Most auto industry observers have lauded President Obama’s decision to defenestrate GM CEO Rick Wagoner and his Board of Bystanders. Their logic is as simple as one, two, three. One: U.S. taxpayers have “loaned” The General billions of dollars. Two: GM’s management failed to provide a viable viability plan to return the money. Three: the presidential putsch protects America’s “investment” in General Motors. Yes, well, protect THIS. When GM files for bankruptcy 59 days hence, $17.4 to $19.5 billion worth of taxpayer money will disappear down a rathole, never to return. That’s a conservative estimate of the total amount of federal “loans” and grants and God-knows-what that will be wiped out the moment the judge signs GM’s C11 papers. Oh, and after we kiss that cash goodbye, U.S. taxpayers will provide the cratered car maker with debtor-in-possession financing. In other words, more money. And who’s to say that money will ever be repaid? What’s the end game? Is there one?
President Obama justified his intervention in the American automobile industry with a vision of a revitalized General Motors. (Chrysler not so much.) With Uncle Sam’s help, GM will one day rise again. It will produce the clean-running, high mileage vehicles of the future, built right here in the U.S. by yada yada yada. Seriously? Does anyone seriously believe that a post-Chapter 11 General Motors will build and sell products that will be the envy of the world?
Post-C11, GM will trim down to two brands: Chevrolet and Cadillac. Costs will be cut to the bone. The United Auto Workers’ power will be denuded. Legacy issues? Banished. Bloated dealer network? Decimated. GM may even emerge from C11 with a Mulally-like leader and a fiercely independent and intelligent Board of Directors; ready, willing and able to reinvent GM’s poisonous corporate culture. And then . . . GM will face a leaner, hungrier, larger Honda, Nissan, Toyota, Hyundai, VW and Ford.
Good luck with that.
Once upon a time, GM could have entered bankruptcy, cleaned its own clock and survived. The talent locked-up inside the artist formerly known as the world’s largest automaker could have been refocused, redeployed and redirected. But CEO Rick Wagoner couldn’t see the diem, never mind carpe it. His delay and denial made GM’s recovery both more expensive and less likely.
Amongst other Shiva-like maneuvers, Wagoner created four sales “channels” for GM’s eight stricken car brands, trading internecine warfare for outright paralysis. As resources diminished, the key question—who makes what for whom when, where, why and at what price point—became a Gordian knot. “Why” became “why not” became “whatever.” A Cadillac sports wagon? You betcha. GM’s last next big thing, the pedestal-dwelling plug-in hybrid Chevrolet Volt, is the poster boy for the company’s headless chickenism.
And now, nothing. GM Car Czar Bob Lutz has retreated into the shadows, counting the days until he collects his bankruptcy-proof pension, watching as the company’s creative process (such as it is) slips into chaos. Meanwhile, GM’s Best and Brightest have left the building. The Presidential Task Force on Automobiles (PTFOA) rightly ripped Red Ink Rick’s ridiculous rabble a new REDACTED, but their “restructuring fact sheet” makes one wonder about their ability steer a course into the future. What’s the plan, Stan?
“The new GM will have a significant focus on developing high fuel-efficiency cars that have broad consumer appeal because they are cost-effective, have good performance and are reliable, durable and safe.” PC it may be, but that hardly sounds like an ideal recipe for world-class Cadillacs. Which leaves Chevrolet. Trying to play catch-up with battle-hardened, technologically adept, customer retaining competition.
Again, good luck with that.
Fifty-nine days from today, GM will file for C11. Chevy and Cadillac will eventually emerge from the rubble. The chosen ones will survive until they come off the federal teat. They may even survive after that. But they will be damaged brands—welfare queens tainted by their association with the federal government. Even if Chevrolet and Cadillac create world-beating products with industry-leading customer service, they will have the stench of corruption. Their logos will be a malodorous reminder that they achieved their success off the backs of the American taxpayer, rather than honest labor.
