GM/Chrysler on verge of Bankruptcy

OddSox · February 27, 2009

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.

Um, who says the government can or will do a better job of running the companies? And yes, they probably could manage to do worse...

Muddy · February 27, 2009

Um, who says the government can or will do a better job of running the companies? And yes, they probably could manage to do worse...

Your right! They will put a civil servant in charge who knows ziltich about the industry.Let the buggy makers sink or swim like the rest of sluggers out here. If I run my business in a slip shod manner as these guys i will not be bailed out by the government.

jdobbin · February 27, 2009

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.

I don't doubt that is has improved but you are also less rich due to the dollar dropping.

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

I have worked for that wage while going to school, developing skills and sometimes because other jobs were not hiriing at the time.

The question for some is whether they shop at the more expensive options? If not, why not?

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.

Lot of companies are not interested in that discussion. By moving, they can simply set the terms themselves.

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.

It is why some companies move. It is not always labour issues. Think Union Carbide was in the India just for cheap labour or for low safety standards?

GostHacked · February 27, 2009

I don't doubt that is has improved but you are also less rich due to the dollar dropping.

Not really, considering I have been in debt for the last 6 years because of school, and now I am a couple grand short of being debt free. I'll say you are wrong.

I have worked for that wage while going to school, developing skills and sometimes because other jobs were not hiriing at the time.

The question was are you willing to work for that wage?? If not why? We all worked for those wages at some point or another.

The question for some is whether they shop at the more expensive options? If not, why not?

Sometimes the more expensive item is the better item. I'd rather pay a little more for a good product that will last me many many years, over a cheap inexpensive item I have to replace several times to match the life of the other product, which might turn out to be more money in the long run. You get what you pay for.

Lot of companies are not interested in that discussion. By moving, they can simply set the terms themselves.

It's all gravy for those at the top, and the rest get the crumbs, if any are left.

It is why some companies move. It is not always labour issues. Think Union Carbide was in the India just for cheap labour or for low safety standards?

Again the mentality of NIMBY.

jdobbin · February 27, 2009

Not really, considering I have been in debt for the last 6 years because of school, and now I am a couple grand short of being debt free. I'll say you are wrong.

It is a question of purchasing power. I suppose you could be okay if you had the same increase in pay as the value of the dollar dropping.

The question was are you willing to work for that wage?? If not why? We all worked for those wages at some point or another.

I think I've indicated that I was willing to work for those wages and did. If unemployment increased across Canada again, I would work at whatever place employed me.

Sometimes the more expensive item is the better item. I'd rather pay a little more for a good product that will last me many many years, over a cheap inexpensive item I have to replace several times to match the life of the other product, which might turn out to be more money in the long run. You get what you pay for.

I was thinking just in terms of product but of service as well.

It's all gravy for those at the top, and the rest get the crumbs, if any are left.

Welcome to the corporate thing out there for some.

Again the mentality of NIMBY.

I don't think anyone wants Union Carbide in their backyard.

August1991 · February 28, 2009

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?

Dobbin, I'm just some guy in my pyjamas in Mother's basement. What do I know about the car business? Heck, what does Obama's cabinet know about the car business?

I suspect that some parts work well, and some parts don't. I also suspect that some risk-averse people refuse change. And some people have invested their lives in the status quo (just like learning a computer language), only to learn that the language is now obsolete and the status quo no longer exists.

If I take a broader view of this economic collapse, it seems to me that world trade has changed the world's car industry and computers have changed the world's banking industry. Trade and technology were bound to affect fundamentally these two industries.

Modern banks (and North American car makers) are like horse traders or Morse code specialists in 1900.

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

What does Singapore manufacture? Or New York, or Winnipeg? People in these places have high incomes.

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

Dobbin, this is "the race to the bottom" fallacy and it shows a misunderstanding of markets with prices. Prices in a market can go up, or down. Why should they race down?

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

If I was behind the curve, so were many others, with even more reason not to be. I'm just some guy... And frankly, if teh Caisse had let me invest my own money, I would have done better. But you're right msj, I have not followed these events closely (but I have lived through other economic crises in other countries). I am always surprised how quickly these things blow up, and how quickly some people ex-post claim to have seen it.

