Why AIG Gets Billions While GM Gets Scorn 74 comments
Rick Newman
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Let me see if I’m getting this right: AIG (AIG), the huge insurance company, has so far gotten $173 billion worth of federal aid, because traders at one small division made bets on exotic securities that were so calamitous they threatened to bring down the whole company. So far, the amount of money the feds have pledged to this one firm equals nearly one-third of the nation’s defense budget.
General Motors (GM), America’s biggest automaker, has asked for a $10 billion federal loan, equal to one-seventeenth of what AIG has gotten – and Congress has said no. There were no rogue traders at GM, and the company’s problems have intensified in plain view, over several months, instead of coming from out of nowhere in a single, cataclysmic episode.
Make sense? Doesn’t to me. So maybe if we look at each company a bit more closely, it will be clearer why the government favors companies like AIG over ones like GM.
Is AIG bigger? No. AIG doesn’t break out its U.S. employment numbers, but it has 116,000 workers worldwide. Perhaps half of those are U.S. jobs.
GM employs 96,000 Americans. Total worldwide employment is 252,000, more than twice AIG’s.
Are AIG executives humbler? Not really. Here’s how CEO pay stacks up:
Former AIG CEO Martin Sullivan earned about $14 million in 2007. Total pay over the last three years: About $53 million (including only 9 months in 2005, the year he became CEO).
GM CEO Rick Wagoner earned $14.4 million in 2007. Total pay over the last three years: About $30 million.
AIG is also offering controversial “retention bonuses,” ranging from $92,500 to $4,000,000, to a select group of execs deemed essential to the company’s turnaround. Congress has asked questions - but so far shown little outrage.
Has AIG had a regime change? Yes. Former Allstate CEO Ed Liddy took over the company in September, replacing Sullivan, who presided over a wipeout in credit-default swaps and other exotic investments. The fresh blood pacified critics somewhat.
GM has had no regime change, although key members of Congress have called for that. Wagoner has been running the company since 2000, and the company continues to aggressively defend him.
[Read a defense of Rick Wagoner.]
Has AIG presented its turnaround plan to Congress? Not formally. There’s only been one Congressional hearing on AIG, and that focused mostly on past practices. No current AIG officials have testified before Congress since the feds got involved.
Wagoner has testified before Congress four times since November. And GM has presented a 38-page “viability plan,” that’s publicly available, showing how it would use government money.
[See how the automakers' bailout plans stack up.]
Does AIG have friends in high places? You could say that. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke both support the AIG bailout, and they’ve steered money to the company without Congressional approval.
GM’s most important friends in Washington have been the Michigan Congressional delegation, which obviously doesn’t have the clout it used to. Paulson has actually argued against using part of the huge $700 billion financial bailout fund to help the automakers, because they can’t pass a “viability” test proving they’ll stay in business long enough to pay back the loans. But AIG hasn’t passed a viability test either, and without federal help there’s little doubt it would be in bankruptcy.
[Read about better ways to handle a multibillion-dollar bailout.]
Does AIG have unionized workers? Few, if any.
GM has a bunch: 64,000. Ah ha! Maybe that explains it. In fact, Senate Republicans who blocked a $10 billion emergency loan for GM and a $4 billion loan for Chrysler said they wouldn’t approve a Detroit bailout unless the United Auto Workers made much deeper concessions than they’ve already offered, essentially giving up any advantages they have over non-unionized workers in other states.
So here’s one lesson: If you want a government bailout, try to have problems that are too complicated for most people to understand. And make sure your employees are the kind who wear a suit to work every day. Once you’ve satisfied those two requirements, ask for as much as you want: The coffers are open.
Disclosure: No positions.
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This article has 74 comments:
GM (and the other 2 of the Big 3) have been dying a slow death for decades, not just over the last year, so that profitability is a pipe dream unless the company's are forced into bankruptcy and completely revamp their business model.
I love the smell of socialism in the morning....
A major reason that the public has little support for bailing out Detroit is that it has a fundamentally flawed business model and cost structure that has been problematic for a very long time -- and they have no good answer for how they're going to fix those issues. There is NO doubt in anyone's mind that they'll be back for more, and multiple times.