OK, maybe that’s a bit much. Americans love a comeback kid. And what late 1940s industry expert could have predicted that his fellow countrymen would elevate Japanese brands to the top of the family and luxury car sales charts? But do we really have to pay twice for GM’s resurrection?
If General Motors had filed for Chapter 11 when they coulda shoulda, no tax money would have been harmed in the making of this [entirely theoretical] renaissance. As it currently stands, there is no end point. Sure, Chrysler repaid its loans way back when and . . . oh dear. Despite all that government help they’re in a bit of mess now aren’t they? You know, in a DOA sort of way. So maybe, just maybe, government assistance is a form of assisted suicide. Perish the thought.
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I think it’s great that Obama is doing what a normal CEO of a company cannot intentionally do… which is to accelerate an extreme level of restructuring
You do realize that Wagoner is not supposed intentionally force a publicity traded company into bankruptcy. It is his responsibility to keep GM out of bankruptcy – and Fritz, as the new CEO, is technically supposed to do the same thing. This prevents a CEO from increasing the firm’s leverage in order to overpay business “partners” and to pay bonuses. And then plunge into an intentional bankruptcy because the business just isn’t viable as it was operated.
Of course, the situation changes if the firm defaults in spite of the best efforts of its CEO or its creditors force the issue. The banks (and other entities that are owed money by the automakers) are going to be the ones that should use bankruptcy court (or Obama’s Court) to force a reorganization.
I guess there is one example where in 2001 the CEO of USG (Foote) used bankruptcy as a means to protect itself from massive asbestos-related lawsuits. USG had been combating these suits even though other firms in that industry were dropping out like flies due to increasing litigation. Prior to the filing USG was doing so well that the Enlightened One, Warren Buffet, bought big-time into USG because he believed in the company.
Of course the year following their 2001 bankruptcy Foote received a pretty hefty retention bonus for his efforts.
donut, I disagree in part. It was Wagoners job to keep GM out of bankruptcy, true. But there was a point past which he was just pissing away resources in a futile struggle to stay afloat. At that point his job was to man up and do what was best for the long term health of the company. That’s why we pay em the big bucks (in theory) vision and balls. Not shortsighted cowardice.
You asked what the endgame is. Well, let me tell you- it is global socialism.
That’s it. Take a look for yourself what the sentiments are in England:
http://www.youtube.com/watch?v=94lW6Y4tBXs
The destruction we are witnessing is deliberate.
What does that mean for GM? Well, Buickman has stated many times the destruction of GM is/was deliberate….so, what becomes of GM is totally irrelevant.
What is relevant is the amount of debt being heaped upon the working folks of this nation- the debt is not a tragic consequence…it is THE main objective!! Job loss is the main objective. The destruction of salaries…all part of the main objective.
Wake up.
toxicroach :
… That’s why we pay em the big bucks (in theory) vision and balls. Not shortsighted cowardice.
I think this taxpayer funded bailout is causing me to misinterpret the term “we” in your quote.
Prior to this bailout there were 2 major sources of GM continuing to trek along its merry way while meeting its payments due to bondholders and other long term debt. The first was the fact that dealers kept on buying cars to sell to end consumers. The second was GM funding itself through additional financing (equity and debt). While yes, the money you deposit into a 401K technically provides a bank with the ability to purchase GM stock or to loan GM money, I don’t think you’re really paying GM anything.
It is the CEO’s job to try his best to stave off bankruptcy. The banks and other lenders kept on feeding the issue – and it manifest itself in what you see today. If GM had a workable cash flow where it wasn’t about to fail its obligation to pay its interest payments, then GM cannot snap its fingers and just decide to go into bankruptcy.
The Taxpayer Bailout prevented what would normally be witnessed as a bankruptcy. But the bailout is creating a domino effect of increasing government intervention where now some federal task force appointed by the Executive Branch is making business decisions.