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.

Currency losses?

The bottom line here is that many Baby Boomers have seen their retirement nest eggs lose value. Their house is worth less, their stock portfolio is worth less. People without houses and stocks are suddenly (in relative terms) worth more.

-----

Returning to GM/Chrysler, Canada once produced radios and TVs. That's no longer the case. Quebec produces no cars and imports all of them (as does Alberta and Manitoba). In pure political terms, in a country based on regional politics, there is no sympathy for a federal bailout of these firms.

Why should Quebec taxpayers give billions to a bankrupt industry in Ontario?

Edited February 28, 2009 by August1991

jdobbin · February 28, 2009

Dobbin, I'm just some guy in my pyjamas in Mother's basement. What do I know about the car business? Heck, what does Obama's cabinet know about the car business?

I suspect they know the difference between the outcome of liquidation of the industry in the U.S. versus finding a way to get it back on its feet.

Truth be told, North America could get all its vehicles (among other things) from overseas. The problem is what to do with 6 to 10 million people not working in those industries.

I suspect that some parts work well, and some parts don't. I also suspect that some risk-averse people refuse change. And some people have invested their lives in the status quo (just like learning a computer language), only to learn that the language is now obsolete and the status quo no longer exists.

And those people should die rather than receive help in doing something else?

If I take a broader view of this economic collapse, it seems to me that world trade has changed the world's car industry and computers have changed the world's banking industry. Trade and technology were bound to affect fundamentally these two industries.

That may be so. But what to do with so many out of work all at the same time?

What does Singapore manufacture? Or New York, or Winnipeg? People in these places have high incomes.

Perhaps some of those jobs will move to places where the incomes are lower.

Dobbin, this is "the race to the bottom" fallacy and it shows a misunderstanding of markets with prices. Prices in a market can go up, or down. Why should they race down?

Are you saying companies don't move to where wages are cheaper at times?

Currency losses?

Currency values.

The bottom line here is that many Baby Boomers have seen their retirement nest eggs lose value. Their house is worth less, their stock portfolio is worth less. People without houses and stocks are suddenly (in relative terms) worth more.

Not if their purchasing power has gone down or they have lost their jobs.

Returning to GM/Chrysler, Canada once produced radios and TVs. That's no longer the case. Quebec produces no cars and imports all of them (as does Alberta and Manitoba).

In other words, we will be okay with no manufacturers in North America and should just let them go.

August1991 · February 28, 2009

Are you saying companies don't move to where wages are cheaper at times?

That's bad?

Dobin, are you saying that if I find a cheaper cell phone provider, I shouldn't accept it? Or if I find a dealer offering a lower Toyota Corolla lease, I should refuse it? Are you saying that it's bad to choose a lower price? Is it bad to be frugal? In general Dobbin, in the long term, do you think that it's a wise idea to spend more for something when a cheaper alternative exists? If such a family chooses the costly way to do things, will it exist over time?

In other words, we will be okay with no manufacturers in North America and should just let them go.

Uh, we have few horse traders now. And many want to eliminate coal burners. No one makes TVs, radios or CPUs in North America.

No manufactures? Dunno. There are about 400 million North Americans. I prefer to let them decide.

Edited February 28, 2009 by August1991

jdobbin · February 28, 2009

That's bad?

Businesses does what's best for business. It isn't always what's good for workers.

Dobin, are you saying that if I find a cheaper cell phone provider, I shouldn't accept it? Or if I find a dealer offering a lower Toyota Corolla lease, I should refuse it? Are you saying that it's bad to choose a lower price? Is it bad to be frugal? In general Dobbin, in the long term, do you think that it's a wise idea to spend more for something when a cheaper alternative exists? If such a family chooses the costly way to do things, will it exist over time?

I certainly never said anything like that here. I said that the Obama government had to weigh the costs of letting several companies liquidate immediately versus finding ways of helping them overcome their present difficulties.

The solution of the some of the right wing is to let them all fail. What they don't like to talk about is how much that decision might cost the government is money and stability.

