By on November 3, 2012

TTAC alumni Ed Niedermeyer has an op-ed in the Wall Street Journal. The piece discusses the spin surrounding the bailout in this year’s campaign. Check it out here.

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250 Comments on “Ed Niedermeyer In Today’s Wall Street Journal...”


  • avatar
    areader

    The usual right wing BS that Niedermeyer spouts. There was no private money in sufficient amounts to do what he claims would have worked. This is covered in Rattner’s book. Of course the claims will go on. Certainly there was money to be made without the govt bailout, but not to sustain a going concern, so the hit to the economy would have been huge. Toyota and Honda supported the bailout.

    • 0 avatar
      Pch101

      “There was no private money in sufficient amounts to do what he claims would have worked.”

      Yep. This is so painfully obvious that I really have to wonder about the financial acumen of anyone who would claim otherwise.

      Furthermore, it might help to notice that the Treasury converted their loans into equity. There was a reason for that — these companies couldn’t support loans that large, so the government had no choice but to take stock.

      DIP lenders are just that: lenders. Since DIP lenders don’t want to make equity investments, the need for equity removes them from the picture.

      A private equity investor that would consider taking stock would have never done deals like these, as the potential for returns were too low. The auto industry is mature, and neither GM nor Chrysler could produce the types of returns that those investors demand.

      Three years after the fact, the same lack of knowledge of finance and bankruptcy law is spewed ad nauseum. The endless repetition of falsehoods doesn’t make those falsehoods any more accurate.

      • 0 avatar
        wmba

        +1

        I read that op-ed with growing disbelief and sadness. I had thought Niedermeyer had some acumen, but judging by this ridiculousness, he was partisan all the time he ran TTAC.

        More than highly disappointing, this op-ed is a willful distortion of the facts.

      • 0 avatar
        APaGttH

        In 2008 early 2009 there wasn’t free capital anywhere to support anything. The banks wouldn’t have given a loan or reorganization to Jesus Christ himself if he had his second coming and asked for money to fund his army of angels to fight the darkness.

        I’ll be glad when the election is over, and TTAC can maybe go back to focusing on – CARS – not the weekly missive on why Chrysler and GM should die. It’s over. Its in the history books. Time to move on. It would be like still beating the drum that Toyotas are death traps. No, they are. Serious. They just had to do another floor mat recall so it must be true. DEATH TRAPS! See how easy that was. GM is profitable – they report a profit every quarter following standard accounting practices. Chrysler is profitable under the same measure.

        Time to move on people — it’s getting old.

    • 0 avatar
      jetcal1

      Dear areader,
      Try something like: “The usual conservative view point Niedermeyer espouses.”
      It sounds so much less vitriolic than “The usual right wing BS that Niedermeyer spouts.” And might make more people rea the rest of your comment.

      A perfect example of political discourse in this country as practiced by too many on both left and right.

      • 0 avatar
        Luke42

        It is very possible to be conservative without spouting BS.

        I truly wish more conservatives would try it.

        Come to think of it, the tone on the Internet has been more measured over last few months than it was, say, 6 months ago. (Not sure about commercial TV; I wouldn’t know.) Is it election fatigue, an improvement in tone, or maybe the Eternal September has finally ended?

    • 0 avatar
      KixStart

      areader,

      “BS” is a little harsh in tone. jetcal1 has a more nuanced and pleasant approach.

      If the edit timewindow hasn’t closed, you might do a little cleanup.

    • 0 avatar
      carguy

      I would not words such as BS but Ed’s article is more of the revisionist history that seems to be popular with conservatives at the moment. It’s a little sad that the intellectualism championed by Mr Buckley is now being replaced by populism and revisionism. From the Reagan’s presidency, the Gingrich leadership of the house to the Bush years – everything that no longer passes the ideological purity test will be revised or expunged from the record. So too does the somewhat imperfect rescue of the auto industry provide a thorn in the side of conservatives that needs to be revised to make it less successful, legally shady and possibly corrupt. I have to admit that it was not comfortable with the bailout when it happened but the results speak louder than any political dogma. So please give it a rest and possibly contemplate that the realities of government are infinitely more complex than any political ideology could ever hope to capture. Political theories are all fine and good but pragmatism usually gets better results.

      • 0 avatar
        Pch101

        “I would not (use) words such as BS”

        But it was BS. It doesn’t hurt to call it out for what it is.

        The problem here is that we have people who know nothing about business or law commenting about business or law.

        Let’s say a company such as Bain had been part of a quasi-privatized version of this plan. This is probably what would have happened:

        -The government would have lent all of the money

        -When it came time for the government to take equity, Bain would have paid pennies on the dollar for the government’s stock, in exchange for a pledge to contribute working capital to the new company. So in the case of GM, Bain might have paid $5-10 billion for the government’s then-$50 billion contribution, with Bain agreeing to park a similar amount into GM.

        In other words, the “private” solution would have probably locked in a loss to Treasury of about $40-45 billion, which is considerably more than the loss that would be realized if Treasury sold its GM stock today, and higher than what any loss might prove to be.

        A player like Bain would require fire sale prices to do a deal like this because that’s how their business model operates. I would imagine that Mr. Romney doesn’t care for this version of the GM deal because his firm lost whatever opportunity that it may have had to make a mint at government expense.

      • 0 avatar
        Robert.Walter

        Thought Romney left Bain like a decade ago?

        Why would he get torqued up about losing a possible opportunity for a chance in a potential deal concept that never came to be for a firm in which he’s had no role for so long?

      • 0 avatar
        mcs

        @Robert.Walter “Why would he get torqued up about losing a possible opportunity for a chance in a potential deal concept that never came to be for a firm in which he’s had no role for so long?”

        He still has money in Bain.

      • 0 avatar
        GeneralMalaise

        “He still has money in Bain.”

        and 0bama has pissed away all of our tax dollars and increased the debt by $6T…

    • 0 avatar
      jimmyy

      The left wing Obama people keep spinning the story to confuse the masses. As a Wall Street bond trader, let me clue you in … all the US Government needed to do was to guarantee DIP GM, Ford, and Chrysler debt before putting GM, Ford, and Chrysler through a normal Chap 11. This guarantee would have cost nothing, and would have resulted in a flood of cash that was flowing into Treasury, Mortgage, and Agency paper also to find it’s way into auto debt because it would have been as safe as Agency paper. After the bankruptcy, this same guarantee would have been applied to new debt.

      But, this plan was not followed because the government wanted to save the UAW from the normal bankruptcy process. The UAW took 10s of billions of taxpayer money into pension and healthcare while keeping their overpaid contracts in tact. A normal bankruptcy would have stopped this scam. And, in a normal bankruptcy, secured corporate debt would have been ahead of the UAW. Another problem for the UAW. Time to get the socialists out of office. Tuesday can’t come close enough.

      • 0 avatar
        Astigmatism

        “This guarantee would have cost nothing?” Um, it would have cost any losses if GM and Chrysler weren’t in a position to repay the bonds on maturity, or couldn’t make debt service payments along the way. Which, considering that Treasury ended up converting their debt into equity because GM’s revenues couldn’t support it, is exactly what would have happened. Who exactly would that be a better deal for?

        If you have a hammer, everything looks like a nail. Government guarantees in the bond market worked great where the fundamentals underlying the bonds were better than the market was giving them credit for during the crash – TALF is one example, in that it made no sense for the asset-backed market to be trading where it was. But GM and Chrysler simply couldn’t pay their debts, and piling more private debt on top of it would have helped exactly nobody.

        All of which is beside the point, of course, considering that Romney’s op-ed specified that federal guarantees should only be given _after_ the companies exited bankruptcy, which would never have happened without the federal backing.

      • 0 avatar
        jimmyy

        Astiqmatism, what are you talking about? The guaranteed DIP paper keeps the firms operating while their capital structure is restructured. This is the normal way things are done … with the exception of the government guarantee. After the restructure, all new debt is floated with the same guarantee. And, the guarantee eliminates credit risk, so the bonds never trade much below par, unless the yield curve backs up. And, the restructure would eliminate the UAW and salary defined benefit retirement, kill the labor contracts, and cut back the health care. And, the senior secured corporate bondholders are protected from the UAW … this means more future investors. Result is a competitive Detroit that has no problem servicing the guaranteed debt.

      • 0 avatar
        KixStart

        jimmyy,

        You’re missing something. Hint: If DIP “costs nothing,” then why don’t the private markets do it?

    • 0 avatar
      dbcoop

      Former Clinton labor secretary Robert Reich, hardly an Ayn Rand worshipper, supported an orderly bankruptcy for GM and Chrysler very similar to Romney’s plan. I guess what constitutes moral hazard is in the eye of the beholder…

    • 0 avatar
      TomHend

      More liberal crap, Rattner? He is a Wall Street thief let off the hook by the Obama Administration. You trust Rattner?

    • 0 avatar
      ranwhenparked

      @areader

      Except Romney wasn’t proposing relying on private money. His plan was actually almost the same as what Obama did, except that the ultimate reorganization plan would have been worked out through the courts the same as in a normal bankruptcy, instead of being predetermined by the government. That’s really the key difference between the two proposals. Understanding that there wasn’t much private credit flowing at the time, Romney was still OK with using government funds, but only at the minimal levels needed to complete the reorganization, not as a near-bottomless well of cash. Basically, government guarantees for new debt and a government-funded backstop for warranties. The result would have been much the same, except Fiat might have had to pay for Chrysler and GM would not have been saddled with the unfortunate “government motors” stigma. Federal losses would have been much lower.

  • avatar
    stuntmonkey

    It’s nice to be reminded about the hows of why we got here. I agree of Ed, the bailout was rally an unwelcome tack on at the time of the credit crunch. It had nothing to do with what was going on, but Ed sums it up pretty nicely, the industry was opportunistic in using it as a way to cover up management sins. Time has past and we now talk about the auto bailout as part of the housing crisis/credit crunch, but they were (and are) two different issues.

  • avatar
    CJinSD

    Saving Detroit wasn’t worth throwing out the rule of law regardless of whether legal means of restructuring would have worked or not.

  • avatar
    Jeff Waingrow

    I’m with “Areader” on this. While Ed makes a few claims that might have some validity, when he got to the point of using as authority the Heritage Foundation and George Mason University, two rubber stamps for any and all right wing concoctions, I knew where this thing started and was leading. Too bad, because a case can be made about the bailout putting unions in a favorable position, though I don’t think that was the prime motivation. Mainstream economist thinking on the subject currently seems to be that a true bankruptcy’s unforseen and possibly unintended consequences were too serious to risk with an economy already on the ropes. Of course, this will be debated far into the future, but the Heritage Foundation is unlikely to be one of the citations in scholarly papers. One last point: few can doubt the long-term arrogance and ineptitude of Detroit auto moguls, but this policy’s purpose was not to let them off the hook, though to some degree it was the result.

    • 0 avatar
      ihatetrees

      You can take Heritage and GMU to task for their right of center views. But to say that “Mainstream economic thinking” did not support a traditional bankruptcy is a poor selling point.
      Economics is NOT a precision predictive discipline like quantum particle physics. Differences of opinion in the former are much more varied and diverse. Just because 70% or so economists thought that SOMETHING MUST BE DONE to save GM/Chrysler/theEconomy/theWorld/theWhales/theChildren does not make 99.9% likely it was the right thing to do.
      I love the assertion that “there was no private money in sufficient amounts” to fix the auto industry. Couldn’t Toyota, with it’s $120+ Billion market cap, have stepped forward to provide financing / capital to necessary auto and parts plants (in exchange for throwing the UAW under the bus). Yeah, I know – that couldn’t be done – because it would have been mean. Better to trash current standard law than to have a (non-UAW made) Toyota Corvettes and Silverados.

      • 0 avatar
        KixStart

        ihatetrees,

        I can’t think of a single reason Toyota would buy any part of GM, except maybe some part of the new and/or recently refurbished plants and that seems unlikely, too, as they’d need to be completely retooled. They certainly wouldn’t buy up Oshawa, rechristen the Impala as the Crown and order the workers to increase production to meet the intense demand for a new, fullsize Toyota that looks suspiciously like a Hertz Fleet Queen.

        Toyota’s market cap has little to do, by the way, with how much money they have to invest in such a venture. On the strength of their market cap, they could probably raise a ton of money but then they’d owe on it (one way or the other) and they’d have to be able to show how acquiring, say, Buick, was a better investment than working towards organic growth in Lexus.

        Moreover, the scenario favored by Conservatives, who are mostly conservative in terms of the amount of thinking and reading they do, Toyota (or anybody else) would be bidding against the Chinese for the parts of GM that are really worth something… the parts that are in China. Those portions are well entrenched in a tremendously growing market and the Chinese JV partners would probably be able to round up Chinese capital to take them over.

        I doubt that Toyota would or could outbid them; Toyota would be more constrained by their other investment options and cash flow needs.

        Losing GM’s presence in China doesn’t smell like a win to me. In short order, we might well be looking at a serious Chinese auto invasion.

      • 0 avatar
        Robbie

        Economics is a valid academic discipline, and not politics… but likely I am biased, since I am an Economics Professor at a good department.

