Again, I Agree With You. I Don’t Have A Problem With People Spending Their Money Any Way They Choose To. This Is America.
The problem I Have with Gore is that he earns his money lecturing people about how to live their lives cutting back and curtailing pollution and instead of setting an example, he lives extravagantly, however the hell he pleases. I don’t care for Ralph Nader, but at least he seems to practice what he preaches, for example.
At the very least, they could have “plane-pooled” there.
As with any topic that so strongly and negatively involves us personally, there is the predictable whaling and anguish along with exhorted extreme solutions.
I agree that complacency and mismanagement by the U.S. auto industry played a large role in the present situation which was exacerbated by the economic meltdown now being experienced. If the big-3 were to go down the tube today, rest assured that the market for new cars and trucks will not disappear. The remaining auto manufacturers, be they Toyota, Mercedes, Mazda, VW, etc., will be certain to pick up the void left by the big-3. This likely will involve either taking over the old big-3 plants and retaining the workforce and supplier network, or building anew. Either way, the present workforce and supplier network will still be needed, albeit with some likely restructuring changes. Just my two cents worth.
That makes sense to me. There is a lot of hypocrisy in politicians criticizing the extravagant spending of private money. I see something a little different though. I see taxpayers upset at the idea of tax revenues going to subsidize this extravagant spending and I see politicians foreseeing taxpayer/voter backlash if they reward these fat cats with guaranteed loans from borrowed public money. These CEOs aren’t even willing to share their plans for this money, and I agree that we should apply the same stringent standards to politicians who spend our tax dollars. In fairness, though, they aren’t spending your and my tax revenues. They are spending future tax revenues from future generations, which I find even more morally repugnant. It is as if they are taking advantage of today’s children, who don’t yet vote or have a voice in Washington, DC.
John DeLorean wrote a book titled “On a Clear Day, You Can See General Motors”. I think this book was published about 30 years ago. While I am not a fan of John DeLorean, he was a “car guy”. He talked about the excesses of the GM executives. He recounted one incident in which one executive always liked to end his day with a sandwich and a beer. While staying in one hotel, his underlings had a window removed and a refrigerator brought into the room by crane.
Another book, titled “The Insolent Chariots” published in the early 1960’s also describes some of the behavior of the executives in the auto industry.
I believe that “to those who have been given much, much is expected”. I think that these executives should be concerned about a salable product that would keep the workers in their corporation employed. The union leaders should be looking out for the long term stability of the corporations. I think too many times these executives are like Lt. Fuzz in the Beetle Bailey comic strip. Lt. Fuzz is always measuring Sgt. Snorkel’s desk and complaining that Sgt. Snorkel has a bigger desk than he has. Lt. Fuzz is also going into General Halftrack and trying to promote Lt. Fuzz. Of course, General Halftrack is also incompetent. I think that we have too many Lt. Fuzz’s and General Halftracks running our auto corporations. I’m not so certain but what we would be better off if Pvt. Zero ran GM. At least he would be humble.
Bankruptcy means stockholder share value is 0
REALLY? I would appreciate it if you would explain how that could happen. K-Mart filed chapter 11 bankruptcy several years ago and their stock is currently being traded at $29.16. Their shares never hit $0. Why would it be different for the car companies?
Those are great points. It is as if these executives have no incentive to succeed. If they succeed, they keep their jobs. If they don’t succeed, they get bought out of their contracts the their golden parachutes kick in. Their pay isn’t related to their performance. In fact, even if Detroit’s big three all go out of business tomorrow, the three CEOs are already set for life. It must be nice.
The problem I Have with Gore is that he earns his money lecturing people about how to live their lives cutting
What the H*LL does Gore have to do with this???
Umm, they did cut their expenses and pay before they went to DC.
Ummmmm…NO they didn’t. In fact when asked the CEO of Ford thought his salary and compensation was fine the way it was (about $26m).
Lastly, and most importantly, doesn’t anyone care about the 2 million people who will lose their jobs if Ford, GM, and Chrysler shut down?
Why does everyone think that the ONLY path is for them to close their doors. They’ll file chapter 11 and restructure…and hopefully either get bought out of finally learn about how to run a company and emerge from bankruptcy with a stronger company.
Bankruptcy means stockholder share value is 0
HUH…Who told you that??? I suggest you look at the companies that have filed bankruptcy in the past 20 years and check what their stock is/was worth. There are many different forms of Bankruptcy…one being chapter 11.
Many…many of these executives are paid MILLIONS for just being there…NOT because they succeeded. In fact many have NOT succeeded and are still paid MILLIONS.
On MSN.Com today…GM is returning 2 of it’s leased jets. Ford hasn’t made any comments on it’s 8 jets.
Nancy Pelosi told the execs to come back in 12 days with a business plan that would show operational improvement and no red ink before any moneys would be allocated. Makes sense to me.
