GM: More Bailout-Worthy than Citigroup 87 comments
Martin Hutchinson
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Financial journalists, most of whom spend more time writing about derivatives than carburetors, have been scathing about the possibility of an auto industry bailout, even though they’ve happily accepted multiple bailouts for the financial sector.
Of course, the reality is that bailouts are likely to do more harm than good in the long run, regardless of what sector they are in. But given the choice, I would rather bail out General Motors Corp. (GM) than Citigroup Inc. (C), because the automaker has a better long-term future.
The financial services industry got far too big during the 1995-2007 bubble. Its growth accelerated in the 1990s on the back of innovative new financing techniques such as derivatives and securitization, as well as a huge expansion in areas such as leveraged buyouts. As a result, its share of United States gross domestic product (GDP) has approximately doubled since the late 1970s.
It is now clear that many of the new financing techniques were misapplied or even spurious. The problem of separating loan origination from credit-risk assumption has become obvious, and so securitization will have a much more limited future.
Of the derivatives, credit default swaps are clearly destabilizing and will be tightly regulated. Many of the new market participants, such as hedge funds and private equity funds, should disappear, since they merely represented conduits through which higher fees could be charged rather than truly innovative investment choices. It is thus likely that the financial services business will revert to close to its previous share of GDP. That would involve a downsizing of its 2007 capacity by 50%.
The automobile industry, on the other hand, has no obvious need to become smaller. With global warming now high on the political agenda, its products need to change radically, employing new technologies that greatly reduce carbon emissions. However, the basic demand for personal transportation has not gone away.
Indeed, it is still expanding rapidly in the growth economies of emerging markets such as China and India. And U.S. urban geography, with its widely spread suburban developments, is wholly incompatible with a sharp drop in automobile usage and would be impossibly expensive to modify except over a very long term.
Why Citi Should Fail
Allowing a large bank such as Citigroup to disappear is probably beneficial. It reduces competition for other major banks, allows medium-sized banks to expand into the space opened up, and provides an appropriate penalty for decades of bad management. Citi was a leader in the Latin American loan crisis of the 1980s; its then-Chairman Walter B. Wriston famously opined that “countries don’t go bust,” a sentiment that has been repeatedly disproved.
Wriston got his succession wrong in 1984, choosing the overaggressive retail banker John Reed (who had pioneered the unsolicited credit card offer in 1978 and lost $100 million – real money back then – in 1980 by doing so) over the capable corporate banker Tom Theobald.
Citi almost went bust in 1991, but was bailed out by Saudi Prince Alwaleed bin Talal. It assembled a financial services conglomerate in 1998 that proved unmanageable, and from 2003-2005 was prevented from making any more acquisitions because of its shaky position.
In short, Citi has been a classically mismanaged behemoth that, in any other industry, would have already collapsed.
Yet, its bailout risks more than $300 billion of taxpayer money, and to no obvious economic benefit.
Meanwhile, General Motors has been damaged by two factors: Misguided government regulation of the automobile industry, and a drastic societal shift away from unionized labor.
CAFÉ Backfires
GM had a 60% share of the U.S. market in the 1950s, and was recognized for large cars that performed distinctly better than their imported competitors and were well suited to U.S. driving conditions. Some expansion of foreign competition was inevitable, as Europe recovered and Japan became a major automobile producer, but GM was particularly hard hit by the Corporate Average Fuel Economy (CAFÉ) legislation. CAFÉ, which mandated fuel economy standards instead of simply raising the gasoline tax, put GM’s large models at a disadvantage to their smaller imported competitors.
However, U.S. automobile companies found a loophole, which is that its standards were limited to automobiles. Vehicles built on a truck chassis were exempt. That gave rise to the sports utility vehicle. Now, higher fuel costs, environmental concerns, and tighter CAFÉ standards have made the SUV an endangered species, but it was a Frankenstein’s monster that only existed because of government meddling.
If GM and the other U.S. automobile manufacturers go out of business, only their foreign competitors will benefit. Furthermore, they have an interdependent network of suppliers, with a total of 3 million employees, which could easily be forced into bankruptcy by the disappearance of their major customers. U.S. automobile manufacturers have important, and in some areas unique technological capabilities, whose loss would severely damage the U.S. economy as a whole.
The automobile business is unprofitable now, but will eventually return to its previous size in the United States, as well as expand worldwide. So, while there is no capacity downsizing needed, capacity restructuring, away from SUVs and towards smaller cars, hybrids and innovative power technologies, is essential.
Ultimately, the right decision would have been to bail out General Motors and allow Citi to go to the wall.