        GMU and the Heritage Foundation are not interested in Economics as an academic pursuit; instead, their purpose is to further a right wing agenda. Therefore, when Ed quotes GMU the Heritage Foundation in this article, he instantly loses credibility. And I say this as a person who personally believes that Ed is basically correct in his assessment that Romney’s approach might have been better.

      • 0 avatar
        Landcrusher

        Robbie,
        Somehow, I doubt the mission of the GMU and Heritage foundations are propaganda. I don’t doubt that you and a lot of others like you think it is.
        What would you say to a requirement to apprentice at a for profit business for two years before being able to claim the title of economist? I think it would solve a lot of the world’s ills.
        In the meantime, how about we agree that quoting the Heritage foundation is perfectly legit until proven otherwise?

  • avatar
    lothar

    Eds WSJ piece shows up same day on an “auto-politics” web site…here (I read it in the journal), but for all the discussion of late on all things auto in politics I must of missed TTAC coverage of the Romney campaigns long nosed ads about autos and the industry’s response. My business takes me all through Ohio, and I have to go again tomorrow, these people can see through the BS and Ed’s WSJ piece is another piece of revisionist history…….people want pragmatism not politics. When all hell’s breaking loose, either in an economic collapse or a hurricane. Common sense dictates actions, not politics…….just ask the Governor of New Jersey

  • avatar
    highdesertcat

    Yeah, I’m afraid I was against bailing out anyone or anything when Bush did it, and I was against bailing out anyone or anything when Obama doubled down on everything.

    There isn’t enough rationale in the universe that can justify nationalizing failed enterprises. If they fail, they’re supposed to be dead. There’s an ap for that. It’s called bankruptcy!

    Read Sheila Bair’s book! I did, and you’ll come away with the understanding that neither the Bush administration nor the Obama administration had a clue about anything at anytime.

    All they did was throw tax payer money at it in the hopes that everything would right itself. It didn’t.

    There’s no way anyone can spin bailing out GM, Chrysler, the US auto industry as anything than a repayment to the UAW in Obama’s case because there were plenty of non-UAW US auto industry workers who lost everything they had because of these bailouts and the PBGA assumptions of their benefits.

    Good article, Ed!

    • 0 avatar
      Kaosaur

      As much as I hate the idea of bailouts and am in favor of letting any poorly-managed enterprise fail, I will say that the GM bailout has had positive results.

      GM isn’t some solitary entity. It’s a massive global enterprise with a web of supporting companies. Companies that are well run enterprises and without GM would fail. GM is a massive lumbering giant that leaves big footprints in the global economy.

      The function of government, ultimately, is to stimulate commerce. A normal bankruptcy would have meant chaos in the market and fear among vendors and consumers alike. The government stepped in to do what government is supposed to do – stimulate commerce. Yes, this puts liability on future generations and presents its own long term problems, but this is the lesser of two evils.

      Frankly, the public on its own is too weak-willed, self-interested and fickle to manage the fallout of the collapse of GM. I know that this is possibly an inflammatory statement but I have to stick to it. This is a choice that most of us aren’t comfortable with — even those that favor the bailout.

      If people were educated enough and level-headed enough, I might say pull the cord on all of these rotten companies — GM included. That’s simply not what we have to work with though.

      • 0 avatar
        highdesertcat

        Kaosaur, nothing inflammatory about your comment or your belief. A lot of people feel the way you do. I’m not one of them.

        There are a lot of people affiliated with the US auto industry who lost everything because of this selective bailout propagated by Obama as a reward for the UAW.

        There are many mom&pop small parts suppliers who went under because of this selective bailout and those small parts are now being furnished by Mexico, and Asia.

        The bailout didn’t help these people. If you’re going to bail out one, bail out everyone.

        By and large my belief is that both GM and Chrysler should have gone the way of Studebaker, AMC, Packard, Nash, Willy’s et al, because in the end, the industry would have righted itself, as it always has.

        BTW, I own a 2012 Jeep Grand Cherokee Overland Summit, imported from Detroit, but I do believe that Chrysler should not have been bailed out, but absorbed by Fiat through liquidation.

        The end result would have been the same. The Daimler-designed products were in the production schedule and they would have been hot sellers either way. Fiat wanted those Daimler-designed Chrysler products, even without the bribe.

        And, liquidating Chrysler would have cost us a whole lot less money than the $1.3Billion we bribed Sergio and Italy with to take Chrysler’s carcass off our hands.

        We should have liquidated (and liquified) GM and pandered its pieces to anyone that would take it, even China and India. Eventually, many GM-centric suppliers will be absorbed by growing global enterprise. The smart companies are going where the money is, and it ain’t here.

        Anytime something goes belly up in the US, like battery makers or whatever, China, India and several other nations are eager to get their hands on the remnants. Reality is, in many aspects of national production and industry, we Americans actually work for foreigners.

        The GM bailout is not the end of the story. The GM bailout will come back to haunt us, and invariably, the US government will bailout GM (and its European alliances) again, no matter who is in power on the hill.

        In for a penny. In for a pound. We’re stuck with this albatross. And a person doesn’t have to be a right-winger or a bleeding heart liberal to see where this is going. I’m an Independent and have voted for candidates of all parties, but what I see coming at us as a nation is not pretty. My guess would be that 2015/2016 will be when the other shoe drops.

        I’m not sure it can be fixed or undone. There isn’t enough wealth on the planet to repair what we did to ourselves and I’m not willing to suffer for the mistakes made by others on my behalf.

      • 0 avatar
        thelaine

        HDC,

        Thank you for taking the time to post. I have read them all, and yours make the most sense to me. I don’t care about the politics, I just care about the economics. Government subsidies and bailouts have cost us plenty and a larger bill is coming due. We may be the next entity that requires reorganization, but no one will be there to bail us out.

      • 0 avatar
        KixStart

        “There are many mom&pop small parts suppliers who went under because of this selective bailout and those small parts are now being furnished by Mexico, and Asia.”

        Let’s see some names of these “mom&pop small parts suppliers.” Or did they somehow fall out of the talking points packet Romney mailed you?

      • 0 avatar
        highdesertcat

        KixStart, I’m an Independent. I already voted and did NOT vote for Obama, neither did I vote for Romney. Each of these two candidates is as bad as the other. I cannot in good conscience waste my vote on either of these two.

        Your assumption that somehow I am against the US auto industry is wrong. I was affiliated with the dealerships of my brothers in four states for more than 30 years, up until they sold out in Sept 2011.

        A lot of people got hurt by the selective bailout and a lot of small businesses went under.

      • 0 avatar
        28-Cars-Later

        Maybe a third party will finally take off?

      • 0 avatar
        KixStart

        HDC,

        I don’t see any names, there.

        Further, I’d like to see you demonstrate that the “selective bailout” had any greater deleterious effect on these “mom&pop” operations than the recession, generally.

  • avatar
    KixStart

    There were multiple goals and the principal goal was to try and turn the recession around. GM was a collateral benefit.

    Romney’s plan would go nowhere fast. Private money would have taken a very long time to assemble and a shutdown would have been prolonged, messy and most likely returned fewer workers to work. The end result would have been an increasingly Wal*Mart-ized workforce, coming back in smaller numbers at lower wages, with more unemployment payouts, more failed businesses in areas dependent on GM’s economic activity and a great deal of other damage.

    As resuscitated, GM is better but not optimal. Well, it wasn’t optimal before, either. Now, they do have the resources to fix themselves.

    I’m OK with this.

    • 0 avatar
      Pch101

      “Private money would have taken a very long time to assemble”

      It wouldn’t have happened in any length of time. It would have been impossible.

      Not even a grossly optimistic pie-in-the-sky pro forma would have justified a $25 billion equity investment for the types of returns demanded by a private equity firm. They want to make double digit returns on their money, and neither GM nor Chrysler could have reasonably expected to do that.

      • 0 avatar
        jimmyy

        You auto guys should not comment on institutional finance. You do not have a clue.

      • 0 avatar
        Pch101

        My background is in private equity. Jimmy’s background, as far I can tell, is limited to trolling.

      • 0 avatar
        Kaosaur

        The greatest failing of laissez-faire economics is in always assuming that there’s a market supply for charity.

      • 0 avatar
        Loser

        “You do not have a clue”

        That is comical coming from the tin foil hat wearing troll. Jimmyy you say you work on Wall Street. Judging from recent history, you and your buddies on Wall Street don’t have a clue about finance. You have proven to be even more lost when it comes to cars.
        So how is the Obama/Consumer Reports infiltration conspiracy going?

      • 0 avatar
        ihatetrees

        “It wouldn’t have happened in any length of time. It would have been impossible.”

        It was impossible because any firm with the capital suggesting the necessary restructuring steps (outsourcing / movement of production/engineering/design to right to work / offshore areas) would have been kneecapped by the toxic political climate.

        GM’s market cap was < ~$25 Billion just before bankruptcy, about 1/8th of Toyota's. A solid bankruptcy court/judge could have guided other (profitable) auto maker(s) into buying and (probably) dismembering GM at a profit. A Nissan-Chevy Corvette or a Toyota Silverado may sound odd, but they would have eventually sold.

      • 0 avatar
        Pch101

        “It was impossible because any firm with the capital suggesting the necessary restructuring steps (outsourcing / movement of production/engineering/design to right to work / offshore areas) would have been kneecapped by the toxic political climate.”

        That’s simply nonsense.

        The problem with you guys is you just spew out political rants that conform to your prejudices, and don’t understand anything from a business perspective.

        The effort to sell Saturn was a failure.

        The effort to sell Hummer was a failure.

        GM paid money to get rid of Saab.

        Tesla purchased the NUMMI plant from Toyota using money that Toyota had given to Tesla. In effect, Toyota paid Tesla to take the Fremont plant.

        Prior to that, Daimler essentially paid Cerberus to buy Chrysler.

        Anyone who knows anything about business valuation realizes that these things were dogs and not really worth much of anything. You might as well argue that the Easter Bunny was poised at the sidelines ready to save GM and Chrysler.

        “GM’s market cap was < ~$25 Billion just before bankruptcy"

        This is a completely false statement, and would be irrelevant even if it was correct.

        In late May 2009, GM's share price fell below $1. According to the old GM's (now Motors Liquidation) 10-Q, there were 610,562,173 shares outstanding as of May 1, 2009. So as of late May 2009, GM's market cap was about $610 million. Woo-pee.

        For another thing, market cap is not the same thing as liquidation value. Car companies have a tendency to hold assets that have negative value, such as plants that produce toxic substances that have to be remediated. Most car factories that are shuttered remain empty, in part because nobody wants to pay to do the clean up. The factories are often effectively worth less than zero, as Toyota knew when it paid Tesla to buy the NUMMI plant.

        Learn something about business and bankruptcy, rely less upon politics. You'll be better off for it, and you can spend less time living in Fantasyland, a place that is best left for children.

      • 0 avatar
        Landcrusher

        PCH,

        His point isn’t nonsense at all. He isn’t spewing anything. He is giving an opinion. You are giving an opinion. There aren’t enough facts in the world to prove your opinion, no matter how much you try.

        I understand a lot about business, and I think he is correct. You understand a lot about business and agree with Obama. Romney’s position is in the middle. Yet you think he knows nothing about business and is just spewing nonsense on the matter as well?

        Not all business involves the disease of high finance, political lobbying, and legal maneuvering. There are people who understand the benefits of avoiding all that, and it doesn’t mean they don’t know business. It’s just rude to tell people to learn about bankruptcy and not depend on politics. Especially since what happened here is that your side used politics to break the normal bankruptcy process. Our side doesn’t like that process to begin with, and stating we think it was the wrong way to go isn’t politics. It’s ideology. It’s a belief about right and wrong.

        The reality here is that a bunch of other people’s money was wasted because, as you just stated, the company isn’t worth anything. Why is it so wrong for us to say that if it isn’t worth anything, then throwing money at it isn’t a good thing? And, why isn’t it worth anything? Because a bunch of people in Washington used political power to meddle with it for nearly a century? Because billions upon billions was siphoned off by Wall Street?

        Seriously, get off your high horse. Either side can point fingers and claim the other side is all politics and ignorance. It solves nothing. You often make some good points, but none of them include how we ought to make ours.

      • 0 avatar
        KixStart

        “Romney’s position is in the middle.”

        Hah. Romney’s position on this is out beyond the orbit of Mars.

        “Not all business involves the disease of high finance, political lobbying, and legal maneuvering.”

        Which, unfortunately, is exactly Romney’s area of expertise. Bain Capital wasn’t a venture capital fund, funding and trying out completely new ideas and building the next Apple; they looked for undervalued assets, like companies with fully supported pension funds, and raided them.

    • 0 avatar
      Kaosaur

      You said this much more diplomatically than I did. Well done!

  • avatar
    DC Bruce

    I think Pch101″s point about DIP financing is correct. Ed’s article claims that even under the so-called “Romney Plan” Uncle Sam would have provided DIP financing. But that leaves open and unanswered what the government would receive in return for the loan. The only reasonable answer is equity; as Pch101 says, the post-bankruptcy companies would have struggled under the weight of servicing such debt, even at low interest rates.

    The question that follows is: what would the government get in exchange for converting the debt to equity . . . besides being the owner of the post-bankrupt company (because all of the equity of the pre-bankruptcy shareholders would have been wiped out)? Well, how about an IPO? Sell the shares to the public and be done with it. Would the government take a loss? Probably. Would it be any greater than the loss the government is taking now? Who knows?
    But the outcome would have been healthier in a general way than what we have. Undoubtedly, the GM and Chrysler retirees would not have done so well under a “private” bankruptcy, but wasn’t it their union that was a least partially responsible for driving these companies under, heedless of the competition?