I liked the old way of using bankruptcy courts to settle things out – but it’s still great to see that the massive restructuring may still occur.
So at this moment “we” as taxpayers are paying Fritz to do whatever it takes where we get our money back. A CEO’s obligation in bankruptcy is to get the firm to re-emerge (as Foote did at USG). If we consider that GM is already bankrupt, then yes – his obligations are no longer aligned to equity holders. But Rick never had the option to steer GM towards in bankruptcy court even as recently as the middle of 2008. Even if the RF’s of the world thought a GM bankruptcy was inevitable, there were still people who thought otherwise and owned GM equity shares. Rick represented the interests of those people – not to RF.
holydonut :
GM was technically bankrupt long before now. At the moment when they had no realistic chance of paying off their debt, the CEO should have filed for C11. You don’t have to enter C11 with a zero bank balance. In fact, it’s the worst possible scenario.
And let’s refocus here: “we” the people are never going to see that initial $20b again, no matter what Fritz or Obama or anyone else does. It was pissed away for political pandering.
As the editorial says, the real question is whether or not we’ll ever see the NEXT $20b again. (And the rest.) I doubt it. And I wonder how in the world this “we” ever got to be me. Actually I know. And it disgusts me.
I don’t mean to upset anyone, but if you knew the REAL figures …you’d probably be hunched over the toilet…face-first:
http://www.youtube.com/watch?v=tfSopTQMtsE
Billions is nothing…not even a drop in the bucket.
RF:
GM was technically bankrupt long before now…
What are your thoughts on when Rick should have pulled the trigger on the filing? 1975? 1984? 2001? 2003? 2005? 2007? 59 days from now?
I agree that their business was fundamentally flawed pretty much since the 1970s, but I don’t think Rick could have taken them into C11 until 2008. Unfortunately this coincided with a time that enough people (it really only takes 1 if he’s the president) felt that Detroit going bankrupt would be catastrophic.
Atop the RenCen, they knew that the federal buffet was available, they opted to keep GM out of C11… we all love buffets right?
Well, now that we are seeing the start of GM’s bankruptcy (what TTAC has been saying has been nessessary for years now) it seems a bit churlish to complain about “what happens after.” GM will face fierce competition when it emerges from C11, but, hell, that’s what we at TTAC wanted, wasn’t it?
Neb
Yeah, when I originally read this article I thought RF was implying that Rick should have taken GM into C11 back in 2005 or whenever it was that RF started vocalizing C11 as the best solution.
If General Motors had filed for Chapter 11 when they coulda shoulda…
Now I’m thinking that RF just meant that GM should have gone into bankruptcy without taking your taxpayer funded bailout dollars… so the timing of the C11 is wrong, even though it is what he wanted from the beginning.
Reminds me of that one XFiles episode of the genie that gives you what you want – but in the worst possible way.
I don’t think it will be 59 days. Three, maybe four days at most. Saturday or Sunday the announcement will be made. Maybe Friday night when the markets close.
RF,
My man, you are a mystery. For YEARS you’ve been begging for this moment to come…and now that its here….and you’re STILL critical and angry? Okay, I get the taxpayer money part…we’re altogehter there. But if we had normal credit and private equity markets, the investment in “the new” GM (assuming this split company approach is put in play like the Leahman Brothers deal which took all of ten days to do)would be very possible. But the credit markets are busted still…so it needs DIP financing from you and me. BUT, think about what we get here:
Caddy, Chevy and BPG – with the right dealers only — in the new company…everything else heads to court to be forgotten.
A clean balance sheet. CLEAN.
A wage rate with the UAW that is completely competitive, with a manufacturing footprint that is sized for volume sold.
A viable way to payback the DIP because the new company is working with a CLEAN balance sheet.
A company with real worth that can pledge equity that has real value…the bondholders have a reason to move now.
The “new” Opel, GMDAT, SAIC and other global assets pleged to the new company to make it powerful.