The Case for Citi
Of course, there are important modifiers to this recommendation. In Citi’s case, its interconnection with the financial system as a whole is such that an immediate bankruptcy followed by years-long court proceedings could render many of its counterparties unviable and damage the global economy badly. Hence, an orderly liquidation is needed, with a receiver appointed to wind down Citi’s positions and sell the viable portion of its operations, making good on those obligations incurred by Citi that appear to have systemic importance. Even if the taxpayer made Citi’s counterparts completely whole, however, it would not have been as expensive as the bailout.
As for GM, it has labor costs and pension obligations making it uncompetitive with foreign-owned producers. Those “legacy” costs can most efficiently be removed through a Chapter 11 bankruptcy filing. The pension obligations will then fall on the taxpayer through the Pension Benefits Guaranty Corporation, while the labor contracts can be rewritten in a way that is competitive with the market in which GM operates. If a government subsidy is then needed to cover GM’s operating cash deficit during the recession, and the investment costs of transforming GM into a producer of environmentally friendly automobiles, it should be provided through a post bankruptcy “debtor-in-possession” financing.
There is nothing magic about banking that should allow the industry to be uniquely permitted access to taxpayer money when disaster hits. Only bank customers and the market should be protected. Conversely, the automobile industry plays an important role in the U.S. economy that is unlikely to be significantly downsized. So, there is considerable justification for assistance to GM and Ford Motor Co. (F), which have valuable capabilities and long-term competitiveness, though less for a bailout of the smaller and less industrially valuable Chrysler Corp.
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This article has 87 comments:
On Dec 05 03:52 PM User 313794 wrote:
> Unless I misunderstand Mr. Hutchinson's position - Citi should fail
> and GM should survive. Citi should fail because it loaned money to
> people who can no longer repay their debts and because the economy
> has turned upside down, GM should survive because when their workers
> are furloughed they receive 95% pay for doing nothing and because
> the American Automotive industry refused to produce fuel efficient
> cost effective cars for sale in the United States. How about this,
> the government limit the sale of imports as is done in other countries
> (especially Japan) so that American car makers can increase their
> sales. At the same time how about Fannie Mae and Freddie Mac get
> off their keesters and help refinance high rate loans with lower
> rate / longer term fixed loan products. Then Citi could loan GM the
> money and everyone survives. As for the position of Mr. Hutchinson,
> he should serve two tours in Iraq just to help clear his mind.
Yes, it is. But no bailouts should happen, ever.
WHEN GM WORKERS ARE FURLOUGHED THEY GET95% OF THEIR TAKE HOME PAY, NOT TOTAL PAY...GET YOUR FACTS STRAIGHT! 65% FROM STATE UNEMPLOYMENT AND 30% OF SUB BENEFITS, WE THE WORKERS CONTRIBUTE TO THE SUB FUND...JUST TO LET YOU KNOW ...THE HYPOCRITES IN WASHINGTON MAKE UP TO $19000 A MONTH. INCLUDING THE MONTH OF AUGUST AND DECEMBER(VACATIONS).TH... HAVE THE BEST OF HEALTH CARE AND PENSIONS...AND NO ONE IS ASKING THEM TO GIVE UP THEIR FREE RIDES ON CORPORATE JETS, THEIR FREE APARTAMENT. FREE MEALS,AND ALL THE PRRKS THAT THEY ANJOY WITH MY TAX MONEY. ANY BODY ASKING THEM TO WORK FOR $1..AFTER ALL THEY'RE THE ONES THAT GOT US IN THIS MESS....STOP BAD MOUTHING THE WORKING PEOLE OF THIS COUNTRY AND START LOOKING IN YOUR MIRROWS.
info.detnews.com/video...
info.detnews.com/video...
I live in a cold dark place. People die on the roads, especially those that buy the little death traps to "save money" on gas.
What they fail to realize is this: The 2 Mode Hybrid Chevy Tahoe—a full size SUV that seats seven with great towing capability—gets the same highway gas mileage as a Toyota Camry and received Green Car of the Year at the LA Auto Show.
On Dec 05 05:34 PM Tony Petroski wrote:
> The author wants the automakers to produce more hamster-wheel "hybrids"
> and the like because the SUV was "a Frankenstein monster and only
> created because of government meddling." I am very happy to be driving
> a Ford Explorer and would buy another one. It's snowing here, damn
> cold (please dear Lord give us some global warming), and the last
> time I passed the gas station, gasoline was $1.63. Here's an idea:
> you buy what you want, and I'll buy what I want, neither of us will
> subsidize the other, and we will remain free people for a little
> while longer.
Citi been brought before Congress? I doubt the public even knows the depth of problems this bank faces. The worst part is the taxpayer is on the hook for billions in bad paper, thanks to Paulson.