    At the end of the day, this was a political payoff to a major Democratic constituency. And, as we now have seen, it was just the first of many done by this administration.

    • 0 avatar
      thelaine

      Exactly. This is where the argument that the bailout was a practical, pragmatic, non-ideological solution is exposed as false. It is the conceit of some ideologies to believe that they are not an ideology.

  • avatar

    Hmm… I wrote this piece because debate over the issue has been dominated by narratives rather than facts, specifically the definition of the debate as an all-or-nothing proposition and the deliberate misreading of Romney’s op-ed. Based on a few of the comments here, it seems that I’m fighting a force as powerful as gravity… partisanship, it seems, always trumps the facts.

    Let’s be clear: nobody is talking about the cost of the bailout, and Romney never said there was no role for the government in the GM and Chrysler rescue. More to the point, the “there was no private money” argument is just a way to avoid discussion of the real issues with how the auto bailout was handled. Bair and Barofsky have made great contributions to political discourse by explaining their deep misgivings about the how of the bank bailout without disputing the decision to take action. It’s both sad and worrying that we can’t have a similar conversation about the GM and Chrysler rescue.

    Look, if Romney had the perfect plan and had been communicating it effectively, this piece wouldn’t have been necessary… so I’m not going to tell anyone that this is a crystal clear and overriding voting issue. But the president has pushed this issue as a central element of his economic pitch, and regardless of your political allegiances every voter should understand what really happened, what the alternatives were and what we can learn from the experience going forward. Parroting a narrative in order to avoid discussing these issues does a disservice to democratic process itself.

    Disagree with me all you like… that’s what this country is all about. But please, please, please, let’s not pretend that there was only one way to facilitate a restructuring of GM and Chrysler, and that we can’t learn anything by critically analyzing what actually happened.

    • 0 avatar
      Pch101

      “More to the point, the “there was no private money” argument is just a way to avoid discussion of the real issues with how the auto bailout was handled.”

      Er, that is exactly the point.

      Your list of lenders and financiers that were willing to pay for the party is shorter than Joe McCarthy’s list of communists. And his list, as you may recall, was blank.

      • 0 avatar
        Landcrusher

        Was there capital? Actually, we will never know. The whole process got rammed down our throats.

        Given the ridiculous amount of government involvement in GM, there really may not have been any money. Had the solution been give us the money, and we will let you run the company with no more interference than we give importers, and the money would have instantly appeared. But hey, why reduce government involvement when you can get all up in their stuff and make yourself feel important?

        Okay, reality is if you took the leash off, the whole thing would collapse because they wouldn’t know how to behave. At some point, we need to start moving towards sensible ways of doing things, and deciding our broken bankruptcy system wasn’t broken enough for GM.

      • 0 avatar
        ihatetrees

        “Your list of lenders and financiers that were willing to pay for the party GIVEN THE POLITICAL ENVIRONMENT’S RESTRICTIONS ON RESTRUCTURING is shorter than Joe McCarthy’s list of communists…”

        Fixed it for ya, IN CAPS…

    • 0 avatar
      Astigmatism

      Ed, you’re dissembling. Romney said, specifically, “The federal government should provide guarantees for POST-BANKRUPTCY FINANCING.” He OPPOSED “government funding of the bankruptcy reorganization process”. The “there was no private money” argument IS THE ARGUMENT. The government was the only money on the table, and as DIP lender they got to name their terms – specifically, favoring health care and pension obligations in favor of the UAW over secured bondholders. You can criticize that choice, but pretending that Romney offered a viable alternative is just that: pretending.

    • 0 avatar
      KixStart

      Romney’s throwin’ stink bombs and claiming his plan was somehow better. It was no such thing. It *might* have, eventually, led to a better GM but that was not the only priority here and the Feds would *still* be on the hook.

      Bain Capital crapped all over a lot of businesses. Romney is really good at figuring out how to screw things over with leverage but he has no idea how to actually build up a business that makes *things* instead of finance.

      He’d be surprised. Building sh!t that people actually want to buy at profitable prices is hard work.

    • 0 avatar

      Nothing is stopping private firms from taking over GM from the govt. now. So how many are stepping forward to do that? Not many, considering the stock price is stuck in the mid 20′s, half of what it should be for the govt to break even.
      Here is a list of what GM has achieved since 2009.
      $4.7B net income in 2010
      $7.6B net income in 2011 (Record)
      Worlds largest automaker as of 2011
      Sales increased across all regions and were flat in EU
      Almost $38B cash on hand

      Despite all this, if there is no private equity firm, bank or institution willing to take over GM now, why would you think there was going to be private capital in the dark days of 2009 to bail GM out? Especially considering the uncertain future of GM still being in existence or turning profits, which was a big unknown back then. There is no private capital to buy equity from the govt, now that most private firms are on solid footing. There is going to be even less in 2009 when the private firms themselves were struggling for capital. More like zero.

      If you want to talk about the morality or legality of the bailout or letting UAW take ownership of companies they have helped ruined in the first place, then you have a point.

    • 0 avatar
      nrcote

      From the op-ed:
      “In retrospect, Mr. Romney’s approach not only would have produced outcomes superior to the president’s, it was actually the braver course of action.”

      In retrospect, I should have watched that figure skating competition with my girlfriend like she asked me to. When it comes to fantasy, I do believe figure skating would have been better than the op-ed, but that’s just me.

      As you wrote above: “Partisanship, it seems, always trumps the facts”. What did you expect? Yes, that’s a rhetorical question.

      • 0 avatar
        Kaosaur

        “In retrospect, Mr. Romney’s approach not only would have produced outcomes superior to the president’s, it was actually the braver course of action.”

        The word brave here sticks out to me, because that’s usually a term used for people who put their lives at risk to do their jobs. Soldiers. Firefighters. Like that.

        I don’t want someone to be brave with my government, economy or auto-industry. I want anyone in those positions of power who wants to be brave to be immediately shown the exit.

        What we need is people who are balanced, measured, totally calculated and will see it through…not brave.

    • 0 avatar
      GeneralMalaise

      Well said, Ed N.!

    • 0 avatar
      vaujot

      Ed, sorry, but if your piece’s objective was to trump narrative by facts, it is a complete failure. As far as I can tell, your piece consist of more narrative than facts.
      You speculate on the outcome of a bankruptcy according to Romney’s suggestions, yet there’s no way of knowing how that would have played out. That’s not fact or even narrative but rather pure speculation.
      You also offer an opinion on the lawfulness of a transfer of tax write-offs (“blatant violation of basic bankruptcy law”) and giving unsecured claims preference, thereby “damaging bankruptcy precedent” instead of a “true bankruptcy guided by the law”. How were those secured creditors secured anyways? Can you cite any court decision that has held the actions of the government to be unlawful? And what’s your qualification to offer an opinion on these things? Have you got a law degree and experience in bankruptcy practise? I would think not. Why would anyone then care for your opinion on these things?

  • avatar
    olddavid

    The Wall Street Journal is owned by Rupert Murdoch. Fox News is owned by Rupert Murdoch. The dominant theory of both seems to me to be “keep repeating it often enough and it will become accepted fact”. Edward, I have disagreed with you in the past, but my knowledge of our shared local realpoltik has at least allowed me to understand your reasoning. This, however, seems outside of your usual norms of argument. Why? We all have way more in common than our political “handlers” would have us believe. I have to ask, who benefits? I believe in law there is a latin term for it, but it escapes my memory. What baffles me is why TTAC continually ventures into these editorial areas.

    • 0 avatar
      vaujot

      The latin term is “qui bono?” (http://en.wikipedia.org/wiki/Cui_bono).
      When it comes to claiming that the Chrysler or GM bailouts were illegal, there are two parties with an interest:
      a) creditors of old GM and/or Chrysler who feel treated unfairly
      b) critics of the bailout.
      As far as I know, in spite of formidable challenges from all possible legal angles (mind you, some of the creditors had the best lawyers money can buy), now court of law has yet held the bailouts to be substantially unlawful.

  • avatar
    PrincipalDan

    Jeeze guys, Ed’s point is simply that there were other ways to try to solve this situation.

    I would also argue that GM especially did not deserve to be saved in the sense that the absolutist monarchies of the world deserved to be saved. I would argue that there was an equal amount of hubris involved in both the management of GM and in the leadership of those monarchies.

    We have not solved the economic problems of the American auto industry, the can has simply been kicked down the road.

    • 0 avatar
      sunridge place

      What sort of problems remain in the American auto industry that weren’t largely solved by the bankruptcy?

      • 0 avatar
        PrincipalDan

        Overcapacity (which is a global issue) and unsustainable UAW contracts, oh and loosing marketshare.

      • 0 avatar
        sunridge place

        Global overcapacity (code word Europe overcapacity) was out of scope on this bankruptcy. North American overcapacity was pretty much resolved.

        Unsustainable UAW contracts? Two-tier system that was agreed to in 2007 and renewed the last time went a long way to fix that. Now, if your desire is to have every blue-collar worker in America making $10 an hour without benefits….then, no that didn’t happen.

        Losing market share? Uh, yeah, when you discontinue 3 brands that does tend to happen.

        One of the main points of the bankruptcy was to make the company viable at a lower SAAR and marketshare. That has been achieved. You can make a lot of money with 18% of the US market if your company is right-sized.

        You can argue the methods but the end result is not a situation where the major problems were not solved.

      • 0 avatar
        th009

        UAW wages are not the real problem (VW makes money even on Golfs while paying German union wages). The big problem is with the retirement benefits. This is a result of (1) high ratio of retirees to current workers (not an issue for the transplants), and (2) the need for heavy private retirement benefits in the US (much more so than in, say, Germany).

        Still, wages only constitute some 10% of the total cost, so if you can build desirable cars that people are willing to pay a good price for, you can still be profitable with those wages.

    • 0 avatar
      28-Cars-Later

      I have to agree, while Chrysler may have been brought back from the dead (again, and good for them), GM’s internal management problems were not addressed nor have their sales volume been drastically improved. The bailouts just cut some of the cancer out and keep them stable… the patient wasn’t cured, just out of the ICU.

      • 0 avatar
        sunridge place

        When you cut 4 brands, 2000 dealerships, and go through a several year period of dramatically reduced investment in new product, overall sales have a tendancy to go down…not up.

        What are some areas of US sales for GM that need the most work?

        Cars? Small cars? Crossovers? Trucks? Should they jump into the minivan market again to get some addditional sales there?

      • 0 avatar
        PrincipalDan

        Well let’s see… cash on the hood…

        As recently as this past July I received a mailer from GM offering anywhere from $2000 cash back (new products like the Cruze and Verano) to $6000 off older products like the Impala.

        Incentives aren’t cheap and in my economic mind show you the true price of a product regardless of MSRP.

  • avatar
    dancote

    The time for second-guessing and Monday morning quarterbacking is long past. The auto bail-out is what it is. Romney wasn’t in charge and President Obama was. I don’t care either way who was right or what their motivations were. We have a re-vitalized auto industry in this country. Be thankful for that … for all the jobs we have as a result … and, not least, for some of the great American cars that have come along since then.

    • 0 avatar
      28-Cars-Later

      What (new) great American cars have come out since then? C7 Corvette?

      • 0 avatar
        Kaosaur

        What great new American cars have come out before then?

        My cousin’s ’90 Ford Probe was essentially a Mazda. And it’s been like that for the whole auto industry about as long.

        I remember this flowchart that a friend showed me nearly a decade ago that showed just where each major auto manufacturer sourced parts, design work and assembly for their cars by supply company and country. It’s truly a global enterprise.

        FC: if you’re reading this and still know where that chart is, that’d be cool. :)

      • 0 avatar
        APaGttH

        Depends on how you define “great”

        If you define great as a sedan that can get close to 40 MPG, seat four in comfort, five in a pinch, functional trunk, and an interior with more class than a Coleman cooler – the Chevy Sonic is a GREAT American car.

        BUT IT’S A DAEWOO!

        Jesus tap dancing Christ, what is an “American” car these days anyway.

    • 0 avatar
      Chocolatedeath

      “We have a re-vitalized auto industry in this country. Be thankful for that … for all the jobs we have as a result … and, not least, for some of the great American cars that have come along since then”

      Sorry dude but you must have mistaken several posters on this site and some others as folks who care about such a thing. In the world we live there is “right thing to do” and then there is “I am right and I dont care what the consequences are”.

      Just a little background on myself:I consider myself a neo-conservative(modern definition)and some of my associates are extremely conservative in every way. These are folks who took several years to accept me ( I am African American) and they would never support most anything a liberal would ever come up with no matter who is in office. I asked all of them point blank bailing out the auto industry was the right thing to do and 14 out of the 22 said yes, with 2 saying that it should have been more restrictive and that Fiat should not get Chrysler for nothing. I personally was for selling Chrysler to Nissan.
      My point being is that politics much like religion, you “aint gone” change a person mind. I just hope that one day I will wake up and there will be some form of agreement. I think 9/11 was the last time America on a whole agreed about anything.

