto their financial statements.

As an accountant who has put that kind of note on statements I know what kind of analysis is done, and should have been done, and that note should have been put on a long time ago (not that anyone would have noticed, though).

[August1991]

The funny thing is that laypeople like you are really just noticing now.

Give it a rest, msj. As far back as July 2006, a poster here (Jerry Fortin) informed me about a Geely.

But until I read the ROB article, and thought about what $30 billion means, it didn't strike home.

GM is a business that employs people to burn down 250 homes every day and there's Dobbin who wants to give more of my tax dollars to GM. It's madness.

It certainly is sick but the right wing solution to let all the auto industry liquidate is likely to cost more. Or do you disagree?

How could it possibly cost more? Edited February 26, 2009 by August1991

[jdobbin]

GM is a business that employs people to burn down 250 homes every day and there's Dobbin who wants to give more of my tax dollars to GM. It's madness.

I actually want to give less.

I am just pointing out that it will cost a lot more to the taxpayer if large manufacturers shut down. Or do you disagree? Do you want a die off in the industry? The estimates of 6 to 10 million unemployed and Depression-like conditions for years to follow would have a much greater impact.

The radical far right extremists want this to happen?

So tell us your solution is? Tell us what the way out will be that won't be worse. I hear a lot of noise and don't hear a lot of solutions. Cutting taxes last year didn't turn things around. Your solution it to cut all taxes, all government spending? What?

Edited February 26, 2009 by jdobbin

[bush_cheney2004]

....So tell us your solution is? Tell us what the way out will be that won't be worse. I hear a lot of noise and don't hear a lot of solutions. Cutting taxes last year didn't turn things around. Your solution it to cut all taxes, all government spending? What?

Turn things around to what? Selling 16 million vehicles per year in North America is not going to come back. Any "solution" you may be dreaming of will not look like that which has failed. Keeping failed business models alive to spare pain for taxpayers is a very short sighted strategy.

Drastic reductions in labor hours per vehicle had already occurred, just over a longer timeline. The process has just been.....accelerated!

I own 1,000 shares of GM and Ford....may the best team win.

[msj]

Give it a rest, msj. As far back as July 2006, a poster here (Jerry Fortin) informed me about a Geely.

Given our history where you are always well behind the curve I don't see why I should give it a rest.

[Topaz]

Today, on a business channel, a business expert said that the US government is looking at a "control" bankruptcy for GM if GM can't meet its March 31st dead line. If GM went to a regular bankruptcy, thousands of people and business' would be affected and cause more burden on the economy. He said no matter which way it went the US government has no choice but the help out the auto sector.

[Muddy]

Let them die. If there is a vacuum other manufacturers will start producing and build a better mouse trap or car. Of course they might think twice about employing former GM employees,executive or line workers.

[jdobbin]

Let them die.

I realize that a die off is what many conservatives want but the pain and suffering could lead to a Depression-like environment.

If there is a vacuum other manufacturers will start producing and build a better mouse trap or car.

Probably not in North America.

Of course they might think twice about employing former GM employees,executive or line workers.

I think that's the point. Millions upon millions of unemployed and a other industries brought down simply because of the widespread pain.

[Muddy]

I realize that a die off is what many conservatives want but the pain and suffering could lead to a Depression-like environment.

Probably not in North America.

I think that's the point. Millions upon millions of unemployed and a other industries brought down simply because of the widespread pain.

Yes ,but these fat cats from top to bottom at GM will not learn and will continue to blackmail the populace and it`s government. I think it terrible and unseemly to ask the guy working at a low paying job to finance these dolts. Because that`s who`s money it is. There is only one source of money for government largess. You and I! When your market drys up as has happened here,then your flogging a dead horse. Shut the door and move on. Dead is dead. You can`t reserect once it`s dead.

[GostHacked]

I realize that a die off is what many conservatives want but the pain and suffering could lead to a Depression-like environment.

Well, hopefully people saved for that rainy day. But how many actually think ahead? How many are saving for this rainy day?

Probably not in North America.

Well, for that we can only blame something called Outsourcing to other countries for cheap labour in all sectors.

I think that's the point. Millions upon millions of unemployed and a other industries brought down simply because of the widespread pain.

The system cannot sustain the cash flow for the booming population. Money is being created out of thin air to provide credit for the crumbling sectors and markets.

[jdobbin]

Dead is dead. You can`t reserect once it`s dead.

That might be true. My main point is that is likely to cost a whole lot more if manufacturers disappear.

[Muddy]

That might be true. My main point is that is likely to cost a whole lot more if manufacturers disappear.

Have a little faith in mans ability to adjust. We will invent a better mouse trap. But printing money will destroy us all. look at Zimbabwe! They should be the greatest nation on earth if printing money worked.