Compare that to AIG which really only had one problem division and the rest of the business is (reputed anyway) to be highly productive and valuable. AIG had the advantage of a (then) appearance of a one-time short-term crisis (but admittedly, with a shockingly large hole). Also, there was a fear that if AIG went down, a lot of others were going down, hard and fast.
Might be smart to let down one of those 3 automakers in case things don't get back on track too soon.
AIG bailout might not be just for their employs, but would affect probably millions of people who had their money savings at their disposal with much more implications.
I don't say it was smart to save AIG, but I don't see a solution in helping all automakers either.
Then for everyone to cry that GM is mismanaged, when all of the supposed foreign automakers that "did everything right" are all asking their govt's for bailouts now says there is a really a much bigger problem in the industry especially when hundreds of thousands of foreign cars are piling up on the docks of Long Beach.
The human cost of not bailing out the big 3 far exceeds the dollar cost and the same repugs that added $150 bbl in pork to the Wall Street bailout bill to now cry about a few billion to save America;s last manufacturing companies and millions of jobs really smells.
I would also posit that the thesis of this article is exactly backwards. The only reason anyone in Washington (Democrats) gives a second thought to Detroit is precisely because it is so highly unionized. Far from being a detriment to getting help from Washington, it's the only thing they have going for them.
to quote Dillinger: "because that's where the money is"
On Dec 12 07:07 PM A. wrote:
> This is silly. AIG poses a systemic risk to the entire financial
> system. The Big 3 make cars. It is a pretty asymmetric comparison.
>
>
> I would also posit that the thesis of this article is exactly backwards.
> The only reason anyone in Washington (Democrats) gives a second thought
> to Detroit is precisely because it is so highly unionized. Far from
> being a detriment to getting help from Washington, it's the only
> thing they have going for them.
But AIG supplied their political buddies $$$$$ in return. They 'managed' their accounts for them if you will.
GM? D.C. politicians don't want a free Chevy, come on.
It's all about money, end of story, and the money party in Washington is always in office...
During the 1910-30 acceleration period, following many acquisitions and product innovations, GM offered more brands and types of vehicles than any other automaker. New assembly plants were also opened in more than a dozen countries
In 1919, GM bought an unknown company for $100,000 that had built the world's first commercial refrigerator and renamed it Frigidaire.
Eight years later, Frigidaire was a household name and was contributing more than $15 million to GM's annual net earnings.
GM's World War II contribution is impressive, having converted all of its production from 1940-45 to the war effort. It delivered more than $12 billion worth of goods, ranging from airplanes to tanks, marine diesel engines, trucks, machine guns and shells. No other manufacturer delivered as much material to the allied forces.
Some estimate that a total shutdown of the top U.S. automakers would lead to nearly three million lost jobs and costs of about $60 billion in the first year.
The loss of GM would be the ultimate blow to American prestige around the globe.
(excerpted from Bill Carrigan's column "Getting Technical" in the Toronto Star Nov 14, 2008)
There is only one institution that is equipped to rationalize this type of restructuring, and that is a bankruptcy court. The government could easily step in to make bankruptcy an orderly process. They could guarantee a portion of the DIP financing, a portion of the suppliers receivables, and new warranties until the company is out of Chapter 11. We might even get a functioning auto industry out of the process.
With Congress calling the shots on a blank check bailout, all you'll get is an endless stream of money thrown at car makers so they can continue to produce cars no one wants to buy.
'Apocalypse Now' is upon both the financial and auto sectors.
Oh the government can pump billions of taxpayers money into the company which will delay it from rotting too fast.
Sooner or later you have to bury the body and go through chaper-11.
The BIGGEST problem is organized labor. the unions' "job bank" is the most stupid thing ever (laid off workers get 95% pay) they're the ones who make the Big Three uncompetive. We can still manufacture cars in the US, all the foreign makers are successful.
Bankruptcy is the only way for them to start clean (break all the union contracts, get rid of all the pensions) and doing things the right way.
The other idiotic assumption is that the financial sector is basically thriving except for a couple of bad apples. This is based upon the idea that once this crisis is over we can return to the financial business model of the past 20 years. Of course we cannot because massive fraud at all levels was occurring in real estate, credit cards, derivatives, etc. that added to the bloated profit margins of these companies. This fraud has been aided and abetted by the Fed (Greenie encouraged adj. rate mortgages while the fed funds rate was 1.0) Most of these financial firms would have trouble in any other environment.
www.wnyc.org/news/arti...