And a reason for customers to consider the cars from the new company because they’ve seen REAL change..this is the most public business deal ever.
Robert, you should be beside yourself with glee here. You almost sound as resistant to change as GM management. Take a breath, enjoy this moment…you called it…this could be a great ending.
Yesterday General Motors fired the CEO, Rick Wagoner. He is being replaced with longtime GM exec Fritz Henderson. Yesterday President Barack Obama promised the American consumer that the US government (you) would provide the warranty for all GM cars. He also said that GM would be reorganized (chapter 11 bankruptcy) in 60 days. What was the new chairman’s first order of business? He committed fund from your checking account for the next five years. The details he promised you would pay:
5 Year / 100,000 mile warranty
Payment protection for unemployed buyers for up to nine $500 payments, or $4,500
Equity protection on your vehicle.
When President Obama said the American people would stand behind the warranties of GM, he clearly did not assume that the warranties would be extended the NEXT DAY! This cost combined with the unemployment payment adjustment could represent possibly $20,000 per vehicle. It is the “Buy Now / Let the Taxpayer Pay Later” plan. The government oversight committee should have stopped the press conference in mid stream today. If the US government was complacent in the deal, they are knowingly committing taxpayer funds in later years to fund sales now. Congress should step in and stop the madness. Where are taxpayer groups?
Is it arrogant to pledge things you do not have? If your are being forced into bankruptcy because you operated on credit all of your career, how prudent is it to pledge the good will of the American people?
Americans want cars of exceptional value that are well made, sold at a fair price and retain their value. They will buy them all day in great numbers. The US has tried to help GM survive. What GM did this morning was similar to a homeless person receiving a gift from a stranger he could never pay back, and leveraging it into a loan that the donor will have to pay for the for the next 5 years. Incredible!
The Car Geek at CarGeek.com has helped car buyers find pricing and financing on new cars since 2003.
Sometimes good things happen for bad reasons. Sometimes bad things happen for good reasons.
GM is long overdue for a massive restructuring. Given the situation as it existed on March 25th, 2009 it seems that team Obama is making a rational set of decisions. Of course many will disagree out of ideological passion or simply a different view of likely outcomes. Personally I think they made a reasonable set of decisions given the facts at hand.
The other options:
1) Let is all burn.
2) Keep drip, drip, dripping money into GM and Chrysler without making any fundamental changes.
Forget what coulda, shoulda happened months or years ago. The only question which really matters is: What happens next?
I heard something interesting on the radio today – that Hummer is is the #1-selling brand in Iraq. Uh huh…seems the emerging middle class in post-war Iraq likes to load up the H3s with bling and show off their new-found wealth. Nothing short of totally-loaded will do. And this in a country where their gasoline prices are through the roof. Seems like GM could find a buyer for Hummer if that’s true.
To me, a more interesting question is what happens to the other brands. Chevy and Caddy survive – that’s simple. But what of Buick, Pontiac, GMC, and the rest? I wouldn’t miss any of them, really, but it seems to me as if the took Chevy back to its entry-level roots and kept Caddy upscale, that might make room for some solid mid-priced rides from Buick. I’m just sayin’…
The REALLY scary part to me is when the ObamaNation starts dictating which models to kill and which to save. Of the 20 vehicles they actually make a profit on, Obama wants them to kill 11 of ‘em. Just because you want everybody to be driving Prius clones doesn’t mean you can force the public to buy them. I’m afraid GM is well on it’s way to becoming America’s answer to the the USSR’s GAZ.
Workers of the world…untie.
RF ‘Does anyone seriously believe that a post-Chapter 11 General Motors will build and sell products that will be the envy of the world?’
I believe it can happen. I believe there are a lot of Americans and consumers worldwide who would absolutely love to see it as well. There would be enough consumers to make a slimmed and efficient Chevy/Cadillac profitable.
prthug ‘And a reason for customers to consider the cars from the new company because they’ve seen REAL change..this is the most public business deal ever.’