    • 0 avatar
      thelaine

      I think it is useful to examine the bailout in detail. Which company is next? How should the next one be structured? How do you pick the company that gets bailed out and the one that does not? How much money should be taken from some workers to be given to others? Could it have been done for less, or not at all? Was the process corrupt? With tens of billions of taxpayer dollars lost in this transaction, and with much more potentially at stake in future transactions, it is reasonable to ask.

  • avatar
    dancote

    2013 Fusion Hybrid & C-Max

    The new Camaro

    The new Mustang

    The new Chryslers

    The new Cadillacs

    … the list goes on.

    • 0 avatar
      APaGttH

      Chevy Cruze — which would never sell

      Chevy Sonic — which would never sell, now the top selling B-Segment car, even if you took out fleet sales it is still crushing the B-Segment

      Chevy Spark — which would never sell

      Buick Verano – which no one would buy

      Chevy Volt – only outselling every other electric and series hybrid, outselling the Prius Plug-In AND Prius-V – on track for 26K to 27K units in 2012 and at current run rate 35K to 40K in 2013. Steady growth. No one would buy one, they would fall apart, they would blow up, they catch on fire – turns out one of the most reliable cars you can buy with the highest brand affinity rating

      Ya – it was all a disaster.

      • 0 avatar
        KixStart

        You’d be better off leaving the Volt off the list. It is selling at less than 3K/month with a $7500 tax credit from the feds and divers other considerations. Without the $7500, which would propel almost any other compact or midsize car into 6 figures of monthly sales, they’d be burying it in a Potter’s Field somewhere in Hamtramck, sulkily licking their wounds and plotting their next “leapfrogging” of Toyota.

      • 0 avatar
        Pch101

        ” Without the $7500, which would propel almost any other compact or midsize car into 6 figures of monthly sales…”

        That’s a poor analogy. If TMC launched a Corolla with a base $40,000 MSRP, with a tax incentive or rebate to match the Volt’s, then there wouldn’t be too many new Corollas on the street.

        The Volt is essentially a car that is worth about $30,000 that is being sold for about $30,000. The tax rebate is effectively going to GM — the consumer overpays for the car and gets a rebate for his overpayment, with the benefit of the excess payment going to the manufacturer.

        It might be easier to understand by applying a similar example to something other than cars. Let’s suppose that the going rate for a six-pack of your favorite beer is $6. Because your favorite beer is brewed in an environmentally sensitive green brewery, the government decides to provide a tax rebate of $4 for every six-pack that is sold.

        If the company keeps selling that beer for $6, then the benefit goes to the customer. The $6 beer is now being sold at a net cost to the consumer of $2 (Bubba pays six bucks at the supermarket, then gets four bucks back on his tax return), so beer sales should soar and beer drinkers will rejoice about the low cost beer in their fridges.

        But if the brewer jacks up the price to $10, then beer sales will probably be about the same, since the net price to the consumer remains at $6. The extra four bucks is really going to the brewer, not to the beer drinker.

        In this case, the subsidy is stickered at a price well above the market price. The excess payment ultimately benefits GM, which helps to pay for the R&D. If all of the Volts eligible for the tax credit are sold, then that will easily cover the combined R&D costs of the Old and New GM.

    • 0 avatar
      28-Cars-Later

      Well a ‘great’ American car post bailout is a little subjective but if the ones you suggested there:

      The Camaro and Catera Coupe were already in the pipeline when the bailouts occurred, in fact the Camaro debuted in spring 2009 before the bankruptcy, both were essentially pre-bailout models. You could argue the 2011 Mustang, but it is a refresh of the 2005 Mustang, as is the Chrysler 300 update (and Sebring to 200), none of these models were really new (also Caddy SRX wiki says it began production in Summer 2009 but doesn’t list a date). I would also argue Fusion was developed by Ford Europe (not sure about C-max) and since Ford was never bailed out or in bankruptcy, the argument politicians had anything to do with those models is moot.

      The only two new models of the brands/models you listed which are ‘new’ were the ATS and XTS from Cadillac, the XTS evidently was shown to auto journalists on August 11, 2009 (wiki), and the ATS as a coupe concept the same month. Both I suppose were then fully developed by post bailout GM, and I would consider something you could point to and say ‘success’.

      I personally think XTS is an insult to luxury cars (although so is Acura) and ATS remains to be seen since its so new, it may be a knockout and it may be a Cimmaron, we’ll see.

      Maybe better stuff is to come, but I think the jury is still out.

  • avatar
    05lgt

    What’s up with the very short list of currently active editors and authors on TTAC? Is it a secret or a coincidence? Did I miss a story about banned authors?

  • avatar
    APaGttH

    Is it Wednesday yet?

    Is it?

    And Ed needs to be reminded, George W. Bush started the auto bailouts, wrote the first checks, and has written in his memoir and is officially on the record that he had no choice, and he would do it again. From February of 2012…

    http://autos.yahoo.com/news/bush-would-do-it-again-on-auto-bailouts.html

    …”I’d do it again,” proclaimed Bush, speaking to the annual convention of the National Automobile Dealers Association.

    The bailout, which ultimately totaled $85 billion, was originally begun during the waning days of the Bush Administration. With a specific rescue effort rejected by Congress, the former Commander-in-Chief decided to tap into a separate, $700 billion fund Capitol Hill did approve for the bailout of Wall Street and the banking industry.

    “Sometimes circumstances get in the way of philosophy,” said the ex-President, during his speech in Las Vegas, referring to his normal stand in favor of free trade. “If you make a bad decision, you ought to pay,” he said, referring to the collapse of both General Motors and Chrysler.

    But Bush also noted that coming on top of the failure of Lehman Brothers, the meltdown of the banking industry and the collapse of the housing market, a painful shift in policy was needed.

    “I didn’t want there to be 21% unemployment,” he stressed, echoing forecasts at the time that the loss of GM, Ford and the automotive lenders also covered by the bailout could lead to the loss of 1 million jobs.

    The former President has kept a low-key profile since leaving office in January 2009 – though he did call the bailout “the only option” in his 2010 book, “Decision Points” — leaving his successor to field much of the criticism.

    In that book, the 43rd President argued that, “The immediate bankruptcy of (Chrysler and GM) could cost more than a million jobs, decrease tax revenues by $150 billion and set back America’s Gross Domestic Product by hundreds of billions of dollars…”

    God I can’t wait until Wednesday

    • 0 avatar
      thelaine

      I don’t understand what is wrong with having a debate over the issue. Just because Bush was in favor of it doesn’t mean it was the right thing to do or that it was done properly by either Bush or Obama. Even your quote indicates that many in Congress disagreed with Bush. If we are going to start spending tens or hundreds of billions of dollars of taxpayers money on private business bailouts, we ought to examine and question what we have done. This is a massive transfer of wealth from Peter to Paul. About 40% of it was borrowed money. It has costs. It is not good enough to say it worked, let’s move on.

      • 0 avatar
        APaGttH

        At some point you have to say it worked move on. We’re almost four years to the DAY when the first check was written.

        Chrysler – profitable.

        GM – profitable.

        Chrysler making more products people want to buy – yup

        GM making more products people want to buy – yup

        So what – we debate it for 10 years, 20 years. Its over. Its time to move on.

      • 0 avatar
        Pch101

        “I don’t understand what is wrong with having a debate over the issue.”

        When one side resorts to making stuff up and spewing half-truths that were debunked long ago, then that doesn’t leave much room for debate.

        If you want to claim that the private sector was ready to rush in with cash, then name who was going to pay the money. Don’t be vague — name the institutions that were willing to fund the deal. I’m sure that you can’t name one credible example.

        If you want to claim that laws were violated, then cite them. Provide specific statutes and examples of case law that prove the point. Again, I’m sure that you can’t name one credible example.

        This whole topic has devolved into an ongoing exercise of The Big Lie. Repeating a lie many, many times over doesn’t make it true.

      • 0 avatar
        Volts On Fire

        And yet Ed got the WSJ byline, Pch, not you. I wonder why…

      • 0 avatar
        Pch101

        Rupert Murdoch and honesty aren’t exactly the best of friends.

        The odd thing, though, is that Mr. Romney’s position on this issue is probably going to contribute to Mr. Obama’s reelection on Tuesday. Your camp would look a bit more clever if you would stop focusing on trying to create a wedge issue that is almost guaranteed to cost you a swing state.

      • 0 avatar
        Volts On Fire

        Barry’s reelection is not a bet I would take at this point.

      • 0 avatar
        KixStart

        “And yet Ed got the WSJ byline, Pch, not you. I wonder why…”

        I don’t wonder why. They needed to lend support to Romney/attack Obama and they scrounged around, looking for something. Ed’s piece was probably the best they could find and Ed does have some name recognition.

    • 0 avatar
      Angus McClure

      Not to blatantly disagree with all the founts of wisdom commenting here but I think Ed made a yeoman attempt at a fair article.

      I so totally agree that Wednesday can’t come early enough, win or lose. I don’t think any of this that has been discussed to death was part of the original question. The President accused the Governor of being willing to see the car industry bite the dust. The route he said he would have followed may not suit you but to say that the Governor had that intention is disingenuous.

      Since I have had all the vitriol that I can stomach I do not intend to subscribe to this thread. If the election turns out one way I have four more years to put up with what I think is the wrong direction. If it turns out the other way I have four years to listen to many of the more vitriolic among us eviscerate Romney. I may just unsubscribe to everything. I’ve had about all the politics I can stomach.

    • 0 avatar
      daviel

      and I say, good for W.

  • avatar
    lw

    So I guess the point is that if GM and Chrysler ceased to exist, then people would be forced to walk and would never buy a car again, hence the jobs would be gone forever.

    How stupid do you have to be to accept this as a fact?

    K-Mart is an epic failure, but somehow people are still able to buy household goods. I see a lot of activity at this building with the name Wal-Mart on the front.. I wonder what they sell….

    GM and Chrysler should have failed. The government should have taken them over to ensure an orderly liquidation and made back any investment by selling whatever had value to a private equity firm.

  • avatar
    JD-Shifty

    this site needs to go back to discussing cars. Honest to god I could care less what that weasel pictured thinks about the bailout.

    • 0 avatar
      lw

      Weasel? Get back to talking about cars? Geez..

      Can you post the links to all of your articles published in the Wall Street Journal?

      • 0 avatar
        Kaosaur

        There’s being published in the Wall Street Journal and there’s being published in the Op-ed pages of the Wall Street Journal.

        And that goes for any other paper as well.

        It’s great for the journalist/writer but remember what an op-ed is. “A newspaper article that expresses the opinions of a named writer who is usually unaffiliated with the newspaper’s editorial board. These are different from editorials, which are usually unsigned and written by editorial board members.”

    • 0 avatar
      TomHend

      Obama is going to lose in a landslide!

      Ahahhahahahhahhahahahhaahahhaha

      • 0 avatar
        Xeranar

        If you mean win with 290-300 EVs then sure.

        As people I know were entitled to our own stupidity but to make this short and sweet, Ed wrote a poorly conceived article trying to revise Romney’s views while doing hindsight to try and prove his point. As to why, he’s a known journalist. Paul Krugman who is a great economist would destroy him but more power to him. Hope his 30 pieces of silver were worthwhile.

        Hating the labor movement is like hating your own genetalia. It’s there for you to enjoy but we get upset because it isn’t big enough to make us feel better than the next guy.

      • 0 avatar
        geeber

        Let’s see, Xeraner calls Paul Krugman a “great economist” and PintoFan has argued, in prior threads, that a Pinto was a better car than a Toyota Corolla or a Honda Civic.

        And they say that the right has credibility problems…

        Thanks for today’s chuckles…

  • avatar
    JD-Shifty

    It’s an op-ed in the wall street journal. a Dr Bronner’s soap wrapper has more legitimacy.

    • 0 avatar
      Volts On Fire

      Daily WSJ circulation: 2.1 million, per Wikipedia.

      Daily JD-Shifty circulation: …

      • 0 avatar
        JD-Shifty

        and Mcdonald’s has the best food by your “logic”

        right moron?

      • 0 avatar
        GeneralMalaise

        JD-Shifty resorts to ad hominem attack… a sure sign he’s lost the argument.

      • 0 avatar
        APaGttH

        Dear Volts on Fire – when you reply to a reply, you should use the account and not give away that Volts on Fire and GeneralMalaise are doppel accounts from the same poster.

        Any shred of any integrity you have is lost when you make mistakes like that – so who are you — really and why do you have so much free time to create two accounts to talk to yourself.

        Hard to not get them mixed up – huh?

      • 0 avatar
        GeneralMalaise

        “Dear Volts on Fire – when you reply to a reply, you should use the account and not give away that Volts on Fire and GeneralMalaise are doppel accounts from the same poster…”

        Not true, Froggy… and stay on topic.

  • avatar
    Trend-Shifter

    One name…Cerberus Capital Management

    Yes we need more of that thinking from Wall Street and the bankers to show us how to fix Detroit.

  • avatar

    I agree with Ed. There is always alternative which might be much better than violation of law forced by current president and his team. It is sad to see how political American populace had become, how American public education system dumbs down student and does not teach basics of economy and capitalist system. America used to have rule of law in the past when it was admired around world as the fast growing and free capitalist society with opportunities for all. Today precedence and not one has been established of violation of basic laws of capitalism by people in power. Could GM survive? If it makes desirable and competitive cars – why not? But forcing tax payers to keep GM afloat regardless of market demand and common sense is not sustainable. You can do it once but next crunch will bury GM and UAW anyway and GM and UAW may not be as lucky to have democrat in White House.