The most laughable part of the testimony by the CEO's of the auto companies is listening to Shelby from Alabama and Corker of Tennessee show contempt for Detroit's way of doing business.
Both have a CONFLICT OF INTEREST as big as the foreign plants, Mercedes, Honda, Hyundai, and Nissan and soon VW, which reside in the states they represent, and are given TAX BREAKS by same.
the quotes on npr by the car executives made them sound disingenuous. and this stuff the bloated pay and worker benefits weren't something that happened over night. like the main airline careers, the execs just don't get it.
25 years ago, the govt set up tariffs so to protect the industry against Japanese makers. and rather than capturing that advantage, the n. amer.n car manufatureres just raised its prices too.
Sorry worker, executives just have it in for the regular grind. for the investor, they will be rescued.
THINK OF IT THE U.S. WITHOUT A MAJOR AUTOMOBILE MANUFACTURER. just a matter of time. and also shake out the unions to make them more competitive
and back to the airline industry, has the stewardessed ever learned to SHUT UP (NO GOSSIP) during the flight and just do your job. I pity all those who faithfully do their jobs there at the mercy of "freedom loving" steward- "esses".
On Dec 05 06:14 PM CLH wrote:
> Ill give you just one reason for giving C the bailout and not GM.
> C is not a union shop. The unions have destroyed their jobs --- let
> them go to China where there are jobs.
On Dec 05 04:52 PM User 303820 wrote:
> PEOPLE CAN NO LONGER PAY THEIR DEBTS BECAUSE THEIR JOBS HAVE BEEN
> SHIPPED OUT AND THEIR WAGES LOWERED IN THE NAME OF COMPETITION.
>
>
> WHEN GM WORKERS ARE FURLOUGHED THEY GET95% OF THEIR TAKE HOME PAY,
> NOT TOTAL PAY...GET YOUR FACTS STRAIGHT! 65% FROM STATE UNEMPLOYMENT
> AND 30% OF SUB BENEFITS, WE THE WORKERS CONTRIBUTE TO THE SUB FUND...JUST
> TO LET YOU KNOW ...THE HYPOCRITES IN WASHINGTON MAKE UP TO $19000
> A MONTH. INCLUDING THE MONTH OF AUGUST AND DECEMBER(VACATIONS).TH...
> HAVE THE BEST OF HEALTH CARE AND PENSIONS...AND NO ONE IS ASKING
> THEM TO GIVE UP THEIR FREE RIDES ON CORPORATE JETS, THEIR FREE APARTAMENT.
> FREE MEALS,AND ALL THE PRRKS THAT THEY ANJOY WITH MY TAX MONEY. ANY
> BODY ASKING THEM TO WORK FOR $1..AFTER ALL THEY'RE THE ONES THAT
> GOT US IN THIS MESS....STOP BAD MOUTHING THE WORKING PEOLE OF THIS
> COUNTRY AND START LOOKING IN YOUR MIRROWS.
A similar practice at General Motors Corp under its agreement with the United Auto Workers union has come in for sharp criticism.
hypocrites!!!!!!!!
WE THE AUTO WORKERS GET ONE HALF HOUR LUNCH (NO PAY) AND 15 MINUTES BREAK IN A 8 HOUR SHIFT...MY (UNBELIVEBLE) PENSION IS $1700 A MONTH WITH 30 YEARS OF SERVICE.
AS FAR AS HEALTHCARE WE HAVE 5 DOCTOR VISITS PER FAMILY PER YEAR.... AFTER.... WE PAY 100%.
AS FOR YOUR COMMENT ABOUT OTHER COUNTRYS...YOU'RE ALSO RIGHT ...THEY DONT DO SAME AS US...THEY PROVIDE THEIR WORKERS WITH HEALTH CARE AND PENSIONS....AND BY THE WAY, MOST PEOPLE I KNOW GET 1 HOUR LUNCH.INCLUDING YOU!
HYPOCRI
Remember that you war happy republicans.
auto co's. get nada.
auto co's need bailouts because we need a viable industrial base in this country. we are fighting 2 wars (one of bush/cheney/rumsfeld's choosing) and need an industrial base. our industrial base has been withering since 1981 (thank you ronald r.).
> jack
US based foreign owned car companies will take up their declining market share with efficient , well made, reliable, vehicles.
They will of course need parts suppliers, showrooms, need to build new lant, hires ......
OK the total market will be smaller, there will be some folks hurt - but North America will have a highly efficient , compact, well run, auto industry.
The squalid boondoggle cobbled together will keep this wretched crew in a job until after the Superbowl .... better spend those Billions on ensuring some security for the retirees and re-training the redundant.
Maybe someone somewhere could find a job for Wagoner .
... and costs (US$50 K basic) as much as Wagoners private jet.