On Dec 13 01:43 AM AlexS wrote:
> Part of the GM contracts was that GM would provide health care benefits
> for life. Even as the rest of us get pushed into Medicare at 65,
> GM continues with gold plated coverage (free, I believe). So bear
> that in mind. Part of the GM bailout would go to paying for retirees
> to get health care benefits that you can only dream of.
a domestically owned industrial base is essential if the u.s.a is going to continue to fight wars all over the world.
> jack
What's happening over the last decade is Asians like Chinese and Indians have become more educated and smarter to realize that Americans are not as productive in comparison as decades before and they are being pampered by the foreign debt. Decades ago, Americans were a productive country in the real sense until they've become to always way overstress the importance of the businesses of "moving money around".
That's whay I learned and observed when I had my further studies in the States. This years and years of complacency amongst the Americans especially the young generations led to this financial meltdown in which the world is starting to realize that the businesses of "moving money around" must be analyzed based on the real merit and not analyzed based on the fact that they're businesses of "moving money around".
Americans are trying to come out of this by ONLY bailing out with TRILLIONS of national deficit and foreign debt on the money-related businesses since they realize that their best way of maintaining the status quo (American is the no. 1 country in the world) is not to let these money-related businesses to go down. The big 3 are not Americans' bread and butter businesses anymore since Asians have become and will become much "better in all sense" at manufacturing businesses.
As long as the Asians do not fully realize this fundamental fact of life, Asians can only rise slowly against Americans. Of course, these are watershed times where the wealth of Asians are steadily rising due to the complacency of Americans. They think they deserve the current standard of living when most Americans do not even care and understand about the world outside the States. They think the world revolves around them.
Full economic decoupling between Asians and Americans would not happen since it's an interconnecting world out there. However, Asians are not experiencing full impact from the American-led meltdown since Asians have been steadily shielding themselves from external adverse impacts by developing their domestic markets.
Believe me, the day will come when the Asians become so fed up with the lofty standard of living that the Americans were having in the past and are still having nowadays are never justified and the Asians will keep on slashing their country financial reserves from the American debt. Of course, there will be economic impact to the Asians themselves but do you think Americans can keep on being complacent and inflating the deficit to trillions and trillions of dollars? In the real sense, countries are like individuals. One cant keep on borrowing money throughout one's life without being "more productive in the true sense". Americans will continue to feel these excruciating pains until they truly realize that the world doesnt revolve around them only.
On Dec 13 01:51 AM User 318684 wrote:
> Please give me an example of a company that any reader of this website
> would work for that does not give excellent benefits. I have worked
> for several large companies and the benefits are excellent for average
> employees. I work in technology by the way and have a pension, full
> benefits, 401k, decent pay. You are basically saying that an auto
> worker makes something more than an average professional, that is
> simply not being honest. At least the auto workers provide a useful
> service which cannot be said for the vast majority of major financial
> institutions. The financial sector's business model has been predicated
> upon a consumer savings rate that over 30 years went from over 10%
> to -1. That is being reversed as we speak which means that these
> large financial companies are dead in the water for the current cycle,
> decades to come.
AIG, Citi, BofA, etc are parasites that suck wealth from the wealth-creating sector.
Go back to Econ 101. There are only a few ways to create wealth, and all involve adding value to more basic goods. Converting mined materials into usable materials for manufacturing, converting materials into manufactured goods, lumbering, fishing, etc.
All together - bankers and insurers don't create wealth; they manage and redistribute wealth. If the wealth-creating sector dries up, we won't need bankers, lawyers, or insurance salesmen.
On Dec 13 12:25 AM mediocris wrote:
> Financial institutions such as AIG are critical to to functioning
> of our entire economy. The same cannot be said for auto manufacturers.
> We could easily import all of our cars from foreign countries (with
> low wages and equally low standards of living), with only slight
> ripples in the functioning of our daily lives. The failure of finance
> would bring down the whole house. Lending, insurance, and reinsurance
> are vital like the electric company and the telephone company. These
> lynchpins hold the whole economic structure together.