    • 0 avatar
      Xeranar

      For all intensive purposes capitalism is not the law of the land. I wish people would stop confusing our poorly chosen economic model with actual laws. If anything most of our laws pertaining to economics paint our country as socialist. There was nothing ilegal about what was done. Perhaps uou should go back to school and learn what is possible. I imagine you’re some cold war kid so you were taught lies to keep people from realizing our fight was as much geopolitical as it was ideological, probably more geopolitical really.

      Technically the issues with the auto industry was as much a cultural one as a market one. The Japanese & Germans are just as unionized but they have largely universal healthcare so that curtails their obligations substantially. That and during boom years they chose to keep paying dividends rather than invest in R&D or future costs. It was the greed of capitalism that hurt them substantially. On top of that the collapse of the auto industry would have raised unemployment between 5-10 points nationally. Any kind of economic collapse is bad by definition. This would be catastrophic. So unless you want a depression bailing them out is cheap.

      As for tax payer funds, we could balance our busget if we raised revenues and created a higher corporate tax that rewarded reinvestment and higher wages. As it stands now ir does neither. The complexity of the tax code is great but the overarching system is simple. Thus you really want oeganizations like the UAW that provide much higher wages as they drivee our economy much more than the handful of 6 & 7 figure admins.

  • avatar
    Landcrusher

    You guys amaze me.

    In another twenty years we will be dealing with another need to bail these guys out, and what will your arguments be then? The same. It will be “necessary” all over again.

    You lefty ideologues always want to talk about hidden costs of the things you hate, but never look at the hidden costs of all those have to haves like forced union membership, CAFE, mounds and mounds of regulations, etc. etc.

    And, you are all about facts, but I don’t see any here. None. Just posturing on your so called expertise. Somehow, I wonder how many of you guys know more about this stuff than Mitt Romney. You can disagree with the guy all you want, but are you going to say he doesn’t know anything about the car biz or capital?

    So, I don’t think it’s all that easy to simply say his plan wouldn’t work because you assume it required more capttal than anyone would fork over.

    And here is some ideology for you. If no one would pay the prices, then the price was too high.( I know! What a bunch of hate filled nonsense!)

    • 0 avatar
      Volts On Fire

      Not 20. Try less than five.

    • 0 avatar
      PintoFan

      “It will be “necessary” all over again.”

      If GM had declared bankruptcy at any time between 2001 and late 2008, nobody would have done anything to stop it. If GM were to declare bankruptcy in 20 years, assuming it was roughly the same size it is today (or smaller) and there was not a simultaneous banking apocalypse, alien nuclear attack, or some other act of God, I doubt anyone would try to stop it. The entire rationale behind bailing out GM and Chrysler was that it was a necessary evil given the (incredibly unique) economic circumstances of the times.

      “And, you are all about facts, but I don’t see any here.”

      Then you must not be looking very hard. The economic effects of what would have happened given the implosion of GM and Chrysler have been gone over again and again.

      “So, I don’t think it’s all that easy to simply say his plan wouldn’t work because you assume it required more capttal than anyone would fork over”

      It’s not an assumption, and yes, it’s pretty easy to say. He’s just objectively, factually wrong.

      • 0 avatar
        Landcrusher

        Your memory must be short. We already bailed out Chrysler once before. Also, what exactly were the big economic problems of a bankruptcy? I never heard one plausible scenario from the give it all to the union crowd. It was all mass starvation and the end of life as we know it. Nonsense! Big numbers don’t scare me one bit. Disrespect for private property, contracts, and justice are what scare me.

        Besides that, it’s almost always going to be tough times when they get in trouble. They aren’t unsuccessful because they can’t build and sell cars to people. It’s the way they run the company, much of it because of ridiculous laws and regulations, that they can’t win. Its a toxic culture.

        So, what I want to hear is the limit. What’s the limit? How many employees do you have to have to get bailed out? How often are you eligible? Do your employees have to be unionized? Do have to contribute to the party in power? How much?

      • 0 avatar
        thelaine

        The bailout is not unique or isolated, it is just massive. Companies all over the country are getting money from the government. The GM bailout was mostly a union payoff. There is no reason to believe that this was the only way, or the best way, to handle GM’s crisis, even assuming the government should have played a role in the first place.

        Other payouts go to “alternate” energy scams, from solar, to wind, to ethanol. Other subsidies go to traditional energy companies and all sorts of other private companies that have connections in Washington. In the meantime, we continue to borrow and spend.

  • avatar
    Volts On Fire

    Barry O and the UAW conned the American public out of billions. It should be a mark of shame to be seen behind the wheel of a post-bailout GM or Fiatsler vehicle – a “scarlet UAW,” if you will.

  • avatar
    thelaine

    What makes GM or its union workers sacred? The coal industry and its workers have gotten hammered, so has construction, so has the hospitality industry, so has the real estate industry, and on and on. Bailouts for all? Some? Which ones? How much should we borrow? Who should pay? Who in the government decides who gets the money and who gets the pink slip? Bailout proponents never seem to consider any of this. They just want to bail out GM, act like those who question it are extremists, and change the subject.

    • 0 avatar
      sunridge place

      So…the coal industry doesn’t get government $ or breaks? The real estate industry doesn’t get help from government tax breaks and get direct help during 08 and 09 and still today?

      You act like jobs were not lost during the automotive bailout.

      • 0 avatar
        thelaine

        Thank you S.P., for addressing the issue. If coal and real estate get taxpayer assistance, why should they? Who should not get money transfers from the government when their business gets in trouble? You know who actually doesn’t? Those who do not have the money or the connections. We borrow 40 cents on every dollar we spend. Our debt is over 100% of our GDP. Aren’t special tax breaks and bailouts for private business run for profit part of the reason? The people who influence the promulgation of these special tax deals are the ones who benefit from them, at the expense of the rest of the taxpayers and our children and grandchildren. The GM bailout was massively expensive and bailed out workers and executives who had created the mess in the first place. Who gets the money, and who gets to pay? It is determined by who has the juice in DC and everyone else gets the debt.

      • 0 avatar
        sunridge place

        I agree with a fair part of what you say…where you are fatally wrong is the concept that taking action in the auto industry cost billions of dollars and was a choice between spending those billions and spending nothing.

        You want to talk about billions? Lets look at what would have happened if the govt didn’t take action in this situation to help save the domestic auto industry.

      • 0 avatar
        thelaine

        I have read the thread. It looks to me like the reorganization was accomplished for the benefit of the union and GM management. Everyone else paid. Ford got no money and is doing fine. If GM suppliers were essential to Ford survival, why weren’t they given the money? It looks to me like a payoff for political support.

      • 0 avatar
        PintoFan

        “If GM suppliers were essential to Ford survival, why weren’t they given the money?”

        Because you would have whined about that, too.

      • 0 avatar
        sunridge place

        ‘I have read the thread. It looks to me like the reorganization was accomplished for the benefit of the union and GM management’

        Well…I’ve identified one part of your problem. You are making judgements from this thread?

        You are either oversimplifying it or have a lot to learn about what really happend…I can’t tell.

      • 0 avatar
        thelaine

        How is it whining to question the wisdom of how your money is spent?

  • avatar
    nova73

    In response to the blatantly illegal and unconstitutional bailout, I will never purchase another GM or Chrysler product. The soon-to-be ex-president can force me to subsidize them, but he cannot force me to buy one of their POS cars.

  • avatar
    PintoFan

    And thusly, did Ed claim
    That Mitt Romney, that scion of fame
    Had a plan, which would shame
    That dastardly Kenyan, so recently elected
    That socialist scoundrel, who completely rejected
    A “market solution,” and instead selected
    General Motors, and Chrysler too
    For reception of funding, creating a bugaboo
    That ruined the economy (And America, too!)

    But Ed had no facts, nor did Mitt
    It was the same, tired old… stuff
    They just wouldn’t quit
    But November 6 came, and there was much crying
    For nothing had come of their repetitive trying
    To confuse everyone, so they would keep on buying
    Lines imported direct from Tokyo
    Telling the “journalists” to put on a big show
    Because when Akio calls, you can’t say “no.”

    (All responses from now on will be rhymed.)

    • 0 avatar
      APaGttH

      Mitt Romney strapped a dog to the roof of a Scion?

    • 0 avatar
      thelaine

      S.R, that is really condescending. There are many intelligent and informed posts on this thread. As for oversimplification, I think most of the complication comes from ideological disagreement, rather than analysis. The GM debate is clearly just a proxy for a larger political contest in the minds of some people and they will defend it or attack it on that basis, regardless of the merits.

  • avatar
    vanpressburg

    In WW2 one German officer checked Russian tank and he said:”This is so good, now all they need is continue to make tanks like this and they will win the war.
    I checked Hyundai Genesis R-Spec 5.0 and Hyundai Genesis Coupe and
    “Now all they need is continue to make amazing cars like this and the war is over”.
    Healthcare in East Europe cost 20% of USA healthcare, houses for people working in car companies are 3 times cheaper than houses in USA.
    You can not compete.
    When you elect Obama, you will lost the war with China, South Korea and East Europe. You will have healthcare, but your children will be nobody.

    • 0 avatar
      silverkris

      “When you elect Obama, you will lost the war with China, South Korea and East Europe. You will have healthcare, but your children will be nobody.”

      Actually, if you RE-elect Obama, you’ll have a better chance of NOT going to war or at least unnecessarily raising tensions with these countries, than with Governor Romney, who has zero foreign policy experience, has made some clumsy sabre-rattling comments, and has retained some of Dubya’s foreign policy players who helped get the USA into the mess in the first place.

    • 0 avatar
      billfrombuckhead

      Socialist tanks from the Soviet Union and Socialist cars from KoreaInc!

      • 0 avatar
        Zackman

        T-34s ran very well and were quite effective, but they were extremely camped and uncomfortable for the crew.

        That’s the only thing I can add to this entire thread!

  • avatar
    Moparman426W

    You don’t need to know anything about cars to be in The Wall Street Journal. That’s why Neidermeyer hasn’t appeared in the likes of Hot Rod, Car Craft, Mopar Action, Super Chevy or any similar publication.

    • 0 avatar
      olddavid

      I have to admit, Edward N., the part-time nail hammerer and photographer of old iron in Eugene- with a byline in WSJ! Rupert is a better recruiter than I ever gave him credit for. Being the only small-c conservative in Oregon has to be frustrating, so I will be glad to congratulate you. I will also defend your car intellect for those who haven’t read your excellent contributions in the past. Don’t forget to file your Oregon income tax.

      • 0 avatar
        Paul Niedermeyer

        You’re mixing me up with my son; we’re quite different in a number of respects.

      • 0 avatar
        olddavid

        My apologies, sir. However, allow me to complement you on the critical-thinking skills you encouraged in your son. Living in Oregon off-and-on for 35 years made me immune to the obvious in my own back yard. He opened my eyes, and although we disagree politically, we have a commonality of gasoline rather than blood. It also allowed me to recall the Nash dealerships and wise counsel of my own Father. Thank you.

    • 0 avatar
      geeber

      This article deals with finance, government intervention in the auto industry industry and corporate structure. You do need to know about those subjects to be featured in the Wall Street Journal. Knowledge of those subjects is also critical to any rational discussion of the business aspect of this industry.

      Judging by the distressingly large percentage of substandard products they have produced over the past 35 years, the leadership of GM and Chrysler apparently don’t know much about cars, either. They certainly haven’t been industry leaders in build quality or engineering.

  • avatar
    -Cole-

    Don’t forget, one party! One agenda! One government! Don’t be fooled!

  • avatar
    Dave M.

    “Barry’s reelection is not a bet I would take at this point.”

    I’ll take that bet.

    Ed is a gifted writer, and has a bright future ahead of him. While I didn’t agree with the bailout, I have come to realize it was a necessary evil. Obama was the person in position to make the decisions and guide the discussion, not Romney…so I find this spilled milk.

    This is a moot argument.

  • avatar
    JohnTheDriver

    And TTAC continues it’s slide into the abyss of politics and stupidity. TTAC, it was good knowing ya! As a political website though I’m just not interested anymore. If Mr. Lang continues writing for a less stupid site I would very much like to know where.

    • 0 avatar
      Landcrusher

      Why did you bother commenting, nevertheless reading? Is it really your desire that a web site, or newspaper or channel, provide only content that interests you? If you don’t get that do you always leave?

      Personally, I can’t stand half the WSJ or any local news productions, but I still watch tv and read some of the Journal. I continue to be curious about these types of complaints. If I had learned that Lang’s columns were the only ones on the site I liked, I would ignore the rest.

      • 0 avatar
        thelaine

        I agree. If you don’t want to read about “politics” then skip the GM and Volt threads. This is actually one of the few sites that is moderated for civility, so people can actually discuss these issues if they are interested in the intersection of the auto industry, economics, and politics. Most sites that discuss politics are dominated by one viewpoint and dissenting opinions are treated like an infectious disease.