The regular 5.6 litre petrol Tahoe (US$33K basic) gives you 14 mpg on the highway.
But nobody wants to buy any cars....
Instead of giving Detroit a bunch of money to produce more cars when there is no demand, we should rather spend the money to create demand for cars.
How about this: Congress should send every US citizen (between ages 18 & 65) a coupon worth $5,000 toward the purchase of a new car! If 60 million people are eligible, that's only $30 billion!!!
As of August 2007, which manufacturer had the most recalled vehicles in the U.S. for that year?
Answer: Volkswagen.
According to Business Week, Volkswagen had the most recalls at this time a year ago. The second worst was Toyota.
www.businessweek.com/a...
Oh, wait. It's $300 billion, not $30 billion. And THAT's a really BIG number.
With my math skills, maybe I can get a job with the government...
Answer: The Chevrolet Malibu has better initial quality than any competitor, including the Honda Accord, Toyota Camry and Nissan Altima. The Ford Fusion also beat all 3 Japanese competitors.
This too is from the J.D. Power Initial Quality Survey, which also reveals that above average are American brands Mercury, Ford, Cadillac, Chevrolet , Pontiac, Lincoln, and Buick. Below average are import brands Acura, Kia, Nissan, BMW, Mazda, VW, Subaru, and Scion (and several others).
www.jdpower.com/autos/...
www.jdpower.com/corpor...
Answer: Not only was the Saturn Aura picked by the automotive press corps as better than the Honda Fit and the Toyota Camry, “When a panel of 47 journalists named the Saturn Aura the North American Car of the Year over the Toyota Camry, the vote wasn't even close, 205-89.” Chicago Tribune, 1/15/07
www.northamericancarof...
Answer: Toyota’s much publicized quality problems resulted in Consumer Reports actually removing from their recommended vehicles list the Lexus GS luxury car, Camry V6 sedan, and Tundra pickup. This demotion occurred in October 2007.
If you are one of the many Americans who gave up on Detroit’s cars because of a bad experience many years ago, it’s time to rethink your position. Rethink Detroit.
Foreign automakers: 33 U.S. jobs per 2,500 cars sold in America.
levelfieldinstitute.or.../
A lot of Americans are living in the past and still believe nothing has changed in Detroit - primarily because they haven't been driving new domestics recently... The Domestics cleaned up their act on the quality and efficiency front. Those that say otherwise are living in the past. Yes, Detroit had plenty of problems in times past and it has angered a lot of customers who will never buy another domestic... I guess people also forget Japanese quality early on didn't exist either and it hurt a lot of people - but people gave them another chance to clean up their act.
Either way, the Detroit brand has been diminished due to the actions of the past. Yes, Detriot makes superior cars/trucks at the moment but too many Americans already gave up on them from their errors in the past that cost them a lot of time, money and hassle. It isn't hard to see it, just read the above comments.
But this discussion should be focused on if they can sustain themselves like a normal corporation - not on whether they make a good product or not. Tucker made an awesome product - much superior - but where is he today? Many corporations have made better products and still failed to thrive.
Many of the bailouts for bankers are not in the form of LOANS, but are handouts. As long as we only give the domestics LOANS that are repaid with interest, I see no issue with allowing it to occur - this is a special time with banks not lending - and we bailed the banks out and they still aren't lending... Why can't we loan the domestics some money for a short period of time until the whole financial industry gets its act together? It's only a loan. If it's a handout - then scream "NO!" from the top of your lungs. If it's a loan - with interest- then that is a different story - especially at special times like these.
The big 3 automakers really do have a history of footdragging, even actively lobbying, against every government effort to do something for the public good - the lobbied against seatbelts, airbags, fuel efficiency and only recently put any real effort into cleaner energy autos. So even though Bill Ford and some execs have shown genuine interest in being more public-good minded, the track record overall is pretty lousy.
However, I do not blame them for producing so many SUV's! If your dealers keep ordering SUV's because they are selling off the lot, you have no choice but to keep producing them. What is the option? Car dealers order Explorers to replace the ones that were sold, and Ford ships them Escorts instead? It's the public to blame for driving gas hogs when they could buy something lighter. Pickup trucks and even SUV's deserve to exist as some people really do need them because of their line of work or where they live in the boonies.
However, since the big 3 have histories of fighting any change for the public good, there's no way the government should bail them out. I also don't like that type of precedent (yes, I know Chrysler in the 80's, but that was several administrations ago, so a very old precedent that doesn't mean anything). So I'm against automaker bailouts (even though I own shares of GM).
Citigroup, however, until recently was our biggest bank and a very symbol of our financial system in this country. The big financials dying one by one is a real possibiity that could cause major panic from depositors, which could derail our whole economy much more than the credit freeze we've seen since October. Washington Mutual ultimately was taken out in fact by a depositor run, not it's load of subprime mortgages! It was even fairly well capitalized at the time.