Of the three, Mulally of Ford will have the best plan, since he has been this route before at Boeing. He’s already got rid of Jaguar and Land Rover and is shutting the Expedition plant down to convert it make Fiestas. I can’t see Wagner coming back in 12 days with a plan to restructure GM, complete with the shutting down of more divisions and a savage cut in salaried staff. Yet, this is what is needed. Nardelli at Chrysler is no more savvy than he was at Home Depot before he was ousted.
Shareholders are paid off last,
Okay I should have said possibly 0
"When your company goes bankrupt, there is a very good chance you will not get back the full value of your investment. In fact, there is a chance you won’t get anything back. Here is how the SEC summarizes what may happen to stock- and bondholders during Chapter 11: "
“If they go under they go under. Something will come out of it all. A smaller, more efficient company, division of another after a takeover, etc…”
That’s a lot less likely that it has been in 80 years. In order to reorganize, they need credit. The credit market barely exists for solvent companies, let alone defunct ones. That would mean the Feds would have to step up. It would probably cost a lot less to do it now rather than after the default.
Didn’t the CEO of GM take $1 for his pay at some point until things turned around? I really respected that. What’s happened since then? I think the govt. should bail the big three out as a “one time deal”, but as one of the conditions, I think all the CEOs and upper management should have to take a huge pay cut and NO bonuses of any kind until the company is profitable again—and not by eliminating 1,000s of workers. What are these bigwigs being paid for? Not performance, that’s for sure. If most of these guys never got another paycheck in their lives, they’d still have more money than they could reasonably spend in a lifetime. I’m all for being able to enjoy the spoils of hard work and wise career moves, but how many millions of dollars does a person need to live well, provide for their family, and have plenty for luxuries and a ‘rainy day’? It makes me sick to think how many blue collar workers’ salaries could be paid with the ridiculous amounts of money that upper management makes, as they eliminate jobs left and right to try and fix their mistakes. At this point, some streamlining is in order to keep these companies afloat, and good people will lose their jobs, which sucks. But a new “paradigm” is needed–the days of reckless extravagance are over. I wonder how cold/detached from reality these guys must be to be able to sleep at night. I work for a major auto supplier, and in the course of my day yesterday overheard two execs talking casually about laying off 500 more workers, then went right into discussing golf without missing a beat. Made me sick to my stomach. Unfortunately it seems that with the economy in the state it’s in currently, the only folks with job security are lawyers.
The way I look at it is that if the Big Three all went belly-up instantaneously and did not produce one single car after a certain date the slack would be taken up by all of the other car makers. The Big Three doesn’t sell X number of vehicle and all of their dealers go under only means that X number of cars will be sold by everybody else and the numnber of “other” dealers will increase.
Any suppliers would then simply step up production to the car companies that are still in business and mechanics would wind up working at a Honda or VW dealer instead of a Big Three operation.
Decades of mismanagement by a procession of clueless CEOs and now Congress (also a bunch of nitwits) thinks these guys can come up with a “plan” in a few short weeks or months?
If any of them had a “plan” it would have been instigated long ago. Maybe.
Some may remember the obscure story (I read it in the business pages of the paper) about 10 years ago in which the CEO of GM announced they were “going to introduce 18 new models in the next couple of years”.
Translated that means, “We’re going to throw a bucket of mud at the wall and see if any of it sticks”. Nice strategy.
I say…call their bluff. Give the Bail Out but directly payable to the UAW workers in the form of health insurance and retirement benefits until the new contract is valid. Pay in the form of a loan to UAW that the big 3 must start paying pack when the new contract begins in 2010. They have two years to turn a profit and in the meantime there are full benefits for workers. The big three does not see one red cent directly.
Conspicuous consumption at its peak.
Production lost by the foundering/defunct Big 3 will be picked up by the rest of the industry, as you say. It’s a sort of conservation of energy concept. Worldwide vehicle demand is what it is, and simply removing 1, 2 or 3 producers doesn’t make that demand go away. Of course, the workers who will be making those vehicles may not be Americans, and that should worry us. With the possible exception of the 3 CEOs involved, I suspect that nobody disputes that there have been serious miscalculations in the business model used by the US automakers over the past 30 years. But I don’t regard Congress as “nitwits” for requiring the Big 3 to finally come to terms with this, spurred on by a deathbed conversion, if that’s what it takes to get Detroit’s attention. Nardelli, Mulally and Wagner (and the union bosses who have been complicit in pricing their commodity out of economic reach) may indeed not be up to it, in which case the free market has a solution. I’m a capitalist; I believe in this stuff! But we should take no comfort in the loss of the cornerstone manufacturing industry in our country without making the effort that Congress has now challenged Detroit to undertake. What’s more, we should all be rooting as hard as we can for Detroit to finally respond appropriately.