  • avatar
    50merc

    For those who have been reading TTAC just a couple of years, this argument goes way back. GM’s headlong cruise to bankruptcy was chronicled for years by TTAC founder Farago. It’s what made me a faithful reader. Back then I publicly wondered how GM would gain lasting prosperity by selling profitable divisions while retaining money-losing operations. How, I asked, can GM repeatedly pay dividends exceeding profits yet escape condemnation? And shouldn’t the UAW, at the very least, be alarmed that pension and health care obligations were hugely underfunded? Is there no one on the Board of Directors who understands fiduciary duty? How can the auditors maintain the “going concern” assumption for a Dead Company Walking? Where are the SEC and the bond trustees and analysts? Yet the band played on.

    I have no doubt Romney’s government-backed Chapter 11 bankruptcy would have worked. PCH101 keeps saying no private equity firm would have provided financing. But private equity is straw man. Government-backed loans would have found willing investors all over. Hell, the Treasury is selling more than a trillion dollars of such IOU’s every year. And in a normal bankruptcy, GM wouldn’t have had to honor its feckless promises to the UAW and other overprivileged and overfed stakeholders.

    Looks, democracy is messy. What’s done is done. But we shouldn’t tell American taxpayers they can’t put “My taxes pay UAW pensions” bumper stickers on their Toyotas.

    • 0 avatar
      Pch101

      “Government-backed loans would have found willing investors all over.”

      How exactly would these loans get repaid?

      It’s as if political conservatives can’t handle arithmetic. Loans have to be repaid.

      Where exactly is the profit and cash flow needed to support another $50+ billion worth of debt? When you find it, you be sure to let everyone else know, since nobody who knows what they’re talking about can actually find it.

      • 0 avatar
        thelaine

        Weren’t union pension and benefit obligations a big reason why GM was in financial difficulty in the first place? Why should tax money have been used to protect them? Wasn’t this just a payoff for political support? Why should GM have survived as a company? If Ford, an apparently well-run company, needed GM suppliers in order to survive, why not assist them in the post-GM transition? Politics seem to have been a big part of the specific terms of the bailout, as they have many other government “investments” that have been made in the energy sector and other private industries.

      • 0 avatar
        Pch101

        “Weren’t union pension and benefit obligations a big reason why GM was in financial difficulty in the first place?”

        No.

        “Why should tax money have been used to protect them?”

        If you think that was the main motivation for the bailout, then you don’t know a damned thing about the bailout.

        “Wasn’t this just a payoff for political support?”

        No.

        “Why should GM have survived as a company?”

        It didn’t. The original GM is in liquidation.

        “Politics seem to have been a big part of the specific terms of the bailout”

        I suppose that it may look that way to someone who doesn’t want to do the heavy lifting and actually understand what happened.

      • 0 avatar
        thelaine

        If you think that was the main motivation for the bailout, then you don’t know a damned thing about the bailout.

        Saying it was not the “main motivation” for the bailout begs the question of why it was done with taxpayer money.

        The rest of your responses are simply dismissive and conclusory.

      • 0 avatar
        Pch101

        “Saying it was not the “main motivation” for the bailout begs the question of why it was done with taxpayer money.”

        I’ve explained that in detail.

        You claim that you want to understand it, but you obviously aren’t genuinely interested in learning about this subject. You have a predetermined political narrative, and you will accept only those things that conform to that political narrative. And since facts don’t help your narrative, you reject them, leaving only rhetoric and half-baked suppositions in your wake.

    • 0 avatar
      APaGttH

      … Government-backed loans would have found willing investors all over…

      In early 2009? No they wouldn’t have. Credit markets were frozen, Jesus Christ himself wouldn’t have been able to get a loan for a condo with 20% down. Small business couldn’t get loans and the Fed (source TTAC if you do a search) was propping up companies from McDonalds to Caterpillar to Ford with stealth bailouts so that they could get financing to keep operating.

      Good Lord man – MCDONALDS could not get money to keep operations going with a dollar value menu in the middle of a recession. They had to go to the fed (again, do a search – source TTAC). You really think a bankrupt car company would have got private equity takers when no one would float the money for McDonalds? Or Caterpillar???

      You’re rewriting history – there was no credit.

      • 0 avatar
        Landcrusher

        Has it ever occurred to any anyone that needing credit to meet payroll is hardly a wise way to run a company that has had billions in revenue? The only reason it’s at all justifiable is because you need to do it to compete with the other guys doing it. It’s steroid abuse, and 2008 was the inevitable rage.

  • avatar
    Acd

    I’m sure many of the comments on this thread have crossed Herr Schmidt’s line of civility. Let the bannings begin!

  • avatar
    thelaine

    I have read your responses. You have not addressed the financial necessity of bailing out the unions.

  • avatar
    urZepher

    I have been reading only for many years. But now I would suggest that the Ed N article is just as much truth as the Greg Palast article in The Nation on Oct 18. Maybe that’s how big money people deal with a bankruptcy opportunity. And yes I tried to get someone at TTAC to write or discuss the Palast article a week or two ago. Facts all come with points of view, facts don’t do what I want them to etc, The Talking Heads

  • avatar
    thelaine

    “Weren’t union pension and benefit obligations a big reason why GM was in financial difficulty in the first place?”

    No.

    I think you have underplayed the responsibility of the union in the financial mess GM created.

    General Motors is straddled with the ‘legacy costs’ of providing healthcare and pensions to a host of retired workers, which cost GM millions of dollars every single year.

    “When GM agreed to them, the company was lauded as an example of good corporate governance. Now, everyone says, ‘How did they agree to this?’ Back then, it was considered enlightened. But now, it’s a different story,” said Jeremy Anwyl, CEO of Edmunds.com.

    These legacy costs shake out to be about $2,000 per car, David Cole, Chairman of the Center for Automotive Research, said. And that $2,000 has to be passed along to the consumer if GM wants to turn a significant profit

    • 0 avatar
      PrincipalDan

      Which is why all taxpayers should cringe when GM puts massive amounts of cash on the hood of new cars. The reduction of profit makes it that much harder for them to pay their bills. Combine that with the fact that GM is still its own biggest compeditor (Regal or Verano? Terrain or Equinox? Suburban or Yukon XL?) and you see the structural problems of GM clearly.

      • 0 avatar
        sunridge place

        Where is all the massive amount of cash on the hood of all those vehicles you mentioned?

      • 0 avatar
        Pch101

        Per Edmunds’ True Cost of Incentives, GM has the highest incentives today.

        All of the GM brands are also above average:

        Lincoln - $5,283
        Ram - $4,274
        Infiniti - $4,074
        Chrysler - $3,893
        Cadillac - $3,570
        Buick - $3,448
        GMC - $3,265
        Chevrolet - $3,187
        Acura - $2,951
        Ford - $2,622
        Dodge - $2,411
        AVERAGE - $2,197
        Nissan - $2,152
        Volvo - $2,035
        Mitsubishi - $1,923
        BMW - $1,909
        Mazda - $1,882
        Jeep - $1,876
        Lexus - $1,852
        Suzuki - $1,824
        Toyota - $1,775
        Honda - $1,506
        Kia - $1,490
        Mercedes-Benz - $1,453
        Audi - $1,358
        Hyundai - $1,095
        Volkswagen - $832
        MINI - $599
        Subaru - $471
        Scion - $448

    • 0 avatar
      el scotto

      “I think you have underplayed the responsibility of the union in the financial mess GM created.” It’s GM’s responsibility, not the UAW’s. GM agreed to all the contracts.

    • 0 avatar

      While it is common for companies to cut pension benefits while you’re working, they can’t cut them after you retire. Even if an employer goes bankrupt and dumps its obligations on the Pension Benefit Guaranty Corp., current retirees continue to receive their monthly payments, and most future retirees receive 100% of what they had earned.

      From WSJ
      http://online.wsj.com/article/SB10000872396390443720204578004292957113104.html

  • avatar
    GeneralMalaise

    Let’s see… put your trust in an honest man with a proven track record of turning things around in the business world and in working with the “opposition” across the aisle during his time in politics, or re-elect a narcissistic, community organizer who has absolutely no self-accountability and who has literally pissed away billions of taxpayer dollars through giveaways to his cronies and thought it more important that he nationalize healthcare than foster the conditions required to promote capitalism and job creation?

    … tough call!

  • avatar

    Right now the US Treasury is about $23 billion in the red on the GM bailout, based on current GM stock prices. A Ed points out in his WSJ piece, the UAW came out $26 billion ahead of where they should have been had they been treated like all of the other unsecured creditors. That means that if this had been like other managed bankruptcies and had the Obama team not given the UAW favorable treatment, the bailout would actually be slightly profitable today, even at GM’s low stock price.

    Perhaps one reason why GM stock is so low is that investors are not convinced that their interests will be protected.

    • 0 avatar
      Pch101

      “A Ed points out in his WSJ piece, the UAW came out $26 billion ahead of where they should have been had they been treated like all of the other unsecured creditors.”

      I was going to say that he pulled that figure out of his backside, but then I realized that he had already conceded that when he cited the Heritage Foundation as a “source”.

      All of these years, and you still don’t know a damned thing about the bankruptcy. If you would spend less time typing and more time learning about the cramdown statute in Chapter 11, then you could devote less energy to producing factually deficient rants that you like to serve up.

    • 0 avatar
      GeneralMalaise

      Do NOT confuse them with The Facts, Ronnie! Wouldn’t be prudent.

      • 0 avatar
        Pch101

        The VEBA settlement with GM included stock, warrants and a $2.5 billion promissory note. The VEBA had been owed about $20 billion prior to the bankruptcy.

        Your abacus has to be really rusty in order to turn something like that into a $26 billion gain. Must be the New Math.

        Mr. Niedermeyer also states that the General Motors secured creditors were somehow shortchanged by the VEBA. Yet the reality is that GM’s secureds were paid off at par. How does someone who has been covering this story for three years botch that up, and how does a WSJ editor allow a blatant error like that to slide right by?

  • avatar
    thelaine

    These are the costs that the taxpayers picked up so that GM could have a chance to be price competitive again. The question is why did the burden fall on the taxpayers and not the workers themselves? Many people, some of whom I know, have lost their jobs, pensions and benefits in this economy. The government did not bail them out. Delco workers were not bailed out. People who defend the bailout are silent on this issue. These were enormous costs that were not necessary to accomplish the bailout, as far as I can tell. No one seems to be prepared to say otherwise. If the worker bailout was not necessary to accomplish the bankruptcy, we could have had the bailout at significantly lower cost to taxpayers. It would also have held workers responsible for their contribution to pushing GM to insolvency, which had been predicted for many years, but was ignored or denied by workers and management in contract negotiations. That is why I have concluded that it was simply payback for union political support, and therefore a form of corruption. I am open to a counter argument, but no one seems prepared to make one.

    • 0 avatar
      el scotto

      “It would also have held workers responsible for their contribution to pushing GM to insolvency, which had been predicted for many years, but was ignored or denied by workers and management in contract negotiations.” A union works for the best deal it can get for it’s workers. It is not the worker’s fault that GM agreed to their contracts.

      • 0 avatar
        thelaine

        I agree that the union worked for the best deal it could get without thought to what it would do to the ability of the company to survive. I disagree with taking money from other people and giving it to the union when the bill comes due. If the union is not responsible for what the company does, then why are taxpayers responsible for what the union and the company did?

      • 0 avatar
        el scotto

        “I agree that the union worked for the best deal it could get without thought to what it would do to the ability of the company to survive.” If a company agrees to pay it employees under the terms of a contract and can’t survive, it’s stupid. The GM pension fund was topped up because GM had under funded it for years

      • 0 avatar
        thelaine

        And so the company suffers the consequences of its decisions, all of which were evident well in advance, even to the union. Taxpayers were not at fault and did not cause any of it. Why should they pay to bail out the union members when the bailout could have been achieved without it?

      • 0 avatar
        el scotto

        @thelaine We’re at cross purposes when it comes to unions; we’ll have to agree to disagree. You’ve tried to blame the union when in fact you’re mad about the bailout in general. I can understand your anger. I’m one of those, by hair, who approved of the bailout. I think in 08/09 GM and Chrysler going for real bankrupt would have made the economy much much worse. It’s done, you’re pissed, I got it.

      • 0 avatar
        thelaine

        el scotto. I am neither angry nor anti-union. Your assertions are both incorrect and non-sequiturs. I do not know if the GM bailout was necessary, but I have accepted for the purposes of argument that it was. My question, which no one will address, including those who claim superior knowledge of bankruptcy and finance, is why the enormously expensive union benefit payout was necessary to implement the managed bankruptcy. The obvious answer is simple politics. If it is otherwise, I would like to hear it, but no response is forthcoming.

    • 0 avatar
      silverkris

      “Delco workers were not bailed out.”

      Delco Electronics had been spun off into Delphi in 1999 as an independent supplier, it was not part of GM at the time of the 2008-2009 reorg/restructure. It had gone through a very painful Chapter 11 bankruptcy in 2005 prior to that.

  • avatar
    silverkris

    I’m pretty astonished by the statements that imply that the UAW and the workers got a free ride out of this. That’s rubbish.

    The Feds insisted on concessions that included changes in work rules that limit job classifications for skilled trades workers, a freeze on wages and benefits for entry level employees and cuts to retiree benefits…To ensure that the billions taxpayers invested would not be wasted, the government demanded that the UAW accept limits on its right to strike over pay and benefit increases in 2011 talks. Not to mention that even given this, a lot of workers still lost their jobs in the restructuring.