The carmakers' dying would hurt Detroit and certain cities badly (like the slow death hasn't already taken a major toll for years), but it won't derail the country and would arguably create a positive environment for a new auto industry that would be unshackled from a bloodsucking union that made it impossible to be competitive with heavy pensions and labor costs sinking them. (GM could lay off skilled workers, but had to pay them nearly full salary for years anyway to do nothing!)
ARE YOU ANOTHER EXPERT THAT'S NEVER SEEN THE INSIDE OF AN ASSEMBLY PLANT? OR AN ACONOMIST THAT KNOWS EVERYTHING ABOUT NOTHING?
By the way, Thank you Martin for a good article "exposing" the bank nonsense.... I agree, banks are plentiful, automakers are not....
On Dec 05 05:47 PM GoBlue wrote:
> You've really lost your mind. Citi is healthy, was healthy, and
> you're assuming that all of the $300 billion (asset backed) is worth
> exactly zero. Even Lehman and Wamu debt is worth less more than
> that. I bet the taxpayer doesn't loose a nickel on citi when the
> economy picks up.
You are so right... Shelby has been bought out like all of the Free Market Republicans....( to think I was a die hard republican for so many years) No longer. I do not like traitors...The pompous Republican's sold us down the river, Shelby,Corker(another idiot) etc..... Keep it up idiots,You sold out to Big Oil,The Japanese and the Germans. How much Tax credit did you offer any of the big three to build plants in Alabama Shelby????? None? That's what I thought.
Also what are all you prima donna Republicans going to do when all of the new Gm workers are making $22 an hour compared to Toyota's $38.00. Will you find a way to call that unfair competition???
By the way the $22 an hour was already in place 2 years ago in agreement with the Uaw for all new hires. So when all of the old gm people retire, The foreign Auto Makers will have a Much higher labor cost then GM. And I suppose Shelby will find a way to Toyota some more tax credits.....
On Dec 05 05:47 PM Beatdown wrote:
> The big three just don't happen to be Paulson,Franks, or Bush's buddies.
> If they were they'd be handed 1 trillion in cash and 7.4 trillion
> in loan guarentees. Then they wouldn't have to fly to Washington
> to talk to congress.They would just have to make a phone call. The
> next day the money would be direct deposited in their bank. Oh, and
> if they were an oil company Bush would give them 15 billion while
> they made record profits. Let the big three die and save the paper
> pushing jobs. This country was made great because we rebuilt the
> earth by manufacturing everything here after the World wars. This
> country is devastated because people forgot that and all our currency
> is shipped overseas. The reason the asian and South American econnomies
> have boomed is because congress is owned by their campaighn money.
> Senater Shelby is a servant to his Japaneese masters. The banking
> bailout and benevolent transplant man can't cough up money for Americans.
> This is because he is owned by unamerican interests. Wake up America,
> trickled on economics only works for the top 1%. Rebuild the middle
> class by making congress responsible to our own American interests.
> I feel bad for all our forefathers who fought for the world, only
> to have Washington give the fruits of their patriotism to foreighn
> interests.
Interesting comments about GM, If their vehicles cost to much,how were they able to sell 9.7 million units in 2007( more then Toyota and Honda combined). You must be another one of cronies that is Bought out by Big Oil. At $1.70 a gallon, how many people are going to buy little Prius hybrids now??? Ill answer that, now that BIG OIL broke the back of this country at $5.00 a gallon gas (monopoly,price-fixing < that's a real free market)(Last time I checked Monopoly's and Price -Fixing were illegal) No one will buy any car because we will all be laid off. Wonderful Job Big Oil and all you crooked politicians.
Why are the Big -Three automakers so afraid to expose the Big Oil folly's???
On Dec 05 03:44 PM User 313790 wrote:
> Having the ability to get inside info on Citi, I can tell you that
> they did not need the bailout. They accepted it to stabalize the
> mass frenzy of investors driving down the stock. With regards to
> automakers they have lobbied congress away from tougher gas standards
> and have actually killed many of the proposals to switch their business
> models. As more and more dollars got built into the price of a car
> via unions what do you think the American people chose to do? Although
> fear and uncertainty is currently present in todays markets, the
> media continues to drive it home daily. This constant reminder that
> our indicators are "off" pushes people into panic mode. I am a firm
> believer in the free market system and I understand that every 7-10
> years something in our system needs to correct itself. It has to
> fail in order to get better. Congress this time around, pushed hard
> to lower lending criteria and "we" responded, even if we were not
> able to afford it. Personally, when I invest my money, I read everything.