One of the reasons that GM is failing is that they cannot continue to get a line of credit (from companies like Bank of America or Citi) unless they get an infusion of capital, a bridge loan. Multiply that over the entire economy, no credit for anyone. Our modern, prosperous, economy would collapse and even the Treasury Dept.could not save it. The "wise men" in Washington correctly called that one.
On Dec 13 11:06 AM User 173545 wrote:
> What a load of crap. Sure, we need a transparent financial system
> without abuse to "lubricate the engine of the economy", but to claim
> that companies like AIG are critical to our entire economy is ridiculous.
>
>
> AIG, Citi, BofA, etc are parasites that suck wealth from the wealth-creating
> sector.
>
> Go back to Econ 101. There are only a few ways to create wealth,
> and all involve adding value to more basic goods. Converting mined
> materials into usable materials for manufacturing, converting materials
> into manufactured goods, lumbering, fishing, etc.
>
> All together - bankers and insurers don't create wealth; they manage
> and redistribute wealth. If the wealth-creating sector dries up,
> we won't need bankers, lawyers, or insurance salesmen.
Now the corrupt financial regulators are going to stry and ave the corrupt financial system. They cannot. Instead they will destroy America.
We are going to save the virtual world of fake money, but throw out the productive economy.
We're so far gone it's not even funny.
Indeed!
As you are too polite to say it, I will suggest a phrase to be applied to the Americans that I learned on the docks in Hong Kong . Perhaps you are familiar with it?
Do lay lo mo! Quite fitting I think.
On Dec 13 08:45 AM Asians wrote:
> Americans have always been known to be better at manipulating Asians
> in money-related businesses. That's why Americans can still live
> way better and way beyond their means even though they are only good
> at "moving money around" and continuously inflate the national deficit.
>
>
> What's happening over the last decade is Asians like Chinese and
> Indians have become more educated and smarter to realize that Americans
> are not as productive in comparison as decades before and they are
> being pampered by the foreign debt. Decades ago, Americans were a
> productive country in the real sense until they've become to always
> way overstress the importance of the businesses of "moving money
> around".
>
> That's whay I learned and observed when I had my further studies
> in the States. This years and years of complacency amongst the Americans
> especially the young generations led to this financial meltdown in
> which the world is starting to realize that the businesses of "moving
> money around" must be analyzed based on the real merit and not analyzed
> based on the fact that they're businesses of "moving money around".
>
>
> Americans are trying to come out of this by ONLY bailing out with
> TRILLIONS of national deficit and foreign debt on the money-related
> businesses since they realize that their best way of maintaining
> the status quo (American is the no. 1 country in the world) is not
> to let these money-related businesses to go down. The big 3 are not
> Americans' bread and butter businesses anymore since Asians have
> become and will become much "better in all sense" at manufacturing
> businesses.
>
> As long as the Asians do not fully realize this fundamental fact
> of life, Asians can only rise slowly against Americans. Of course,
> these are watershed times where the wealth of Asians are steadily
> rising due to the complacency of Americans. They think they deserve
> the current standard of living when most Americans do not even care
> and understand about the world outside the States. They think the
> world revolves around them.
>
> Full economic decoupling between Asians and Americans would not happen
> since it's an interconnecting world out there. However, Asians are
> not experiencing full impact from the American-led meltdown since
> Asians have been steadily shielding themselves from external adverse
> impacts by developing their domestic markets.
>
> Believe me, the day will come when the Asians become so fed up with
> the lofty standard of living that the Americans were having in the
> past and are still having nowadays are never justified and the Asians
> will keep on slashing their country financial reserves from the American
> debt. Of course, there will be economic impact to the Asians themselves
> but do you think Americans can keep on being complacent and inflating
> the deficit to trillions and trillions of dollars? In the real sense,
> countries are like individuals. One cant keep on borrowing money
> throughout one's life without being "more productive in the true
> sense". Americans will continue to feel these excruciating pains
> until they truly realize that the world doesnt revolve around them
> only.
>
>
>
I have also seen a lot of posts about the defense industry. So far, in the two conflicts we've had in Iraq, we never lost ONE tank, and those tanks were manufactured by General Dynamics. And in case you haven't noticed, the Big 3, outside of trucks and Cadillacs, have not survived through the dealerships but the bond markets. Its the same business model as Amway, but Amway isn't asking for a bailout.