Agreed.
Chevy/Cadillac, Honda/Acura, Nissan/Infiniti. I could see it.
Okay prthug,
Maybe you have absolute faith in the ability of the government to decide which dealerships are worth keeping and which should go away. Maybe you are confident that the government willbe able to decide which cars can be sold at a profit and which can’t. Maybe you think that the government can decide which engineers and designers will provide all of this automotive goodness. As for me, I have no confidence that the government will be able to do any of these things. dealerships will be kept open in the same manner as national parks and military bases, based ont he power of their local representatives. Car models will be absed on what the PACs want and which ones will help are esteemed representatives retain their seats of power. As far as engineering, I work with public sector engineers, and while there are exceptions, as a general rule the weak are protected and the strong are beaten down or leave for the private sector. And, if you don’t think that the feds will have the final say in all such decisions, did you miss the part where they just fired the CEO?
I wonder if any of this is going to cause businesses to reconsider how much they rely on “market research” and “consumer testing”.
It was market research that convinced GM executives that Chapter 11 would hurt them more than taking government loans.
One would think that after coming out with cars that have been focus tested to a fare-thee-well only to flop in the marketplace that they would come to the conclusion that their market research is not reliable.
FWIW, I applied for a few jobs with the federal government. They get great benefits and have better job security than just about anyone. If you make it through the probationary period it’s almost impossible to get fired unless you really piss off a high level supervisor.
Why fight it? It’s easier to go over to the dark side.
Imagine what would US look like if I was a president:) in say, 20 years.
I would drastically diversify taxes. Casinos of Las vegas would pay unprecedently high taxes, while manufacturing companies, if registered as US-based companies, would pay a tiny tax. I would reorganize the whole education system and create the 21 st century as the great century of Art and Science. no bank bailouts, if a manufacturing company had ever been bailed out, the funds would only go into R&D and direct product overhaul. Nothing else. I would tax all companies according to the field of complexity they are dealing with. if a company is running sports games they pay high taxes, if they manufacture LCDs they pay small taxes. I would wipe out all the sports from TV and and annihilate all those multimillion sports contracts. I would bring the sports in your families, and homes, and you would enjoy sports for the sake of its beauty , not profitability. You would have free facilities and possibilities to do what best fits you. imagine the money that this country would save, if healthy people didn`t have to buy insurance and the government didn`t have to subsidize medicare companies . Billions saved. Imagine if we reorganized the education system in a way that we wouldn`t need to import all the gadgets . Imagine if we closed those 700 bases, and poured the money into creating jobs and products.There wouldn`t be an army or 1.4 million people , there would be an army of scientists and engineers who would build the next telescopes, mission to mars aircraft and new engines.I would build monuments for those that discover new frontiers in science and invent new technologies , you wouldn`t bother to memorize names of football teams ,or lottery numbers, because you would be challenged enough to build your own spacecraft in your own basement. The whole education system for technical sciences and engineering would be for free. We would create a new net where each lab in Universities of US would be connected to R&D centers of manufacturing companies.Art is a beautiful side effect of a clever mind. If science was really delveloped, the art would follow in footsteps. for educated people would bother less about cheap food, they would more likely want to be involved in a process of creation. Of creation that could be immortalized.A `we can` would have a new meaning. :)
Jurisb…
A funny place to extol the virtues of a Resource Based Economy….but hey, at the end of the day I have to agree that the pursuit of profit and the debt based economy is the main reason the Human race is not progressing as fast and as compassionately and as rationally as it should be.
http://www.thevenusproject.com perhaps ??!!
Strangely, the pro bailout don’t see Chrysler’s situation now as a problem, instead they look at all the jobs that were saved since they took the loans.
I guess I have a bad attitude because I think if they had gone under back then, Ford and GM might not be in trouble today. If we were to save both GM and Chrysler, I would be willing to bet that the next big downturn would have Ford going under as well.