> Maybe that is a lesson that should be learned by the consumer who
> rode the false waves of funny money. I did learn that oversight
> to some extent needs to be present. Something that was lacking in
> this mess, but something that should be learned next time around.
> To close, I believe that no bailout of anything should ever be inserted
> into a free market supply/demand model. You taint the very thing
> that creates the wealth in this country
At one point and time Americans helped each other out when needed. All of this makes be want to return ot the military so I can at least be among people who love this country and what it stands for.
On Dec 05 04:48 PM Robert Nabloid wrote:
> "GM: More Bailout-Worthy than Citigroup"
>
> Yes, it is. But no bailouts should happen, ever.
Don't shed tears for Detroit automakers they are arrogant bastards. They brought this collapse on themselves and they richly deserve Chapter 11 or worse.
Firstly; No one should lay Detroit problems on the production workers' high wages. Germany pays just as high a wage and even higher benefits to its workers and the companies don't bitch about it. I was never in favor of strong unions because they can and do cause industries to fail.However Detroit has been able to demonize its unions while taking most of the benefits back and underfunding the ones that they had obligated themselves to when business was good.
I believe that Detroit's problems are self inflicted and are due to hubris and deceitful conniving on the part of management. Do you know why the Japanese and Germans are dominant in the marketplace? Because Detroit let them be! Yes, Detroit automakers asked for government safety standards because they thought that the Japanese and the Germans could never pass the intricate and arbitrary rules that Detroit drew fore them in these regulations. These so- called "safety standards" were thought to be so confounding that it would take years for the foreign car makers to meet the import standards. But Detroit underestimated the will of the foreign makers and they came back with cars that met and exceeded expectations with better quality controls and cheaper prices. I was there in the 1970s when Detroit cars would line the highways on hot days and the Japanese cars rolled right on. I was there in 1980 when I sat at the wheel of a shiny Buick in the GM building (NYC) when I spotted the Buick logo on the dashboard was glued on upside down. When I called it to the attention of the salesman he mockingly answered that if this disturbed me than I should look at another car instead. I remember spending days and days at the repair shops with my American cars while Japanese cars drove by problem free. And yet I kept buying American (29 different cars in 45 years of driving).
I must say that in the past 12 years the American cars that I bought have been trouble free and far more comfortable to drive. But the damage was done and the Germans and Japanese have been able to dazzle the market with innovative changes that Detroit is stubbornly slow to adapt.
What ever happened to the exquisite designs of the forties fifties and sixties that Detroit was famous for? What ever happened to the innovative technology that Detroit was known for? What ever happened to the exciting driving experience that we had 40 or 50 years ago?
Detroit has been resting on its laurels for nearly 40 years. The great weakness of the imports was their boring, faceless designs. Did Detroit exploit this deficit? NO!
Can anyone point at the GM lineup and tell us that the designs are beautiful? Phooey! They are downright ugly! Cadillac's CTS is a disgrace. Ford's cars are so boring that I left the dealership several times with my head shaking in disgust. No mechanic (ask around if you don't believe me) will recommend the purchase of a Chrysler product because they literally fall apart in the slightest mishap.
Now! Somehow our no nothing Congress will throw money at these lazy,arrogant outfits and all will be solved? Give the American public credit!! We don't want these jerks running the companies and we don't need to give them corporate welfare. They don't deserve one cent of our tax money.
And folks, don't blame the line workers. They don't have a say on the design, innovation, and creative technologies that are required to be put into these vehicles. They just have to push the garbage out the door.
Oh! By the way. Citicorp should go down because its corrupt through and through!!! So ,nice try Mr. Hutchinson, but neither situation calls for people to waste more tax money on them. IT IS JUST UN-AMERICAN TO DO SO!
Whatever happened to our capitalist system? Why are we even dicussing bailout for private enterprise. No one will be there when I or you fail in business.
Has this country gone bunkers? Who is putting Koolaid in our water? Wake up America! How did one month in 2008 change this country into a whimpering socialist-communist oligarchy have we no shame?
Yes, all bailouts are bad. But if we're going to do it anyway, then auto industry more worthy than banks. The banks created their own mess, whereas the auto industry fell victim to historic events that left them saddled with expensive labor and obligations in a globalized economy with plenty of cheap manufacturing labor.
I am puzzled that many people are so upset at auto workers making "an excessive" $75/hr, but perfectly happy to see legions of unnecessary Wall Street employees making, on average, $200/hr. I submit that the true value to the economy of an auto worker is greater than that of an average Wall Street employee.
It is people like you that p...me off!
So... those that provide health care and pensions for 1.2 million workers and family members are, as you call them "arrogant bastards".
