We the people lose 10 billion on GM deal

Discussion in 'Too Hot for Swamp Gas' started by g8orbill, Dec 10, 2013.

  1. gatorpa
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    gatorpa Well-Known Member

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    Your premise that GM would have totally stopped any production is at the least misinformed and at the worst a case of classic scare tactics that you so often rail about Pubs doing.

    Do you really believe that every GM employee, plant, and supplier would have totally ceased operations?

    How do other massive companies enter and exit bankruptcy without destroying the worlds economy?

    Ford seems to have done it without a Gov controlled buyout.
  2. chemgator
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    chemgator Well-Known Member

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    Well, if you support unions, fear is usually the first option: "ECONOMY DESTROYED!" "NO LIVING WAGE". The actual truth tends to take a back seat.
  3. dangolegators
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    dangolegators Well-Known Member

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    These guys wringing their hands over spending a total of 10 billion to save the US auto industry are the same bunch who had no problem spending 2 billion per week in Iraq for a period of about 6 or 7 years.
  4. chemgator
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    chemgator Well-Known Member

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    At the time, I believe that Bush indicated that Iraq would pay for security from oil sales. It turns out that was more wishful thinking than anything else. There's no question that GWB and Rummy the Dummy mismanaged Iraq.

    Now back to the topic. A single waste of $10 billion wouldn't be that bad--it would be a minor embarrassment. But this administration wastes money left and right. They are even worse than the previous admin. They have a general philosophy that the federal gov't can and should drive the U.S. economy, which is absurd. Yes, the gov't makes its contribution to the economy via infrastructure improvements and regulations. But it should not try to drive the economy (the gov't is way too wasteful, inefficient and inexperienced to do that). That is foolish and it is not capitalism. Taken to its logical conclusion, it will destroy the economy, just like it did in the USSR.

    Also, it was very uncapitalistic to bail out an automaker, even in difficult economic times. The justification was that GM was too big to fail, just like AIG and many others. Well, guess what? If you are going to make those claims, you need to fix it going forward so that they are NOT too big to fail after re-structuring. Obama did not. GM is still "too big to fail". Furthermore, GM had enough bailout money that they did not have to make the kind of fundamental changes to their business that would have made it extremely unlikely that they would have to ask for another bailout in the future. The odds are very high that the next recession will bring GM right back to D.C. asking for more money.

    Whacked out liberals like to claim that Obama "rescued the automotive industry". That cannot be proven, since they did not get a chance to go through a standard bankruptcy process with minimal gov't involvement.
  5. asuragator
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    asuragator Well-Known Member

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    Yeah, but Iraq paid for itself ;)
    Except that had all those folks lost their jobs, the costs associated with emergency benefits etc... would probably have been 10x the amount of the ten billion loss. It was a net win in many important ways.
    Last edited: Dec 12, 2013
  6. JerseyGator01
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    JerseyGator01 Well-Known Member

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    It didn't save the US auto industry. It just perpetuated mediocrity in the US auto industry thru the everlasting good ol' boy system in DC.
    • Winner Winner x 1
  7. asuragator
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    asuragator Well-Known Member

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    Given the unquestionably extraordinary circumstances of the economic crisis, arguing that the federal government shouldn't have stepped in is a losing one. Had GM collapsed the ripple effects would have likely been far worse. Besides, the credit markets had seized up during this time so it's unlikely that anyone else besides government would have provided the money.
    Last edited: Dec 12, 2013
  8. OklahomaGator
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    Ford didn't need any bailout money. The government didn't save them. You could make the argument that by bailing out GM, it hurt Ford.
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  9. asuragator
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    asuragator Well-Known Member

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    You're right, Ford did not take bailout money, but they did take over 5 billion in loans from the government in 2009. Ford was also absolutely concerned that GM's and Chrysler's collapse would severely damage the supply chain, as Ford's CEO Alan Mulally put it in supporting GM's bailout.
    Last edited: Dec 12, 2013
  10. OklahomaGator
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    OklahomaGator VIP Member

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    I believe Ford also paid the loan back with interest.
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  11. g8orbill
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    g8orbill Gators VIP Member

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    yes they did C
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  12. asuragator
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    asuragator Well-Known Member

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    yet they supported the bailout :D

    Last edited: Dec 12, 2013
  13. chemgator
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    chemgator Well-Known Member

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    It's a good question. Why did Ford support the bailout, and yet other automakers in the U.S. (Honda, Toyota, BMW, etc.) keep silent? The answer is fairly clear. Ford was dealing with the same greedy UAW that GM and Chrysler were dealing with, and probably had essentially the same agreements. If UAW agreed to concessions with GM and Chrysler, Ford wanted to make sure that they got the same concessions, if at all possible.