It is the “Buy Now / Let the Taxpayer Pay Later” plan. The government oversight committee should have stopped the press conference in mid stream today. If the US government was complacent in the deal, they are knowingly committing taxpayer funds in later years to fund sales now.
You nailed it.
FWIW, I applied for a few jobs with the federal government. They get great benefits and have better job security than just about anyone. If you make it through the probationary period it’s almost impossible to get fired unless you really piss off a high level supervisor.
Why fight it? It’s easier to go over to the dark side
You must fight it because it is the dark side.
If the dark side (Collectivism) wins ALL the “benefits” and the “security” vanish.
I doubt most consumers will care if GM survived because of bailouts. I don’t think the badges will carry any odor. The key, post C-11, will be making good products. That was key prior to C-11 and GM could only manage it here and there, not consistantly. If they make good stuff, people will buy it. Only a few idealists will avoid GM because it was bailed out.
As for competing against Honda, Hyundai, etc., those companies were once very small, but they built good stuff, gave good value for money, and prospered.
I’m not implying that GM will, as a matter of course, build good stuff. It’s going to take more than reducing to two brands to accomplish what needs to be done.
Recalibrating the discussion, re the “cars that GM should be building,” while ObamaNation wants us all to drive a Prius.
It appears this has to be stated again:
The US has 4% of the world’s available oil reserves, and consumes 20% of daily global production, of which over half goes to transportation.
The US auto industry has blithely gone on making irrelevant cars, as if the above was not a fact — while at the same time denigrating anyone who said that maybe, just maybe, it was worth thinking about.
And that’s why they’re going to hell now.
Imagine if those 700bn dollars US government allotted to building cars. For this money we could build 600 new car models. We could build the next generation cargo and passenger airplanes, new helicopters,we could revive the consumer electronics sector and build next generation reusable launch vehicles and prepare for Mars mission. Instead we give the money to Wallstreet nerds who haven`t built a single item in their boring lives….So sad.
It seems many are missing the point of this bailout and the banking rescues, set out pretty clearly in hearings for the first auto bailout.
Pch101 has said it previously; most recognise that these companies are going to crash land, but by puffing them up for a few more months, hopefully they land out to sea rather than on a heavily populated city. (Apologies to Pch101 if I have mangled that).
Sorry RF/TTAC but it was not the time then to crash that plane, maybe not quite yet either.
The shame is, for the size of the debt, no structural change has been achieved (or will be).
It’s all for show, not effect.
This whole thing is a giant distraction. I don’t believe any of the participants believe this footwork is going to achieve anything.
But who cares? They aren’t paying for it. And they can go to the industrial Midwest and say, “And when you were in trouble, who was there!? We were! We supported the American worker!” they can attempt to conjure up memories of a valiant fight to keep a dieing industry alive.
Why should anyone believe the UAW will be forced to make any changes to the structure of their agreements?
Obama will protect the UAW to the bitter end.
And then he’ll force them on the transplants.
I’m still waiting for Ron Pullmyfinger to resign. Good thing I’m not holding my breath.
I don’t believe that Obama is going to force GM into CH11, nor do I believe that Fritz will take them there.
First, “When GM files for bankruptcy 59 days hence, $17.4 to $19.5 billion worth of taxpayer money will disappear down a rathole, never to return.”
Second, “Post-C11, GM will trim down to two brands: Chevrolet and Cadillac. Costs will be cut to the bone. The United Auto Workers’ power will be denuded. Legacy issues? Banished. Bloated dealer network? Decimated.”
If Obama were serious about putting them into CH11, why is he giving them 60 days and more billions down the rat hole? The terms of the agreement GM was working under up until this week were, ‘come up with a viability plan or else’. Now that that plan has rinses and repeated, why would anyone expect a different result? Insanity defined.
