I agree that this one will come back to bite them. Even if they don’t get away with this trick, the statement alone will cause people to reconsider buying a GM.
Unfortunately, most people won’t ever read the statement. Most that do probably won’t even bother to digest it.
@bladecutter
Odd though, that when I bought a new car earlier this year, it was a Mazda.
Or maybe that’s not really that odd, when you think about it closely enough.
Atleast with Mazda, you knew your money was going to Japan(with my car it did anyways) and that they offered the best car for your money, right?
But, that is the point, Mike.
You spelled defecate correctly.
I take it you don’t use spell checker much??..I was trying to spell deficit…But somehow it didn’t end up that way…And the word I spelled was wrong…Spell checker determined that the closest word to what I had typed was defecate…and I just picked it…That’s the way spell checkers work…Try it sometime
Mountainbike, you can say that GM was a greedy company and that their inattentiveness, inflated union salaries, and executives filling their own pockets caused the problem, but in the end, it’s all the workers that would suffer if they went under. Same with Chrysler. Not to mention all the Tier-1 suppliers on down. The economy would take a big hit from any of the big-3’s demise, and in my admittedly personal opinion, the only reason Ford wasn’t in the same boat is that they went through disaster and a reorg just before the economy started to tank.
Everyone needs a second chance and/or a helping hand sometimes, and the government aid is preventing thousands of new unemployment cases and financial hardship for workers. I’m disgusted at the way GM sloughed off all the unprofitable sections of itself to rot with total forgiveness, but I think if GM folded, the repercussions would have been enormous. And as I mentioned, this has actually been a profitable investment for the government.
The thing about manufacturing is that the companies actually have assets besides on paper, and actually produce something. Unlike financial institutions, where the total value is smoke n’ mirrors in some cases.
“I was trying to spell deficit…But somehow it didn’t end up that way.”
Okay–now I understand!
Your attempt to spell deficit was so far from the actual word that spell check assumed that you were attempting to spell “defecate”. No matter how good spell check might be, if someone is w-a-a-a-y off on their spelling, the software may well give you other words, rather than the one that you thought you were using.
“I take it you don’t use spell checker much??..”
You are correct!
Luckily, some of us don’t need that feature.
;-))
You are correct!
Luckily, some of us don’t need that feature.</b.
Well unfortunately I’m NOT one of them. I can’t live without it. But it has gotten me in trouble sometimes.
Mountainbike, you can say that GM was a greedy company and that their inattentiveness, inflated union salaries, and executives filling their own pockets caused the problem, but in the end, it’s all the workers that would suffer if they went under. Same with Chrysler. Not to mention all the Tier-1 suppliers on down.
People think that there were only two options…The US bailing GM out…OR GM closes it’s doors…Well if you look at bankruptcy of other large companies in the past…Instead of them closing doors…they were bought up by another company and continued to survive. Or they restructured and became a smaller company but still survived and eventually became larger then they were before.
The problem with bailing them out…we now set expectation that we’ll do it again…So keep running your company as poorly as you want…and if you get in trouble…don’t worry…you’ll get bailed out. So as long as this safety net is in place…then why even bother…
Sorry, Mike… I didn’t mean to cause such a diversion with the comment on your earlier post! 
I just thought it was funny, 'cause “defecate” is a near perfect description of congress’s actions over the past 20-30 years… far more so than “deficit”, which is what you clearly meant…
When it comes to the bailout, here’s my opinion:
Yes, it absolutely creates a moral hazard as MikeInNH points out.
The cost to the government (and therefore, us) would have been much greater had GM failed. I don’t believe anyone would have wanted to buy them out or even been able to in 2008-2009 when the bailout took place. Every major automaker was having to run to their respective governments for short-term help… in the US we even had Toyota, Honda, Ford, etc, turning to the Federal Reserve for short-term loans for their finance divisions. So you had all the automakers short on cash, swimming in excess capacity, and struggling to keep things moving. It was a short-term problem for them, but did they really have tens of billions in cash available to snatch up a competitor?
The alternative, restructuring with private capital, was equally difficult to impossible. My employer has a AA- / AA3 credit rating, yet at that point in time we were struggling to get bonds placed below 6% yields… since that time, our bonds have traded at yields below those of US treasuries with comparable maturity dates. If solid companies were struggling to sell bonds, what outrageous terms would private capital have demanded from GM? Remember when they got the first wave of support from Bush in 2008, the corporate paper markets were pretty much dead.
So I think Chap 7 was pretty much guaranteed without federal support… and that would have cost the government much more than the bailout when you consider unemployment benefits and lost tax revenues.
I just thought it was funny, 'cause “defecate” is a near perfect description of congress’s actions over the past 20-30 years… far more so than “deficit”, which is what you clearly meant…
No problem…I too thought it was funny as hell…If I make a mistake like that again…bring it up…I’m good for laugh too…And trust me I’ve done worse…
I didn’t think it was a mistake at all and thought it was a great play on words.