The truth is that no bailouts come with a very large near term cost to the economy, to jobs, to the world. What I believe would be ideal in the long run, doesn't work at all in the short run. Ideally, we would have already had a system in place that would make the cost borne only on those who made such disastrous decisions. Now we have to work around it, and later make the changes necessary so that stupidity is not rewarded and/or supported.
Now in addressing Ricky's blog, I have to present the evidence as he failed miserably. His blog is one for political posturing only and has business on "Seeking Alpha".
AIG is turning out to be ridiculously costly. The company would tell us that they taxpayers will see a return of principal plus interest but I'm a little skeptical about that. However, what is most important is understanding why we've sent them so much of taxpayer dollars. AIG is about as deeply involved in Credit default swaps as any other American company. The risk isn't just to AIG, for if it were, I say bye, bye AIG. The risk is to virtually every large bank on Earth. The risk is counter party risk of the worse kind. The world's largest banks are so deep in credit default swaps and counter party risk that a player like AIG could send the entire world financial system into a freefall that would make what we've seen in this financial crisis so far seem like a tea party. This totally unacceptable. Our risk isn't the 170B we've used, its trillions to the entire network of banks.
Now what about the big 3? What risk does the economy face if one or more should see bankruptcy? it depends on whether the government is willing to back these companies with loans after a managed bankruptcy solution is hatched. This talk of them going to total liquidation would only occur if the government chooses not to loan them anything under any circumstance. What's the chance of that after Obama is in power and the new Congress is seated? Zero! This is actually the best opportunity the Auto industry has ever had to get a clean start. Under bankruptcy they have the power to renegotiate contracts as they see fit for the industry going forward. If things are done in what I would call properly managed with government loans, the risk to the economy is much less than if we start loaning them money now without bankruptcy. The assumption from guys like Rick Newman is that the auto industry only needs some short term loans to get over the hump and will function thereafter in a profitable environment. But the evidence is all around that won't be happening. Their business model is broken. Their legacy costs are killing them. The UAW says they'll cover legacy costs after 2010 but only if the big 3 cough up $50 billion. Wait a minute. The money discussed right now is a bridge loan to last till March. Then all agree they will seek at least the remainder of the 34 billion they had last calculated. Then they will need at the very least another $25 billion that the congress had already promised them for retooling. If they are in need of this money, where does the other $50 billion come from? That's right! The taxpayer will fund this too. So now, we're in the tank for a little over $100 billion at the least. Because there isn't any bankruptcy, the government can't demand that our $100 billion+ is senior to other loans that have already been designated senior debts. We can't break contract laws without bankruptcy. So we wait in line. In the meantime, the American auto manufacturers are attempting to build small economical cars as instructed by Congress which they decided against in prior years due to the fact that they can't make a profit on these same small cars in this country. These are their words, from just a couple of years ago.
So, its not about 15B, and its likely not just about 100B. This is going to be an intravenous drip for as long as the American taxpayer is gullible enough to keep throwing good money after bad.
I think as far as total employment of those 2 companies, AIG & GM, the numbers are bigger at GM. The far reaching numbers will be if GM has to declare bankruptcy in all those other companies affected by it. Is Big Oil listening to any of this??
On Dec 12 06:03 PM EMS wrote:
> Agreed- AIG is an absolute disgrace.
These are the facts and the real truth but it won't be mentioned or discussed becasue China.more and more........can influence US actions..........becau... of the money..........didn't you ever hear "follow the money".......and it will lead you..........
It is one of the tenets of the architects of "globalization" to kill US industry. The idea is simple. Get rid of US manufacturing, the US won't be able to make anything, including weaponry. This will t hen make the US totally dependent on the "international community." The US will then be more comfortably merged into "North American Union" and eventually, "Global Governance" if the US is unable to exist independently.
This is all double standard which unfortunately very few are able to see.
On Dec 13 12:25 AM mediocris wrote:
> Financial institutions such as AIG are critical to to functioning
> of our entire economy. The same cannot be said for auto manufacturers.
> We could easily import all of our cars from foreign countries (with
> low wages and equally low standards of living), with only slight
> ripples in the functioning of our daily lives. The failure of finance
> would bring down the whole house. Lending, insurance, and reinsurance
> are vital like the electric company and the telephone company. These
> lynchpins hold the whole economic structure together.
