GM: Natural Death or Suicide? 27 comments
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America is sad for many reasons - investment scams, credit market scams, housing scams, political scams - and not the least cause for sadness is the death of General Motors (GM). In typical sleepwalking mode, the management of this once great company - despite having been forced by its legal people to retain bankruptcy counsel - is as yet unaware of the fact of their own death - or the fact that it was a suicide.
A deeply researched, comprehensive, and ultimately emotional obituary was just published by Bloomberg. A summary would not do it justice; I recommend you spend the time to read it because in the telling of G.M.’s rich history of arrogance, self-deception, and just shear lack of common sense it symbolizes the time we are living in, a time of nearly Biblical retribution for having lived a life of arrogance, self-deception and poor judgement - just like G.M.
It is a time when the truth of our societal self-deception is exposed to all. When we discover that:
- A system that lets you buy a car for nothing down and low monthly payments is eating its seed-corn every day.
- A system that puts poor people in houses they can’t afford and finances it with paper the buyers of which can’t understand and the regulators don’t want to investigate can only produce consumer, financial and political victims eventually.
- A system that pays people at the top more than they or their heirs can spend, gives alms to the poor, and forces the middle class to work so hard that they hardly have time to raise their children will not produce a happy society. And yes it is a system - composed of higher tax rates on Warren Buffet’s secretary than on Warren himself and a health care system featuring escalating costs, 20% uninsured, huge expenses devoted to denying coverage, mediocre medical results and the top reason for personal bankruptcies.
President Bush is unwilling to let G.M. go bankrupt on his watch so the legal death throes will come in 2009 under what we have reason to think will be the better management of the Obama administration. Yet, as the experts who have looked at G.M. from the outside - from Ross Perot to Jerome York to Carlos Ghosn and many others - have all concluded, and in the famous words of Sergeant Preston, “this case is closed.” There will be no saving General Motors in anything like its present form regardless of how much money and talent the Obama people pour into it.
There will be a conflagration in the automobile industry during the coming long, slow motion collapse of General Motors. It will impact suppliers, competitors, ancillary business, and consumers around the world. No doubt the Obama people will try to cushion the fall through some sort of pre-packaged bankruptcy. But the fact of enormous gushing negative cash flow every day will not let them do much about it. There is no time for a downsizing, for a product restructuring, for a management shake-up, for a new set of alliances. In the end, the Volt has been trumped by the global recession, depression, whatever we call it. Cash flow is truth.
We will survive. The economy will grow again some day. But in the meantime just the ordinary business of getting and spending is going to be like World War I. Except that the soldiers now are the average Joe and Jane all over the world. A final gift from the indolent, truly stupid world symbolized by George W. Bush in which many people - myself included - allowed themselves to be sucked into a lot of self deception.
Stocks: is the market making a bottom; is all the bad news out? I wouldn’t bet on that.
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I have NO sympathy for the big three.
A pragmatic solution will entail bringing all stakeholders together, establishing a 90 day window for voluntary concessions, and keeping the pressure on to make something happen. Everybody is going to have to take a haircut.
The government is on the hook anyway, so they will supply enough capital to make it work. The Senate ideologues have had their day of glory in front of the TV cameras. There will be no conflagration, just a long slog with low returns. Cars will still be built, and the 80% of the parts that come from outside the Detroit three will still be put into something.
When a well thought out energy policy stabilizes gasoline price trends, and the US works through its oversupply of cars, the industry will start to recover.
With a lousy 20-30 billion required, after giving 700 billion to the criminals on wall street, to the auto industry everyone is making the auto ind the fault guy for everything that ails this country. not so fast.
the real criminials are the politicians and AIG, GE, CITIBANK, ETC AND guess what they still collect their full salary. how about cutting back and taking $1 Senators? Stop giving VW, Toyota millions and millions who do nothing but assemble cars. suddenly everyone is an automobile manufacturing expert. you guy have no clue, still.
No, that would only last the auto industry until the early part of next year; then they would want much more.
There is so much talk of Union salaries – the Big 3 executives have huge salaries too, much higher than Toyota executives – why not talk about that. Did the Wall Street executives have to give up their salaries or even their bonuses to get the bailout.
The Big 3 just do not have the right lobbyist to bribe the Congress that is the only difference.
I personally am against all bailouts but there has to be a fair play amongst all classes.
And then post them on Yahoo to go after GM
1)Toyota & Honda executives and assembly line workers get paid considerably less than their GM counterparts. You don't hear the assembly line workers at Honda & Toyota complaining about getting only $48 /hr.
2) Toyota & Honda don't have huge health care & legacy costs.
3) Toyota & Honda don't have a sense of entitlement and actually work to get a larger market share and build better cars.
Why not do something constructive instead? Get the recalcitrant UAW to go along with ALL the other stakeholders to try to save these companies. Oh, I forgot, they didn't have ANYTHING to do creating this mess, so it's not their fault.
$45 per hr X 40 hrs per week = $1,800
versus...
$55 per hr X NO hrs per week = $ ZERO
I understand this is difficult math for the braintrust who runs the UAW, so perhaps you should forward this formula to them to assist them in making their decision.
If you think can sell a taxpayer funded bailout to the rest of America under these terms, either the President-elect is alot dumber than I thought, or you guys are the best salesmen in the WORLD.
For those of you who don't understand why the majority of Americans don't want to bail out the big 3 (atleast in their current form), heres a few reasons-
1.They have close to zero confidence that the tax-payer money will be used wisely, after all, the companies haven't even spent their own money wisely.
2. The execs and managers don't seem to have got the message how much they need to change their style, their priorities. They are not on war footing.
3. The unions don't seem to understand that the overall benefit package that the workers get will need to be downscaled by atleast 30%. Like paulault above said- alesser job is better than no job.
4. The biggest point is that we only need perhaps 1/2 the vehicle production capacity than we currently have (if we consider that the country should only buy what it can actually afford). How does bailing out the big 3 result in an orderly downsizing of the industry, and how does it guarentee that the companies will put out energy efficient vehicles rather than Hummers?
we have found the enemy, looked directly into the eyes of the enemy, and determined we look into a mirror.
how are the owners/managers of GM different from the owners/managers of the USA, WHEN IT COMES TO ECONOMIC/BUSINESS WELLBEING?
are we both not economic basket cases? desperately financially struggling.
i fear we both suffer from lack of--
self-reliance
sustainability
the person with levels of abnormally bad readings of organic function, warned by his doctor and his own feelings, fails to take action, dies of cardiac arrest.
NATURAL CAUSATION OR SUICIDE?
OR LACK OF SELF-RELIANCE/SUSTAINA...
On Dec 15 08:42 PM kurt walter wrote:
> How did most of the same congress people that helped create the current
mess
> get re-elected in November? I am still trying to figure that one
out.