[jdobbin]

Well, hopefully people saved for that rainy day. But how many actually think ahead? How many are saving for this rainy day?

Doesn't matter really how much someone saves if the value of their savings has dropped and continues to drop. That is the nature of such downturns.

Well, for that we can only blame something called Outsourcing to other countries for cheap labour in all sectors.

There is always a market for cheap labour. For centuries, companies moved around internally in nations for cheaper labour.

I guess we could use protectionism in manufacturing moved out of the country but that would make matters worse when all sides did tit for tat.

The system cannot sustain the cash flow for the booming population. Money is being created out of thin air to provide credit for the crumbling sectors and markets.

And it will likely be even more with a massive amount of unemployment and collapse of other industries.

[jdobbin]

Have a little faith in mans ability to adjust. We will invent a better mouse trap.

I have no doubt. However, the chaos of a Depression-like downturn could mean a very lengthy suffering.

But printing money will destroy us all. look at Zimbabwe! They should be the greatest nation on earth if printing money worked.

Zimbabwe's problem started from driving away or killing those people who provided the nation with food and money.

[GostHacked]

Doesn't matter really how much someone saves if the value of their savings has dropped and continues to drop. That is the nature of such downturns.

There are much safer investments out there, and that is quite obvious. Risky investments come with the expectation that you can loose your shirt overnight as much as making the millions overnight.

There is always a market for cheap labour. For centuries, companies moved around internally in nations for cheaper labour.

Cheap labour cheap products, cheap service. Language barrier, ect ect ect. Walmart, dollar stores, ect ect.

I guess we could use protectionism in manufacturing moved out of the country but that would make matters worse when all sides did tit for tat.

No we can use GOOD quality manufacturing. All companies go for the bottom dollar in all aspects. Profits and shareholders say what goes. If they are not making enough money in North America, they will ship jobs overseas. Good companies give back to the community from which it takes, not ship their jobs overseas and hand them a pink slip. Just need less bullshit, better negotiations between unions and the company so everyone is happy.

And it will likely be even more with a massive amount of unemployment and collapse of other industries.

Well that just proves to you that the current system is far broken to be repaired. Let it die so something new and better can come out of it. If you keep patching the problem, you are constantly trying to prevent the problem from getting worse instead of trying to actually get to the root issue and fix that.

[jdobbin]

There are much safer investments out there, and that is quite obvious. Risky investments come with the expectation that you can loose your shirt overnight as much as making the millions overnight.

I was referring simply to the value of currency rather than just investments. You are poorer today simply because the dollar isn't worth as much.

Cheap labour cheap products, cheap service. Language barrier, ect ect ect. Walmart, dollar stores, ect ect.

There is a market for that. Always has been.

No we can use GOOD quality manufacturing. All companies go for the bottom dollar in all aspects. Profits and shareholders say what goes. If they are not making enough money in North America, they will ship jobs overseas. Good companies give back to the community from which it takes, not ship their jobs overseas and hand them a pink slip. Just need less bullshit, better negotiations between unions and the company so everyone is happy.

Not all companies who have moved overseas had unions to deal with in the first place. Many moved just because is cheaper to hire people in developing nations.

Well that just proves to you that the current system is far broken to be repaired. Let it die so something new and better can come out of it. If you keep patching the problem, you are constantly trying to prevent the problem from getting worse instead of trying to actually get to the root issue and fix that.

Not sure if we will get that better system. If we smash all unions, labour laws, safety laws, health laws, immigration laws, building codes and the like, we might be able to build TVs again in North America. I wonder if that will be an improvement.

[GostHacked]

I was referring simply to the value of currency rather than just investments. You are poorer today simply because the dollar isn't worth as much.

Well, that's inflation for you. The ability to print money on demand, mo money mo problems. My quality of life has actually improved in the last 5 years. Mostly due to me getting off my ass and doing something about it.

There is a market for that. Always has been.

Are you willing to work for that kind of wage?? If not... why?

Not all companies who have moved overseas had unions to deal with in the first place. Many moved just because is cheaper to hire people in developing nations.

Correct, this made it much easier for those companies to transfer the jobs overseas. Unions might be the reason why some jobs have NOT been outsourced to the third world. But still, better negotiations between unions/workers and companies need to happen.

Not sure if we will get that better system. If we smash all unions, labour laws, safety laws, health laws, immigration laws, building codes and the like, we might be able to build TVs again in North America. I wonder if that will be an improvement.

Ah, so along with cheap labour there is the environmental aspect of it all. NIMBY !!!!!!! I want to buy the TV, but not if they are down the street polluting the environment, I'd rather Chinese get sick and cancers and all that other crap while building that craptacular TV........ this is the wrong attitude.