Well Hell yeah sure we should not spend the fifteen. We may not be smart but we are ideologically pure.
And after the 9/11 attacks, I did not see any help offered by Toyota or Honda. Ford and GM together gave $40 million + in cash and also fleets of replacement vehicles to the cause. Chrysler also gave millions as did Harley Davidson, who also gave new motorcyles to NYPD. Food for thought.
Our fearless leaders have gotten US into this, & it will take All of US to get out of it. Many yrs...Look @ Japan! Did their Govt's help their Auto Industry when their entire economy went down the shute? I didn't notice any of them Bankrupting. Nissan was in Big Trouble as I recall.
On Dec 12 06:55 PM market ace wrote:
> If you look into the details the AIG bailout did more to help foreign
> banks than anyone. Their failure would have set off a bad dominoe
> effect, but the exposure to all of those derivatives has not been
> solved, addressed or ecen understood by congress so nothing was accomplished
> except pissing away a lot of tax dollars The psychological effect
> of destroying the automakers will be far worse that the small billions
> required to keep them alive. Then when congress decides tha they
> can better mangage an auto cpmpany than the current mangement it
> is just laughable, since they look like total idiots when pretending
> to understand AIG and why it needs a $173 bbl bailout.
>
> Then for everyone to cry that GM is mismanaged, when all of the supposed
> foreign automakers that "did everything right" are all asking their
> govt's for bailouts now says there is a really a much bigger problem
> in the industry especially when hundreds of thousands of foreign
> cars are piling up on the docks of Long Beach.
>
> The human cost of not bailing out the big 3 far exceeds the dollar
> cost and the same repugs that added $150 bbl in pork to the Wall
> Street bailout bill to now cry about a few billion to save America;s
> last manufacturing companies and millions of jobs really smells.
Who here would loan money to any company that has such little control regarding unproductive workers and their firings.
Labor unions need to be a dead horse. Neither they nor the USA can survive in this new world trade market unless we become competitive. What more proof do we need to see this and please, don't try and compare the financials to the manufacturing companies. They are two completely different animals.
On Dec 13 01:02 AM edtheincomeinvestor wrote:
> The Big Three doesn't make cars that we want (high MPG, quality,
> etc) Guess who killed the electric car? GM! I would have gladly brought
> the EV1, instead got a Prius.
>
> The BIGGEST problem is organized labor. the unions' "job bank" is
> the most stupid thing ever (laid off workers get 95% pay) they're
> the ones who make the Big Three uncompetive. We can still manufacture
> cars in the US, all the foreign makers are successful.
>
> Bankruptcy is the only way for them to start clean (break all the
> union contracts, get rid of all the pensions) and doing things the
> right way.
>
Who killed the electric car? The real question should be what and not who killed the electric car. When GM had the EV-1 on the roads in Calif both Toyota and Honda had their versions out and running too. All three companies killed their programs and destroyed almost every electric cars that they had in the programs because of management decisions that the cars weren't economically feasable at the time but most importantly the battery technology wasn't good enough.
All three companies, GM, Toyota and Honda made the decision to kill their electric car programs but you and others only seem to blame GM while not even mentioning Toyota or Honda. If you feel the need to blame GM then you should also blame Toyota and Honda. I'm sure that the reasons that the three companies made their decisions were all pretty much the same.
I do agree with you about the Jobs Bank being a stupid thing but I do have to inform you that you are wrong about the percentage of pay that the people in the bank actually get. I'll give you a hint, it's not 95% of their wages. I really do wish that people would stop relying and believing the numbers that are put out by the media and actually do some checking for themselves.
It's true that the foreign manufacturers that have plants here are successful but it's really not a level playing field. They are all located in states where the state labor and employment laws are to put it mildly very favorable to the employer and not to the employees. Very few of them have been here long enough for any of their employees to be close to retiring with Honda in Marysville, Ohio and Nissan in Tennessee being two that come to mind. They all have retirement programs but very few of them for whatever the reason have had any of their employees getting close to being able to retire. I seriously doubt that they ever will either. GM has been here for 100 years, Ford just about that long and both have had generations of employees working their whole lives and retiring while Toyota, Honda, Nissan, VW, BMW, Mazda and Mercedes have only been here for 30 years at the most with the majority of them being here less then 15 or 20 years. They have no "legacy" costs and will not have any for another 10 years.
