k9s-4-k8

If Cars Are the Problem, They Can Also Be the Solution

Much to comment on.

Jim Kingsdale says:
"......pay a cash rebate to buyers of super-acceptable models that are produced (assembled, at least) in the U.S."

This is a typical protectionist proposal I expect to hear from the UAW and the Democrat majority in Congress. Cash rebates paid only on U.S. built vehicles bypasses international trade laws.


Jim Kingsdale says:
"A “bridge” loan will still be needed by GM to get them through their current negative cash flow operating structure. But it will be made with the realistic potential of paying off in the future."

The only realistic terms for GM to be relieved of this debt is for the U.S. taxpayer to convert it into a grant, or convert it into equity which will perform only a bit better than a grant.

Jim Kingsdale says:
"Moreover, the government should get options on a huge part of the equity in GM, thus potentially getting the taxpayers’ money back at some point. The company will still need contractual restructuring to eliminate legacy costs that now make it uncompetitive. That means the bailout funds should come in as part of a pre-packaged restructuring that abrogates G.M.’s current legal obligations to its unions, dealers, and suppliers."

Either you're suggesting we receive stock in exchange for a $50 billion infusion to the UAW,(that's the big 3 deal with the UAW and they won't abrogate that deal for anything) or you're just papering over one of the major reasons GM will never survive profitably on their own without an intravenous drip on taxpayer funds for the remainder of this century. Certainly, I don't expect taxpayers will put up with that. We will cut our losses after many billions have already been flushed on this company.

Jim Kingsdale says:
"How do we know a government-controlled GM would be smarter than the old one? We don’t, but we do know two things. One: new management could hardly be dumber than the past management. Two: we’ve just elected maybe the smartest President in history - so giving him the opportunity to pick the people who will make the GM decisions at least provides us with a glimmer of hope. His recent choices for leadership positions should give us confidence in his judgement."

On the contrary, anyone that thinks they can turn around GM without a managed bankruptcy supported with government loans solution, is at least as stupid as the former management. As for Barack Obama being the smartest President in history? He's not even in the top 10. Where do you come up with such crap? Fact of the matter is that GM is suffering under the burden of labor expense due to the combination of greedy unions and greedy management. Nobody cared a whit about shareholders or the long term viability of the company, neither management nor the UAW. Automobile manufacturers are beholden to long-term supplier contracts and fix costs such as interest on debt for capital investment. The unions understand every day they strike costs GM millions. They hold tremendous leverage over the company. Management cares about year end bonuses. Enough days on strike in any year can dramatically curtail profits and leave management with a simple salary and no bonus.