    I suspect that this goes to the heart of Ford's quality problem in recent years. Ford and Lincoln are now the two lowest quality automakers in the U.S., according to Consumer Reports, for manufacturers not named Jaguar. Before the bailout, they were much better than both GM and Chrysler, and it wasn't close. Why did it happen? I think the factory workers did not realize that their union was greedy, and felt there was no need to make concessions since Ford was not going bankrupt. When they saw what management was doing, they decided to get even.

    A typical union worker does not realize that he has a problem until the company actually goes bankrupt. Even when the company announces bankruptcy, the first reaction is to say that it is a ploy by "greedy" management to get concessions. They don't want to hear about what the typical manufacturing worker in the U.S. gets for compensation, work hours, OT, or benefits. They are special. They deserve special compensation.
  14. chemgator
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    chemgator Well-Known Member

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    We've been trying to tell you that the workers would not lose their jobs. The company continues to operate in bankruptcy. Americans still need cars, and all the other carmakers in the U.S. cannot (currently) supply enough to meet demand. GM was going to continue to produce cars, and people needed to be in the factories to do that.

    Either way, there was going to be a tremendous loss of jobs. There were significant layoffs associated with the bailout, so we did pay out a fair amount in those emergency benefits. GM had employees who sat around and played cards all day just in case they were needed to work on the factory floor. Those people got laid off. Entire divisions (e.g., Pontiac) were closed down. Large layoffs there. A huge percentage of the dealerships were shut down. Again, big numbers of unemployed people. So there were significant numbers of people that lost their jobs. You were afraid of something that you think the bailout prevented, but it actually happened to a certain extent (and wouldn't have happened to any greater extent without the federal bailout).

    The bad news is that it set a precedent. GM will be back in D.C. at some point, asking for more money. And most administrations/Congresses will give it to them. And GM won't be alone. Lots of companies will be claiming that they are too big to fail. Therefore, it was a net loss in many important ways.
  15. gatordowneast
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    all these rounding areas now have us $17 T in debt with Obama responsible for 70% of the total.
  16. HallGator
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    HallGator Administrator VIP Member

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    Would you break that down for us?
  17. Gatorrick22
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    Gatorrick22 Well-Known Member

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    Lol... I think he meant 7 trillion of that.
  18. asuragator
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    asuragator Well-Known Member

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    Yet, Ford was in better shape and did not need a bail out, even if they took a loan. You read the words of Ford's CEO, I presume? He need not have supported GM, regardless of your trying to shoehorn in the UAW. In fact, your logic makes little sense since had GM failed, it would have only increased Ford's position relative to the UAW. But that is not what it's about. Mulally said at the time--and this is backed up by the actual events, but there was a widely shared belief that the economy could have crashed even worse had GM gone under.

    OTOH, while I do agree that GM over the years have made too many concessions to the AGW, placing the onus on the union as opposed to those in power is part of the coordinated attacks on workers that have come from the right for decades.
  19. chemgator
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    chemgator Well-Known Member

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    Mulally is not stupid. He knew that GM wasn't "going under". That makes it especially strange that a competitor shows up to support GM in its bailout bid. Now, there was the possibility that, without the bailout, many of GM's suppliers would go bankrupt, and would not be able to continue to supply Ford with parts, putting Ford in a difficult position.

    You really don't understand the business world if you think Mulally showed up to support GM because of the nation's economy was in trouble. A corporate leader only cares about that corporation's economy (and maybe the industry's economy) and nothing else. Had GM failed, it would have no effect on Ford's relationship with the UAW. The union had an ironclad agreement with Ford, and until Ford actually goes under, it is highly unlikely that the UAW would offer any concessions to Ford, unless Ford were lumped in with negotiations with GM and Chrysler. Of course, Mulally can't say anything about the UAW without stirring up a hornet's nest back in their own factories. Obviously he is going to say something generic about the economy crashing.

    You have to learn to read between the lines.
  20. HallGator
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    Seems to me the nation's economy would have a direct affect on GM's economy so I don't follow your line of reasoning here.

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