The fact is that Card Check Obama isn’t going to decimate the UAW, not anytime soon anyway. His public works projects aren’t going to be able to absorb all those job losses 60 days from now. His PTFOA wont have figured out how to screw all the secured debt holders by then either. The guaranteed warrantee test is going to show that sales continue to decline anyway, and the $5B supplier support will disappear faster than coke up Ashley Biden’s nose.
CH11 was punted because the Obama team is afraid of the consequences. GM will continue to get bailouts. SUV’s and sports cars will certainly be banished and everything will become much more fuel efficient, but it will not get smaller, it will not produce less vehicles, and brands will not die.
most recognise that these companies are going to crash land, but by puffing them up for a few more months, hopefully they land out to sea rather than on a heavily populated city.
Thanks, that’s a pretty accurate view of my position. However, I do think that the administration sees a possibility that GM might be reparable, whereas the Obama team has already effectively written off Chrysler.
That’s a very good strategy, in my view. In the scheme of things, an immediate failure of GM would be painful to the economic system, whereas Chrysler could vanish with little impact.
Plus, a GM with a clean balance sheet and new upper management may have a chance to work. Among the Detroit players, it has the strongest product portfolio of the bunch; if it could shed the many losers that weigh it down and then create some branding power with the few winners that remain, then there might be a shot of recovery.
I’m impressed that the administration did a far better job of identifying what ails these companies in far less time than did the private sector in many years of bumbling and misdiagnosing the problem. The task force summaries are far better than practically every stock analyst’s report that I’ve read about the industry, and made observations that were mostly missed by the mainstream business press. The media and Wall Street were oblivious to many of Detroit’s structural problems, even though they are paid to know better.
The feds clearly understand that these companies’ greatest problems come from unrealistic sales projections, a lack of pricing power and overwhelming debt, more so than their operating costs or labor.
It may hurt the ideological conservatives, but the automaker situation and the task force response illustrate that the private sector is far from perfect and that there are occasions when government really does do a better job. Most ideological conservatives have bought hook, line and sinker into this union blamefest, when anyone who can work a calculator who bothers reviewing the numbers can see that labor costs are not even close to being the primary problem. Politics tend to get in the way of good financial analysis, even if they shouldn’t.
Isn’t a “resource-based” economy the same thing as “From each according to his ability, to each according to his need”?
http://en.wikipedia.org/wiki/From_each_according_to_his_ability,_to_each_according_to_his_need
Is this what “the venus project” is striving for?…one of those futuristic utopias where everything is perfect and you no longer have to work for material comfort?
Pch101
Diagnostics are easy. We’ve been doing it here for years.
Effective treatment is a WHOLE ‘nother matter.
Diagnostics are easy.
Apparently not. GM has been pushing this “everything-will-be-great-if-we-can-just-cut-these-costs-and-fight-these-regulations” nonsense for years, and Wall Street sucked it in and regurgitated it like cheap booze during a drinking binge.
Read the stock analyst reports of old, and you see little assessment of the superior products of the competition, and almost no mention of the huge pricing disparity or why it exists. With few exceptions, they just missed it completely and misdiagnosed what they did see. They were like Wagoner’s parrots, presumably because the message being shopped by GM suited their political whims and they weren’t eager to challenge their own ideological assumptions. Those blinders have since cost a lot of people a lot of money.
If the private sector was on the ball, then GM would have lost its ability to borrow long before the credit crunch. Guys who are paid very well to assess risk completely blew it.
The feds face the same challenges that the private sector would — finding good leadership who can fix what the current board, Wagoner, et. al. hath wrought. I suspect that Henderson is an interim choice, who is just there as a placeholder because the need to dump Wagoner was that urgent. Hell, we may even have a shot at getting our money back (although I already wrote that off; we probably won’t, no matter what happens.)
I wouldn’t say a RBE is where everything is perfect and you don’t have to work, but probably better for most of us than what we currently have…and hey, most of us do extra work for no reward anyway!!