    Maybe some of these posters are upset that for once, the little guys don’t take most or all of the brunt in such a restructuring, but the banks and the big boys also have to take a hit too.

    • 0 avatar
      thelaine

      The non-union little guys got crushed. They were the real “little guys.” Regardless, why were the benefit costs paid by the taxpayer? Was it necessary to accomplish the bailout? If not, then why was it done? The answer is the one that no one who defends the bailout will directly address. It was taxpayer-financed political payback. In other words, corruption. This is the problem with government “investment” in private business, from tax breaks to subsidies to mandates. It is the “little guy” who gets screwed. Those with the money and the connections and the power get the benefits. Everyone else just pays the bills and takes on the debt.

      • 0 avatar
        silverkris

        Perhaps a better question to ask, what would be the cost of NOT acting on GM and Chrysler?

        While the price of the auto bailout was high, the cost of not acting would have been higher,” Sophia Koropeckyj, a managing director at New York-based Moody’s, wrote in the report issued yesterday. “Without assistance, the auto industry would eventually have recovered, as would the U.S. economy. But the process would have taken longer, caused more hardship, and cost more to taxpayers.”

        If Chrysler alone had liquidated, the U.S. would have lost about 145,000 more jobs in 2009 and 2010, Moody’s estimated.

        The Obama administration has said it was split on whether to save the company before eventually deciding to back an alliance with Italian automaker Fiat SpA.

        If GM filed bankruptcy and liquidated, the economy would have lost about 550,000 additional jobs, Moody’s said. Those two bankruptcies combined may have led to failures of auto suppliers that supply Ford Motor Co., which “could have tumbled as well,” according to the report.

        “This would have increased job losses to nearly 800,000 more than the baseline expectation,” Koropeckyj wrote.

      • 0 avatar
        el scotto

        Specifically, who are these non-union little guys who got crushed? Crushed by whom for what nefarious purpose? I’ve worked in lots of parts plants. I can see family owned ones going under, the ones backed by auto companies and corporations; not so much. Most of them were non-union.

      • 0 avatar
        thelaine

        The questions are not contradictory. My question assumes the taxpayer-financed bankruptcy was necessary. The question remains whether the union benefits were necessary to the bankruptcy. Apparently not or someone would have explained it rather than changing the subject.

      • 0 avatar
        el scotto

        @ thelaine at 4:29 If GM hadn’t topped off the UAW retirement fund the cost of the UAW pensions may have been assigned to the PBGC. It would have that made it a case of pay now or pay later. I could be wrong, very wrong.

      • 0 avatar
        thelaine

        el scotto. Thank you for the response. I checked it out. “When the PBGC takes over pension benefits it guarantees them, but only to a limit. When Delphi filed for bankruptcy the maximum pension benefits were $54,000 a year for retirees aged 65 and above, with lower benefits for early retirees.[36] About half of Delphi’s union and non-union workers faced reductions in their pension benefits.”

      • 0 avatar
        Pch101

        ““When the PBGC takes over pension benefits it guarantees them, but only to a limit.”

        As usual, you focus on the wrong points and miss the big picture.

        The PBGC is theoretically independent. The program should be self-funded by contributions from the managers of benefit plans.

        But the PBGC itself has been underfunded. Dumping the GM and Chrysler pensions into it would have made the PBGC insolvent.

        Accordingly, if GM and Chrysler had liquidated, the government would have then had to have intervened and thrown money at the PBGC, similarly to Fannie Mae and Freddie Mac. And that is billions of dollars that the Treasury would have had zero chance to ever recover.

        The auto bailouts pushed the pension liabilities into the balance sheets of the new companies. This shuffling of the liabilities kept the PBGC at its status quo.

        The last thing that the economy needed in 2009 was to have yet another government entity on the brink of collapse. The market’s response to such an event would have made it even more costly than the actual cash that would have otherwise been infused into the PBGC.

        The bailout of GM and Chrysler was, in part, a bailout of the PBGC in disguise. The auto bailouts were cheaper, easier and smarter than the alternative. You need to pay attention and connect the dots to figure this out, but it’s all there hiding in plain sight if you stop parroting right-wing talking points and start following the money.

      • 0 avatar
        Truckducken

        Silverkris,
        Isn’t the idea of even Chrysler, let alone GM, being liquidated a straw man? Is there anyone out there, anyone at all, who truly believes that nobody could have been found to bid on the worthwhile parts of Chrysler? That nobody would want the profitable parts of Jeep? Nobody would want the top-selling minivan franchise? Nobody would want to pick up the LH series? Seriously? And as for the dogs – Caliber, ComPat, and the rest, what difference would losing them have made anyway? It’s not like millions of American jobs depended on making parts for cars that were unwanted and selling at a trickle even in a good economy.
        You can run through the GM product lines and make the same case. There would have been consolidation and shutdown of lousy product lines – which happened anyway. The hype about a complete extinction was hype. Period. Only the names on the buildings might have changed…and in Fiatsler’s case, they still might.

      • 0 avatar
        Pch101

        “Isn’t the idea of even Chrysler, let alone GM, being liquidated a straw man?”

        Boy, I can’t wait to buy a brand new Saturn. How about you?

      • 0 avatar
        jmo

        “Is there anyone out there, anyone at all, who truly believes that nobody could have been found to bid on the worthwhile parts of Chrysler?”

        Chryslser declared bankrupcty a few months after the bankruptcy of Lehman and the bailout of fannie, freddie, AIG, etc. Where was a potential bidder going to get the financing to bid in the midst of the greatest economic crisis since the great depression?

      • 0 avatar
        Landcrusher

        SK,
        Isn’t Moody’s one of those rating agencies protected from competition by the Feds? Isn’t using an opinion from them somewhat suspect?

      • 0 avatar
        thelaine

        You are funny psych, and I love your bitter posts. You still have not explained why the union got billions of dollars more than they would have been entitled to if GM had been liquidated or why their pensions and benefits were not cut in the bankruptcy. Connect those dots please.

      • 0 avatar
        Pch101

        “You still have not explained why the union got billions of dollars more than they would have been entitled to if GM had been liquidated”

        You really need to learn a thing or six about bankruptcy.

        The VEBA was a creditor. It is a violation of bankruptcy law to give a creditor less from a reorganization than it would have received from a liquidation.

        If you want to bang on about the “rule of law” this and “normal bankruptcy” that, then you probably shouldn’t be pouting about the fact that the law wasn’t violated. But let’s face it — you couldn’t care less about the law, you’re just upset that the union isn’t out of business (yet).

        “or why their pensions and benefits were not cut in the bankruptcy.”

        You must not have been paying attention. Jobs were cut, lower-wage wage tiers were implemented and the auto companies are off the hook from future VEBA fundings, aside from the promissory note.

        And the promissory note was just a fraction of what the VEBA was owed. The union got very little out of the deal, and if you’ve been paying attention, then you should know that the GM VEBA is currently underfunded and GM doesn’t have to fund it.

      • 0 avatar
        thelaine

        psych, I will ask you again: Why were their pensions and benefits not cut?

      • 0 avatar
        Pch101

        They were cut. Go back and read slowly.

      • 0 avatar
        thelaine

        How much were pensions cut?

      • 0 avatar
        thelaine

        You must be discussing future employees. How much were pensions cut for retired workers and employees who existed at the time of the bailout?

      • 0 avatar
        thelaine

        That’s what I figured. It’s not so difficult after all, once you strip away all the misdirection and jokes.

      • 0 avatar
        Landcrusher

        PCH,
        If possible, can you spare the insults and condescension for a second?

        You say the VEBA could not be given less than they would get in liquidation. It seems to me that some parties did get differing amounts less, and that the liquidation would not have resulted in billions if there was indeed no one to buy any of it.

        I am not trying to be sarcastic, but it seems you are trying to have your cake and eat it too. You need to explain the nuance I think.

      • 0 avatar

        It would appear thelaine was answered if you read all of the above. By law even with a bankruptcy current retiree (already retired) pension benefits can not be reduced or they would default to the government pension office which is already underfunded also mentioned above so this would seem to be a simple easily verified point of law rather then a political argument.

      • 0 avatar
        Pch101

        “It would appear thelaine was answered if you read all of the above. By law even with a bankruptcy current retiree (already retired) pension benefits can not be reduced or they would default to the government pension office which is already underfunded also mentioned above so this would seem to be a simple easily verified point of law rather then a political argument.”

        Precisely. It was all explained previously, and anyone who is paying attention would have understood the points being made.

        As you surely figured out, posters such as Thelaine and Landcrusher are not interested in facts or reality, but only want to rehash the same old political arguments, over and over and over again. It comes down to the fact that they hate unions, and they would gladly violate any law that they could in order to eliminate them as soon as possible.

        Just a thought to our friends on the hard right, but people who supposedly believe in the rule of law ought to realize that labor unions are still legal in the United States. If you don’t like unions, then the answer is pretty simple — go use the power of persuasion to convince workers to terminate their union memberships and to not join unions. If you have to use lies and coercion in order to get your way, then maybe your way wasn’t so great to begin with.

      • 0 avatar
        Landcrusher

        PCH,
        Your post is out of line. It’s an ad hominem attack. Saying that someone would break the law to get their way, just because they disagree with you is not acceptable. I challenge anyone to show justification for such an accusation.

        I recommend you delete it and act like an adult.

        Also, what’s legal, and what is right are not always the same thing. Heard of slavery? Eugenics laws? Hate speech laws? You get easily wrapped up in the way things are, and you will fail on basic right and wrong. Like you did here.

    • 0 avatar
      el scotto

      The union hate on TTAC is large and unabated. Fox news and Glenn Beck say unions are bad, very bad. Somehow many think that the UAW was the cause of GM’s downfall. Uh no, GM agreed to contract after contract, decade after decade. I say GM was stupid and should have set down at contract talks and said we need concessions. Can’t figure you labor cost? You more problems than foreign competition.

      • 0 avatar
        28-Cars-Later

        “Somehow many think that the UAW was the cause of GM’s downfall. Uh no, GM agreed to contract after contract, decade after decade. I say GM was stupid and should have set down at contract talks and said we need concessions.”

        Leverage my friend, GM has been in trouble since the Rodger Smith era and UAW knew it.

        Lets be realistic if the big part of your business is essentially extortion and your victim asks for mercy, do you grant it? If you see the big picture, you might be open to something if only to keep your scheme going, but if short term gain if what you are after you spit in their faces and say ‘too bad, pay me’.

        The big complication the the UAW/GM situation were legacy healthcare and pension costs, essentially the company was liable to the union for the years it was actually successful in years it was clearly not. If you look at it that way, its unsustainable to have to keep chucking what profit you do make at ever increasing healthcare costs for people who haven’t worked for you in 20+ years. We have a similar problem in Pittsburgh where the Port Authority pays anywhere from generous to unsustainable pensions to people who worked for it when Pittsburgh was a city/county transportation network for 2 million people! Pittsburgh today is about a 400K population with about a million in the county at large, its not realistic to pay someone the equivalent compensation of their heyday when the system today is at least half of what it was, just madness.

        If GM is ever going to afford those legacy costs, it must grow and gain market share which at the moment seems unlikely. Ideally groups with skin in the game, such as gov’t, UAW, and the pensioners, should join in for their mutual benefit and help in this growth effort. In North America the biggest competition GM faces IMO are the transplants, mostly the Asians but VW is becoming a monster overseas and that growth can happen here too. Why doesn’t gov come down on the transplants, or go easier on the domestics? (CAFE, regs, etc) UAW has been trying to organize the transplants for years, why not say heck with it and bring in some of those dirty politics they were so famous for in the 60s and 70s? Pickett lines, supplier sabotage, maybe incite some violence. Why not put some retirees in those political ads were bombarded with and have them guilt the general populace… explain the American cars of today are the best they have ever been, why not give them a shot, etc.

    • 0 avatar
      Landcrusher

      My primary anger is the use of tax dollars, followed by the lack of penalties from senior management, the UAW leadership and pro union politicians. The latter pair are hypocritical in the extreme, and if they really cared about workers would behave quite differently.

  • avatar
    MrIncognito

    Mr. Niedermeyer has the perfect soap box now in a Rupert Murdoch owned venue (the unfortunate WSJ is the print equivalent of Fox News these days). I hope this means that we will be seeing far less right wing politicizing on this blog now, because it’s been getting real f*cking old around here fast.

    Political moderate here. Don’t read MSNBC, don’t read Fox or the WSJ, don’t want that garbage on TTAC. A lot of posts here lately have been missing the second T in favor of ideology. Can you guys start posting about cars again please?

    • 0 avatar
      silverkris

      The WSJ’s articles are OK. The op-ed page though is pretty extreme in terms of ideology.

    • 0 avatar
      Landcrusher

      Is your point that there isn’t car content here? Why not just not read the obviously political posts if you know it will annoy you? Why would your wishes be more important than those who like this stuff?

      I stopped reading the junkyard stories for the most part because they mostly don’t interest me. Should I whine about them? No, it’s rude. If you don’t like it, don’t read it. sheesh.