Uh, we have few horse traders now. And many want to eliminate coal burners. No one makes TVs, radios or CPUs in North America.
No manufactures? Dunno. There are about 400 million North Americans. I prefer to let them decide.

I think the reason for the aid package is that the decision to liquidate would cost the government more in the long run. The hope is that an aid package similar to what Chrysler got way back would be paid back in full to the Feds and that the company would bounce back.

By the way, 300 million Americans already decided. Their vote in the last election was for someone to help aid the economy back to health. Recent polls this week show continued support for that idea.

ironstone · February 28, 2009

The U.S. government has to take the hit.

Taxpayers will take the hit,lol.

One can't keep up with who owns what in the automotive world these days.I read that an Indian car company owns Rover now?How the world has changed.

msj · February 28, 2009

If I was behind the curve, so were many others, with even more reason not to be. I'm just some guy... And frankly, if teh Caisse had let me invest my own money, I would have done better. But you're right msj, I have not followed these events closely (but I have lived through other economic crises in other countries). I am always surprised how quickly these things blow up, and how quickly some people ex-post claim to have seen it.

Ah, yes, the excuse is now "since everyone else was wrong then no one is wrong."

And stop this "ex-post" garbage - it was clear that the US was in recession a long time ago and people preferred to try and deny it and cheer lead their way out of it.

This is clear with all those links I presented at that time (not "ex-post").

--------------------------

As for the Caisse - yes, you may have done better in the past year. Maybe two.

But over many years I do not see how one who relies on the excuse of "no one is wrong when everyone is wrong" would do better than a pension fund (even one that is as politically screwed up as the Caisse - just imagine if they were set up like the CPP!).

Edited February 28, 2009 by msj

Smallc · February 28, 2009

I read that an Indian car company owns Rover now?

Rover doesn't exist as a brand. The Indian car company Tata bought Land Rover and Jaguar from Ford last year.

August1991 · March 30, 2009

General Motors Corp Chief Executive Rick Wagoner resigned under pressure from the Obama administration on Sunday as the government prepared to announce a second bailout for the company and its smaller rival Chrysler LLC.

Reuters

There is something vaguely Soviet about this. It seems to me that the Board of Directors should decide whether a CEO should leave a private corporation, and not the President of the US.

The left often criticized Bush Jnr (and Cheney/Rumsfeld) for somehow being anti-democratic yet Obama and his small group of advisors are getting involved in the American economy in ways never seen before. Such concentration of power never leads to much good even when done with the nbest of intentions.

punked · March 30, 2009

Reuters
There is something vaguely Soviet about this. It seems to me that the Board of Directors should decide whether a CEO should leave a private corporation, and not the President of the US.

The left often criticized Bush Jnr (and Cheney/Rumsfeld) for somehow being anti-democratic yet Obama and his small group of advisors are getting involved in the American economy in ways never seen before. Such concentration of power never leads to much good even when done with the nbest of intentions.

After they ran through $17.4 billion of the peoples money in 3 months maybe the whole board of directors should step down.

bush_cheney2004 · March 30, 2009

Reuters
There is something vaguely Soviet about this. It seems to me that the Board of Directors should decide whether a CEO should leave a private corporation, and not the President of the US.

GM should run, not walk to bankruptcy court instead, and give the finger to Obama and Geithner.

As a GM shareholder, I didn't vote for Obama as board chair, let alone president.

lictor616 · March 30, 2009

GM should run, not walk to bankruptcy court instead, and give the finger to Obama and Geithner.
As a GM shareholder, I didn't vote for Obama as board chair, let alone president.

putting GM or Chrysler under bankruptcy and finally dealing away with their hideous, backwards engineered sh*tboxes would be analogous to flushing a toilet more then anything else...

who cares? hideous cars, crappy brands, horrendous engineering, dismal innovation made by mexican hands...

dump the lot of em! they're pointless!

and they want the US tax paying serfs to pick up the tab for 29 years or so of FAILURE AFTER FAILURE? Even when GM has for years admitted to cheating customers with inferior yet more expensive products to Japanese or European cars? Even after GM blocked the entry of the diesel engine ranges for regular cars?