Sen. Shelby's army of transplants that pay 30%of their workers $12 an hour and no benefits...are they your heros?
The skilled workers may have good skills to build cars.
But the bad thing is, they are mostly blind followers of
the unions who are out to destroy business. That's the
point people are talking about. Look at Steel, Airlines,
and many others. Even the Boeing unions are still doing
and walking the same path as UAW. What do you say ?
We all love GM & Ford. We drive their cars even now.
Had never bought a foreign car. Just hate those who killed
them. It hurts the majority of the American citizens to see
GM goes down the drain. You have to understand that.
It will be even more painful to see Boeing down the drain,
when 30 years from now, all is left are planes made in Europe
or China. You see it that way too ?
tell me how unios destroy business, give me details.
did the unions destroy ENRON? Did the unions have anything to do with KMARTfilling bankrupsy two time whithin 10 years?did the unions cause the collapsing of our banking sistem?are the unions shipping our good payng jobs over seas?
I'll tell what the problem is....competition....f... slave labor country...competition that we'll never be able to compete with unless we lower our wages to their level...would you like to work for $1.90 an hour?(mexico) or $120 a month (china). and i'm not talking automobile industry only, every thing else...we inported1.1 millin tons of pipes from china last year at a cost below of what the material would cost in this country. so lets blame the unions and glorify those that are lowering our standard of living....
Gradually, workers took it as a sports event, and have fun and felt proud of it. The last 40 or so years, all we heard were STRIKES, STRIKES, and more
STRIKES. We asked, what the hell were you guys doing ? The minimum wage then was 2.75 an hour, and they already making 200% more than a guy pumping gas or making shoes. Now tell me why the hell Boeing unions go on STRIKE ? They already the highest paid workers on earth.
Greed ? Control ? FUN? Tradition ? or What ? Share holders want to know. They better explain to the public, or they will be sorry.
On your 12:20Am blog you hit the nail on the head. NO ONE can compete with slave labor!! NO ONE! anywhere in the world can compete with slave labor.
So it appears that you somewhat agree with me. There is a tug of war between management and labor. Right now the CEOs of Detroit are making up to 5000 times the annual wages of the lowest rung employee in the plant. This is an egregious pay scale that has to be addressed. When labor unions hold up industries at pivotal points of growth, they too should be slammed.
The current set of executives in Detroit are not the ones who created the workforce of 1.2 mill. These executives have spent their entire careers dismembering the manufacturing base of this nation by outsourcing every bit of the industry that can.
The unions are doing their best to keep what's left in America.The days of take, take, take are over. The mission today is to just save some jobs. There are dozens of give backs and cut backs that the unions swallowed in the past few years just to keep the plants open against the tide of slave labor imports.
the truth is that labor in the USA is a dodo bird. Neither we, nor anyone else, can compete against a near zero labor cost economy.
So don't get p--s-d off because some people have a better life style due to union representation. The unions are the counter-force to management's abuses.
f.y.i... one of the reason boeing went on strike was the outsourcing of their jobs...without a union and the power of strike do you thing boeing would be building airplanes in usa? or mexico?
Don't shed tears for Detroit automakers they are arrogant bastards. They brought this collapse on themselves and they richly deserve Chapter 11 or worse.
Then you wrote!
So don't get p--s-d off because some people have a better life style due to union representation. The unions are the counter-force to management's abuses.
i don't get it....
i'm a union guy..i'm part of the ARROGANT BASTARDS team because chapter 11 is going to affect me....and yes i do agree with you on a lot...
The point that I'm trying to get across is that management at GM is happy to let the unions and the line workers take the blame for 40 years of dismal performance on the part of the management at GM.
the"arrogant bustards" are the very management team that requesting more money from congress to continue mis-managing GM.
There is no reason for hysteria except for the upper management team that may loose the perks.
What would likely happen under Chapter 11 is that GM will have to decide what it wants to keep and what it wants to sell off. Most likely the NEW GM will keep Chevy and Cadillac and sell off SAAB, Saturn, and the Pontiac and Buick divisions. Some entity, say private equity firms, will buy these units and put up teams of new and innovative people who will find ways to change the staid and failed programs of the present teams. Some of these teams will succeed in bringing innovation, excitement, and unique appeal to the surviving companies and Detroit will have a huge revival. Jobs will follow those who succeed in this new endeavor. There will be more casualties, of course, but the re-invigorated spin-offs will find their niche and successfully compete against the imports. Some will fail again.