    • 0 avatar
      vaujot

      While I find Ed’s Op-ed and many of the comments here frustrating like you do, the bailout of GM and Chrysler clearly has a lot to do with the automotive industry and good reporting about it would fit this site’s agenda. Unfortunately, Ed’s Op-ed fails on that front.

  • avatar
    el scotto

    Still cranky about labor/UAW. From what I understand Ford started the two-tier pay rate back in the 1990′s. At some point the UAW and the transplants will pay about the same. What will the union bashers do then? Furthermore, I see union bashers driving European iron that was built by German Union Labor. Source of two-tier wages was friend who worked at Ford’s Louisville truck plant in the 1990′s. I’ve lost contact with him. Done ranting.

    • 0 avatar
      Landcrusher

      As a certified union basher, with personal experience to justify it, I would give you some answers to some of your points.

      First, I’m curious why it’s all GMs fault for the contracts? Why does the UAW not share any blame? Second, given the legal favoritism towards the unions, do you not give GM any slack for simply doing their best? (I don’t but for different reasons likely).

      The two tired thing is simply evidence of the problem of the unions. Workers are willing to take the jobs, which are much safer and less strenuous than they used to be, but the company can’t hire them without the unions permission. It’s just silly. At the same time, the union employees refuse to give their best for the company, and who can blame them? They get a better deal than entry level management.

      Frankly, I don’t know how anyone with any good ideas ever gets hired to GM and then stays. Unions aren’t all bad, but the system that created the UAW has to change. Unions need to be a reaction to bad management, not a cause for more of it.

      • 0 avatar
        el scotto

        GM pays the employees, sets working conditions, provides insurance, retirement and other benefits. Would anyone ask for less money and benefits? My Grandma would say it best about both of them “they’re both bullheaded>”
        The Big Three for decades made money and just kept giving the UAW what ever they asked for contract after contract. Starting in the 80′s both sides ignored the fact that the Big 3 were losing market share and the gravy train would come to a halt. Both sides need a major reboot.
        The closed shop is legal thing. I can’t remember the statutes behind it.
        I was in a trade union and not a labor union. It is an apples to oranges comparison. I went through class room and on the job training. If you couldn’t or wouldn’t make production you were gone. I did make more than the on-site engineers/architects but they weren’t walking on I-beams ;)

  • avatar
    GeneralMalaise

    and to think that for a few more months, this man is but a heartbeat away from the presidency…

    http://www.powerlineblog.com/archives/2012/11/president-who.php

  • avatar
    Type57SC

    wow. That article should come with a “I’m Mitt Romey and I approve this message” disclaimer. At least you only linked it instead of showing the whole thing and at least they put it as an opinion piece.

    I find the auto handling attacks to be a symptom of a political disease where there is a reflect reaction against the other side’s action regardless of merit, and critically, never moving from a position once taken. It’s sad and probably not what the founders had in mind.

  • avatar
    billfrombuckhead

    Wall Street Journal=Faux News

  • avatar
    Moparman426W

    @ El scotto, Mopar parts were made by Chrysler, Mopar is their parts division.

    • 0 avatar
      el scotto

      Thanks Moparman426W. Friend of mine’s dad was able to retire from Chrysler. Friends dad moved from Indiana to Phoenix when he retired. I phrased my question incorrectly. Did Chrysler ever have a division like GM’s Delphi or Ford’s Visteon?

  • avatar
    thelaine

    Well, this is timely.

    Reports that the auto bailouts will cost taxpayers $25 billion more than previously projected have sparked the predictable political squabbles that attend an election year. Liberals claim the cost to taxpayers was worth the price of saving American car companies, while conservatives grouse about what they see as government wasting more taxpayer money.

    The reality, however, is uglier than either side realizes. Those behind the wheel of the automobile bailout were not folks who build cars but cronies who successfully leveraged their highly placed connections. Indeed, lift the hood, and what you find is that the auto bailout was a classic tale of cronyism, in which the well-connected sped away with big bucks.

    As they say, read the whole thing:

    http://m.washingtontimes.com/news/2012/nov/2/auto-bailouts-bleeding-more-taxpayer-cash/

  • avatar
    thelaine

    Your sarcasm should be directed at the shocking revelation that the wealthy and well-connected got the money and everyone else got the bill.

    • 0 avatar
      sunridge place

      see above..if my link cut off…google this:

      chicago fed detroit back from the brink

      click on the first result…look for the link to ‘download the entire publication’ if you want to read another point of view.

      Not saying I agree with everything in it…but you tend to quote stuff from points of view that are a bit biased.

      • 0 avatar
        Landcrusher

        And the Fed isn’t biased? Have you ever met anyone appointed to a Fed? They are very much the definition of establishment. Even the Dallas fed is over run with ivy leaguers.

        Forget bias, it’s everywhere. It’s fine to be skeptical, but throwing out everything just because its from MSNBC or Hannity or O’Reilly isn’t productive. Both report a lot of facts daily. Both do a lot of punditry and assuming. It’s rather rare that they report facts in error. If you want to disagree, it’s better to be specific. I learn things from the lefty’s all the time.

  • avatar
    thelaine

    I have assumed for the purpose of argument that the bailout was needed. The article supports that point of view and argues that it was successful. Does that put the terms of the bailout beyond debate? The bailout of union pensions and benefits was not necessary for the bailout. Not one commentator has shown why it was. It was a political payoff. Now we see, in an article you refuse to read so you will never know, that the deal was full of other corrupt deals to the wealthy and well-connected. Are the rotten and money-wasting aspects of the bailout beyond examination and criticism? Why doesn’t it matter that massive amounts of money were given away for no reason other than corruption?

    • 0 avatar
      sunridge place

      Please…estimate the cost to the US if nothing would have been done and the entire cost of immediate job loss across GM and Chrysler and their suppliers is factored in….and long term pension loss even with reduced payout.

      What is that dollar amount?

      Oh..by the way, if you don’t reply within 20 minutes I’ll call you out as not wanting to answer the question and thus proving my point.

      • 0 avatar
        sunridge place

        @Landcrusher

        ‘The Fed isn’t biased?’

        My point exactly on the Washington Times, Heritage Foundation etc. links before now.

        Where does one find a truly balanced take on anything these days?

        I give up.

        thelaine thinks he’s found the ultimate source of truth…ok for him i guess

      • 0 avatar
        28-Cars-Later

        Both at once would have been a double whammy and probably not sustainable, but I think we could have lost Chrysler/Dodge/Jeep for maybe $10 billion tops hit to GDP. The carcass would have been carved up, Jeep would have lived on under new owners, and some of its workers would have found work under Jeeps new owners and possibly under whomever bought their piece of the remains. GM would have been much bigger, say $75 billion if were to have completely gone away.

        I think though if both had collapsed at the same time, someone would have had to step in (state gov’t/fed gov’t?) and merge the best parts of both into one brand new company, with all debts and contracts cancelled.

        Tough call for any administration, its a bit of damned if you do and damned if you don’t. What’s done is done so now we only have to look forward to when it all comes undone again long after the people who designed the bailout are out of the public eye.

      • 0 avatar
        Landcrusher

        You read skeptically. Most news is biased to the left because reporters tend to be liberals and humans and the journalistic ethics are generally applied in a way that favors the left. Most conservative sources self identify. If someone were truly objective, the rest of the press would call them conservatives and be extra nasty about it.

        As for how much it would cost the US to let GM go, no one can say in the short term, but in the long term there would be great gain. At least if you are a free market types that’s what you believe.

      • 0 avatar
        28-Cars-Later

        “Most news is biased to the left because reporters tend to be liberals and humans and the journalistic ethics are generally applied in a way that favors the left.”

        Societies who fail to heed history are doomed to repeat it. Goebbels and NSDAP showed us when you have complete control of all media outlets (as he did after 1941) you can convince your subjects of virtually anything, not matter how far reaching or depraved. The communists took note of this and wisely began to indoctrinate in the public school and collegiate level, it may have taken decades, but now many of Khrushchev’s dreams are coming true in the United States. Now virtually all public media in the United States has a leftist slant.

        I think its important for a society to have an objective media, one who does prod or question things, and offers leftist ideas alongside rightest or centrist ones, allowing the reader to draw his own conclusions. But really nothing could be further from the truth from MSM in this nation today (I also believe this fueled the rise of the blog-o-sphere). Society went wrong when it failed to vet its journalists with any sense, morals, or integrity to go along with political ideas, whatever they may be.

  • avatar
    probert

    Romney’s “plan” would have resulted in the dissilution of the auto industry. This is how he has made is extra millions – buy a company, “loan” it millions and take a hefty cut, when the company goes belly up due to the onerous loan conditions get the remaining scraps. Kind of of like Goodfellas without actually shooting someone in the head.

    One of his Harvard classmates noted that he had millions to start out with – was smart and connected adn this was how he chose to squander those gifts. The king of pain.

    It turns out he made a pile of sheckles from the GM bailout so he should have the decency to shut up.

    His great “business’ bailout of the Olympics was funded by $1.5 billion ($1,500,000,000) of taxpayer funds.

    Sorry to offend the easily offended but he really is a POS.

  • avatar
    vanpressburg

    Ed Niedermeyer is telling the truth.
    Great article.

  • avatar
    Mr Nosy

    Mr.Romney bowed out of the 2008 campaign for Presidential orifice in February of that same year. We could also knit a sweater from the psychic belly button lint generated from a comparison between the box office grosses of “Back To The Future” had it starred Eric Stoltz,as opposed to Michael J. Fox. As for spin,whose online screen presence/portfolio does this pic promote? Is this disarming finger point shot a reference to early D.C. hardcore’s straightedge punk scene? If so,they’re not really car guys.Personally, I’m always suspicious of shaved heads whenever the military,or male pattern baldness, isn’t involved.

  • avatar
    vaujot

    By the way, has anyone even read Romney’s article? Here it is: http://www.nytimes.com/2008/11/19/opinion/19romney.html
    I must say, there’s a lot of stuff in there that I find very agreeable. Such as: “Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years.”
    And some statements where I wonder if they are part of his current election platform. Such as:
    “I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration.”

  • avatar
    icemilkcoffee

    Ed’s point was that, in a Romney style bankruptcy, the creditors, stockholders and bondholders could have gotten a better deal at teh expense of the workers. That is true. But you see, in Q1 2009, Mr Obama was staring at an abyss of job losses. Yes, Mr Obama looked out for the workers at the expense of the shareholders, bondholders, banks, etc. That was a judgment call. You would have to be a blind ideologue, to think that, at that moment in time, preserving jobs and supporting the most vulnerable sector of society, at the expense of the more well off sectors, was the wrong call.

    • 0 avatar
      CJinSD

      So the hundreds of homeless that I see every day are actually UAW members that were living the middle class dream with no education, substance abuse problems, bad work habits, and a sense of entitlement until the evil hand of freedom broke the backs of the capitalists incompetent enough to employ them? Most vulnerable sector? Middle class? What ever. The barriers to commerce created by the unions in this country have cost millions of manufacturing jobs to sustain an entrenched and corrupt bureaucracy.

  • avatar
    Robert Fahey

    The word “alumni” is plural. Ed is an “alumnus.”

  • avatar
    George B

    The point of the Mitt Romney op ed was that General Motors and Chrysler needed restructuring as opposed to just giving them loans. The misunderstanding is people hear “bankrupt” and they think “going out of business”. Instead, Chapter 11 allows some protection from creditors while the company is restructured to be successful in the future.

    General Motors did go bankrupt under Chapter 11, but the terms of the bankruptcy didn’t go through the normal court process. I think it’s fair to say that the “pre-packaged bankruptcy” terms were more generous to the UAW than what would have been hashed out in court. I think it’s also fair to say that the restructuring of General Motors fell short of what’s necessary for it to be fully competitive in the automotive marketplace. There is at least the appearance that politics played a major role in the restructuring deal. General Motors got restructured enough to survive past November 6, 2012 and the UAW kept it’s role in handling employee and retiree benefits.

  • avatar
    vanpressburg

    Mitt Romney:
    “Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th.This will mean a new direction for the U.A.W…. ”
    Mitt Romney:
    “It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration.”

    Mitt Romney understands business!!!

  • avatar
    50merc

    Thanks, George B and fellows, for voices of reason. Final thoughts: the 2009 federal deficit (i.e., borrowing) was $1.2 trillion. Treasury-backed bonds for GM would have found buyers, and GM’s doors would have remained open. Sure, non-viable units would have been eliminated–but that’s what happened anyway. If a chapter 11 would have thrown pension obligations to the PBGC, so what? That’s the policy for everybody else. I can’t feel sorry for a retiree who’d get $54,000 a year. If they made a lot more than that while working, they should have socked more away. As for the PBGC’s financial problems, better to deal with that openly and directly.
    Oh, and I favor going after the auditors, credit raters and bond houses, who all helped cover up GM’s scam, to recover some money for the taxpayers.

  • avatar
    Sinistermisterman

    I can’t wait until this bloody election will be over. I am sick and tired of wall to wall, 24/7 coverage of Obama vs Romney, the speeches, the half truths, the outright lies and the associated sniping and bad feeling that seems to have dominated this campaign. Besides, I am sick of all my American chums being at each others throats for the past few months. It seems what passes for ‘civil’ discourse has taken a massive nose dive into the realms of trolldom lately. It’s a bit depressing.
    Calm down folks, it’s just politics.


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