Hello Peugeot, Renault, Alfa Romeo, FIAT, Seat, Skoda etc... sorry glorious "nationalizer of toxic assets" comrade Obama-

August1991 · March 30, 2009

A person with direct involvement in the auto bailout discussions said the new deadline would be April 30.
“Thirty days from now, there will either be a bankruptcy or the naming of a chief restructuring officer who will have government authority to ‘knock heads together,’” this person said of G.M. In addition, the government must come up with a backup guarantee on loan for G.M. to operate in bankruptcy because the banks will not do it.

NYT

A person? And I don't even know what the quote really means but the implications don't sound good.

Who will name the CRO? (Is CRO the next fad in senior corporate positions?) What is a "backup guarantee on loan"? What to make of the idea that "the banks will not do it"?

Pliny · March 30, 2009

August 1991 brought up a point that has been neglected. GM is not a car company it has become a finance company in GMAC. It loses money on making cars and any of it's profits of late are in the finance industry. The meltdown of the finance industry leaves them broke and bleeding.

Econometrics became the centre focus of the company over cars and the economic system must once again be the fly in the ointment. Accountants and economists advised them financially. They advised them to forget about making money on cars and encouraged them to make money financing cars. Their actual product, automobiles, never tried to compete in the market. When they started having to offer 0% financing to sell their cars they started getting into trouble.

Basically, accounting took over the assembly line and became the primary function of the company.

There are some fundamental flaws in the economic system. It seems the customer was displaced as the determining factor in the policies and direction of the company and accountant's replaced them.

GostHacked · March 30, 2009

GM should run, not walk to bankruptcy court instead, and give the finger to Obama and Geithner.
As a GM shareholder, I didn't vote for Obama as board chair, let alone president.

Do you agree with the bailouts for the NA auto industry?? If so why? Basicly the finger has already been given, to Bush and Obama.

Eventhough you are a shareholder, you are being given the finger as well, because you are a taxpayer.

bush_cheney2004 · March 30, 2009

Do you agree with the bailouts for the NA auto industry??

No....I would have preferred structured loans a la Chrysler bailout of 1979.

If so why? Basicly the finger has already been given, to Bush and Obama.

Bush never wanted to bail them out....he caved in because of comparisons with saving the banking sector.

Eventhough you are a shareholder, you are being given the finger as well, because you are a taxpayer.

I will be given the finger twice...shareholders and bond holders are last in line. But I would welcome the certainty of bankruptcy and receivership that has long been the mainstay of such things. Markets hate uncertainty.....

M.Dancer · March 30, 2009

I honestly wanted to help the NA industry...but Mazda had what we wanted....and 60 months at 0% to boot....

bush_cheney2004 · March 30, 2009

I honestly wanted to help the NA industry...but Mazda had what we wanted....and 60 months at 0% to boot....

Ditto here...went to the car show on Friday and some manufacturers are not offering such incentives....the new Nissan 370Z looked very nice! :lol:

GostHacked · March 30, 2009

Ditto here...went to the car show on Friday and some manufacturers are not offering such incentives....the new Nissan 370Z looked very nice!

One thing I had always thought odd, is that during the 80s and 90s, people wanted cars with European design/inspiration. That was a major selling point of many NA vehicles during that time. If NA auto makers had something to offer, they might not have used this as such a high selling point.

For the most part, all cars these days are bubble cars and look pretty much all the same. Except Cadillac. I have no idea what these guys are thinking.

I guess I am in the minority of people wanting small, nimble fast cars that are good on gas. That 370Z has some Porcshe in its looks, and I am a fan of the Porcshe

M.Dancer · March 30, 2009

Ditto here...went to the car show on Friday and some manufacturers are not offering such incentives....the new Nissan 370Z looked very nice!

Nice car. My kids would love it even if we had to put them in the trunk.....we are officially mini van folks now....

The Mazda 5...

http://www.newcarpark.com/blog/?p=92

GostHacked · March 30, 2009

Nice car. My kids would love it even if we had to put them in the trunk.....we are officially mini van folks now....
The Mazda 5...

http://www.newcarpark.com/blog/?p=92

Overall of any car company out there, Mazda has the best looking line of vehicles. The 3s are great cars. And I love the 6s, the new ones are georgeous.