I think it is far too early to condemn GM for not honoring their obligations. If their attorneys rolled over right now, the opposing lawyers would probably not go away, but insist on more. I think that both sides are arguing the case as they do to set up a framework for a settlement. BTW, don’t forget that Toyota tried to get out of any legal obligation for all of their unintended acceleration issues. They all do it.
There’s also a lot of taxpayer costs other than the ones that are dwelled on nationally.
The GM plant in Oklahoma City which closed down just a few years ago and was a rathole from the get-go is an example of how the taxpayers are getting soaked.
The empty building was going to be a White Elephant so the county bought it.
Cost to the local taxpayers - 45 million in bonds.
Cost to the state taxpayers - 10 million in a “grant”.
Cost to national taxpayers - 100 million (original estimate) to renovate it for use by the adjoining Tinker Air Force Base.
Cost to operate the building once renovated - unknown to me but godawful high per month.
As to the county/state investment the lease agreement is for 1 dollar per year so it’s going to take a while for that 45 million + interest in bonds to be returned.
All of this happened not too long before the old GM ceased to exist so a cynical person might think this was a case of looting the bank on the way out the door.
Ouch -
Of course, the OK city plant closed well before the recession, and the deal was struck well before bankruptcy. Other closed plants saw much better deals for taxpayers - see Ford’s Lorain Assembly plant, for example, which was bought by a group of private investors…
But the OKC deal is typical of state and local gov’ts anymore - provide land, facilities, etc all at taxpayer cost for the promise of a few more jobs. See Kia in Georgia for another great example.
Oblivian, I compliment you on having made an intelligent and well stated argument, but I take the position that the market would be the same size regardless of the loss of one producer and the void would be filled by the more efficient competitors. Loss of actual jobs would have been minimal. Orders that would have been filled for Chevys would now be added to the orders for Ford, Toyota, Honda etc. GM would be laying off and the others would be hiring.
What probably would have actually happened is that the various divisions of GM that had value would have been “split off” and sold at auction in liquidation. Ford might buy the Chevy division, Someone else might buy Buick, etc.
I don;t believe that artificially supporting a producer in a competative marketplace saves anything or anyone in the long run. Ultimately, if they’re srtificiially supported and become efficient, they’ll have prevented sale by competitors that were more effiicient to begin with, and if they don’t straighten up the market will eventually clear them out anyway…at much greater loss in the end.
We clearly have different perceptions of the government’s position in the marketplace, as well as different perspectives of how intervention manifests itself in the marketplace. My long-held belief that intelligent people given the same facts can come to diametrically opposed conclusions is once again proven. It’s what makes us all human.
Two comments about the defunct Oklahoma City GM plant.
When this plant was first announced and construction started I had to attend a seminar in Houston, TX. On the way home the GCA radar went out at DFW and we had to circle along with a bunch of other planes while this was repaired. This led to a 3 hour layover and off I went to the airport lounge for a few cold ones.
While perusing the Dallas newspaper business section I see a blurb about the Fort Worth GM plant closing. After reading the article I see that these claimed 1500 jobs in OKC are actually going to be filled (mostly) by Texans. The article stated that current employees in TX would be given first shot at those jobs just 200 miles down the pike.
In the big picture, nothing changed except tax incentives and the building itself. There was no new 1500 jobs created.
All of the politicians in OK were shocked about the closing and were working feverishly to dish out more tax money to GM but that failed.
Why should they be shocked over the closing? A blind man could have seen it coming.
About a year before the closing was announced a story in the business section of the OKC paper made reference to SUV production times.
The story stated that Ford and Chrysler spent about 20-21 hours of assembly line work to produce one SUV and that the OKC plant spent about 27 hours to do the same thing.
It doesn’t take much business acumen to see that’s a whale of a lot of difference in production costs and that something was going to give.
Corperate rhetoric.
Happened to me years back.
Accoustic Control Corperation was their name. You’ll see the name Accoustic on many guitar amps and other live sound production equipment.
Sounds like GM wants to at least nitpick the fine print in their ‘old’ warranties.
said it before, but I’ll say it again: “Too big to fail means too big to exist”
the same mountainbike August 24 Report
Oblivian, I compliment you on having made an intelligent and well stated argument, but I take the position that the market would be the same size regardless of the loss of one producer and the void would be filled by the more efficient competitors. Loss of actual jobs would have been minimal. Orders that would have been filled for Chevys would now be added to the orders for Ford, Toyota, Honda etc. GM would be laying off and the others would be hiring.
Not sure who you’re talking to (seeing no posts by anyone named Oblivian).
But I disagree with your claim that job losses would have been minimal. To have minimal job losses, you would have needed the import brands that landed the sales to nearly triple their US employment. That simply wasn’t going to happen. The cars would have been built somewhere - and most likely that would have been in Japan.