They do have a good business plan though. Set up shop in states that really don't care about the welfare of it's workers. Hire young workers that will take a long time to see retirement and use the state's lax worker's protection laws to do your best to push those workers out of the door before they can even think about retiring. As an added bonus you can set up shop in states that have terminate for no cause laws on the books like most of the southern states so that you can get rid of those pesky employees who are getting a little old or the one's who made the mistake of being injured on the job.
Retirement pay is also reduced when you become SSI eligible.
On Dec 13 01:43 AM AlexS wrote:
> Part of the GM contracts was that GM would provide health care benefits
> for life. Even as the rest of us get pushed into Medicare at 65,
> GM continues with gold plated coverage (free, I believe). So bear
> that in mind. Part of the GM bailout would go to paying for retirees
> to get health care benefits that you can only dream of.
Many conservative white-collar workers, who otherwise would never support "bailouts" or bridge loans are saying "well, since AIG got one, we should get one too." Most blame the unions, comparing the Detroit Three to Honda and Toyota. Ron Gettlefinger hasn't helped matters since he refused to work with Congress during a time where *everyone* needs to compromise.
Most of the liberal white-collar workers I know are pretty quiet. They'll lash out at executives from time to time.
Then there are the unionized blue-collar workers who lash out against the executives, taking no blame on themselves. I don't disagree with them that the unions are not the only cause of this problem but most of them act like the unions have absolutely nothing to do with this problem. Bull.
Straight out of college, as an engineer, I worked with unionized plant workers who were making two to three times what I was making. That wouldn't have been a problem if they were actually worth that. Many of them slept on the job. Some drank. Some were fired but the union always managed to get them rehired.
For years, I commented that I could not believe that we could even afford to buy cars- because of the wasted money on labor alone. Much of the plant work is hardly more sophisticated than the work performed in a McDonald's restaurant yet the wages are astronomical.
Then there are the retired workers who defend the union even more.
"Well, these guys were always accustomed to making that much money." Sure, that's a great excuse to keep paying them that.
I suppose I would defend an organization which helped me get paid much more than I was worth for years and then handed me a handsome retirement with health-care benefits as well.
Unfortunately for me, I get to be on the losing side of that equation.
On Dec 13 01:02 AM edtheincomeinvestor wrote:
> The Big Three doesn't make cars that we want (high MPG, quality,
> etc) Guess who killed the electric car? GM! I would have gladly brought
> the EV1, instead got a Prius.
We want big vehicles with bright headlights. Go past a Toyota dealership and all you see are SUV's and pickups. My first car a 1960 American-made car got over 30 mpg and lasted 300,00 miles. I get a new American-made car every ten years or so.
Detroit is one of many underdeveloped places in the US where it is still not popular, profitable or self-advancing for politicians to to help blue-collar, middle-class peoples -- and many of these people are Black (think Bush vs. New Orleans).
Politicians and financiers have gotten used to getting kick-backs for doing the -- now proverbial -- middle-class' "honest day's work." If the rust belt has nothing to offer them and their expensive tastes, they're not interested.
This is still about America needing to grow up sociologically. Someone's got to think of a way to make fair play a valued asset in America.
techn0: I would have given you a +10 for your commentary, but only 1 vote per person here.
WayneS: If "we" (you and the frog in your pocket, I guess) want BIG cars with BIG headlights, then go to any used car lot and take your pick.. there is no shortage of them.
I, myself, drive a Buick LeSabre. I get over 30 mpg. I am retired now. When I was working and computing to work, I got over 75 mpg. I carpooled.
The key issue with GM is the companies failure to alter their business model to realign with present and future consumer demand. The executive's failure to control costs and revise initiatives has put the business in the current place, near bankruptcy and with minimal capital reserves. GM has received bailout funds and most likely will only be able to retain that cash for another quarter or two.
Please do not get me wrong I believe that GM, Ford, Chrysler, and the other American Auto companies are important for the strength of the American Economy. However, if the American Auto companies do not begin to align their initiatives to more extensive technology and produce more efficient vehicles than their fate may be difficult to avoid. Chapter 11 or not.
On Dec 12 06:03 PM EMS wrote:
> Agreed- AIG is an absolute disgrace.