Our system of capitalism and free enterprise is predicated on open competition. What has happened to Detroit is, that they have cocooned themself into a self congratulatory, closed environment, that stifles innovation. They refuse to respond to the market place and instead impose their concepts on the unwilling public. Do you think that Americans shun Detroit cars for spite? Of course not! They shun them because the vehicles don’t fit the American drivers’ needs. This starts at the design, function, and reliability of the products right on to the showroom and dealer support. When you have an OLIGOPOLY (few companies in control of an industry) you increase the chances that it will self extinguish the industry by refusing to adapt to the market. So a GM bankruptcy is not the end of the world either for Detroit or employment opportunity.
I do not mean to offend the hard working labor force that is just a cog in the wheel.
You explained quite well. You are very open minded individual.
Talk about quality. Bought a brand new 1995 Ford and fast enough
Within a few months, 3 recalls. Each recall would took me a whole day to deal with it. One of the recall I had to leave the vehicle there for 2 days. That dealer was famous for SLOW.
Lost whole days work, and paid $15 for the stupid rental.
My friend's same year Toyota, never had any recalls. He still has the
Toyota in good condition. I traded my Ford after one year (12,00 miles)
for a Camry. This Camry still run like young. Can you blame me for that
trade ? Or call me Un***** so and so ? I don't know. To me, a car that costed so much money should serve me well and no stress for me.
I won't touch another Ford as long as there are complains about them.
According to Business Week, Volkswagen had the most recalls at this time a year ago. The second worst was TOYOTA.
www.businessweek.com/a...
Good points.
Just to let you know why I have no compassion for the likes of GM. In 1947,when Tucker made his famous revolutionary vehicle, with features such as headlights that turned the corner with the turn of the steering wheel, it was only short lived.
Tucker was forced into bankruptcy by the BIG THREE auto makers who threatened the steel mills with boycott if they supplied Tucker with even one pound of steel.
What goes around comes around.
The know-nothing congress will grant the "loans" which will in turn become gifts to GM & Ford.
On Dec 06 01:58 PM ziz wrote:
> "The 2 Mode Hybrid Chevy Tahoe—a full size SUV that seats seven with
> great towing capability—gets the same highway gas mileage (21 mpg
> highway) as a Toyota Camry and received Green Car of the Year at
> the LA Auto Show. "
>
> ... and costs (US$50 K basic) as much as Wagoners private jet.
>
>
> The regular 5.6 litre petrol Tahoe (US$33K basic) gives you 14 mpg
> on the highway.
>
It makes zero sense to argue that, because Bush & Co made a terrible mistake, Pelosi/Obama & Co are somehow justified in repeating the mistake
Bailing out society's failures at the expense of its successful taxpayers is a clear recipe to ensure our children and grandchildren never see what used to be called the American Dream
That said, I wouldn't be surprised if the big 3 would be better off filing for chapter 11 and doing a COMPLETE restructuring and coming out of it a lot healthier.
On Dec 07 12:05 AM slowdown wrote:
> Just to clarify - GM is not getting a bailout...it's a loan that
> has to be paid back with interest. The banks on the other hand are
> getting bailouts and they shouldn't.
>
>
> On Dec 05 04:48 PM Robert Nabloid wrote:
At present time it's not a bailout - but we are all acting like it is, and it will probably end up that way. LOL. Funny how that works.
On Dec 08 04:30 PM philipmax wrote:
> To Robert Nabloid posted 12/6 7:11PM
>
> Good points.
> Just to let you know why I have no compassion for the likes of GM.
> In 1947,when Tucker made his famous revolutionary vehicle, with features
> such as headlights that turned the corner with the turn of the steering
> wheel, it was only short lived.
> Tucker was forced into bankruptcy by the BIG THREE auto makers who
> threatened the steel mills with boycott if they supplied Tucker with
> even one pound of steel.
>
> What goes around comes around.
>
> The know-nothing congress will grant the "loans" which will in turn
> become gifts to GM & Ford.
On Dec 06 12:32 AM Nostradamous wrote:
> I hate to be the voice of doom and gloom, but I am obligated to inform
> everyone what will happen in the coming months. Citigroup will fail
> and will be split up and taken over by the government. The person
> running it is focused on what he and his buddies can get out of it,
> much like they did when they pocketed $800 million by selling Citi
> a fund that was liquidated and written off in under a year. As they
> say they want to sell off non-core assets, they are propping up funds
> with non-core assets, like the Spanish highway company they just
> paid $10 Billion for. In addition, they still a high number of worthless
> assets they're hiding, and are currently having huge credit card
> losses. Wall street and the major banks will freeze all credit and
> throw more people out of their houses in retaliation for the government
> not giving them more bailout money. This will be the start of a deep
> depression that will be much worse than 1929. Cheney and his puppet
> Bush will laugh all the way back to Texas and Halliburton. The financial
> executes will watch everything collapse so they can pick up the pieces
> at rock bottom prices. Unfortunately for them, the depression will
> take them down as well.