“A Resource-Based Economy is a system in which all goods and services are available without the use of money, credits, barter or any other system of debt or servitude. All resources become the common heritage of all of the inhabitants, not just a select few. The premise upon which this system is based is that the Earth is abundant with plentiful resource; our practice of rationing resources through monetary methods is irrelevant and counter productive to our survival.
Modern society has access to highly advanced technology and can make available food, clothing, housing and medical care; update our educational system; and develop a limitless supply of renewable, non-contaminating energy. By supplying an efficiently designed economy, everyone can enjoy a very high standard of living with all of the amenities of a high technological society.
A resource-based economy would utilize existing resources from the land and sea, physical equipment, industrial plants, etc. to enhance the lives of the total population. In an economy based on resources rather than money, we could easily produce all of the necessities of life and provide a high standard of living for all.”
And the stated goals of a RBE could be something like:
1. Conserving all the world’s resources as the common heritage of all of the Earth’s people.
2. Transcending all of the artificial boundaries that separate people.
3. Evolving from a monetary-based economy to a resource-based world economy.
4. Reclaiming and restoring the natural environment to the best of our ability.
5. Redesigning our cities, transportation systems, and agricultural and industrial plants so that they are energy efficient, clean, and conveniently serve the needs of all people.
6. Evolving towards a cybernated society that can gradually outgrow the need for all political local, national, and supra-national governments as a means of social management.
7. Sharing and applying all of the new technologies for the benefit of all nations.
8. Using clean, renewable energy sources such as wind, solar, geothermal, and tidal power, etc.
9. Ultimately utilizing the highest quality products for the benefit of all the world’s people.
10. Requiring environmental impact studies prior to construction of any mega-projects.
11. Encouraging the widest range of creativity and incentive toward constructive endeavor.
12. Assisting in stabilizing the world’s population through education and voluntary birth-control to conform to the carrying capacity of the earth.
13. Outgrowing nationalism, bigotry and prejudice through education.
14. Eliminating any type of elitism, technical or otherwise.
15. Arriving at methodologies by careful research rather than random opinions.
16. Enhancing communication in the new schools so that our language and education is relevant to the physical conditions of the world around us.
17. Providing not only the necessities of life but also offering challenges that stimulate the mind, emphasizing individuality rather than uniformity.
18. Finally, preparing people intellectually and emotionally for the possible changes that lie ahead.
Utopia….perhaps! But I for one would sign up if I knew the bankers and the elite were not the only ones getting a good deal from what the Earth has to offer…
Sounds like quite a leap if you ask me
Why not take a baby step and simply have the U.S. Government reclaim the ability to print and coin money (as opposed to the Federal Reserve…a private organization much along the lines of Federal Express)…as JFK attempted to do.
That would go a long way my friend :) As long as the thieves have the ability to print money and manipulate our economy the way they do, we will continue to see these so-called “contractions” if and whenever they choose to do so.
Ask yourself, “If Congress has the ability to print and coin money, then why does a Debt exist at all?”. Its an absurdity knowing we pay income tax to support this racket.
This whole Detroit bailout-as-cover-for-imposing- national-industrial-policy schtick is getting seriously old, seriously fast. Ol’ Tom Paine said it best: “These are the times that try men’s souls.”
By supplying an efficiently designed economy, everyone can enjoy a very high standard of living with all of the amenities of a high technological society.
…Utopia….perhaps! But I for one would sign up if I knew the bankers and the elite were not the only ones getting a good deal from what the Earth has to offer…
Sorry – the last few countries on the planet to have attempted to build that model have closed their borders and aren’t letting anyone in – or out.
Now back to our more mundane subject
world peaceGM bankruptcy.One thing that I haven’t heard about recently but which was often bruited about as a reason to keep GM out of bankruptcy is the impact on the Pension Benefit Guarantee Corporation – http://www.pbgc.gov/
who are tasked with insuring payment of pension benefits (albeit at a reduced level) for the employees of bankrupt companies.
Dumping hundreds of thousands of large pensions on the PBGC is really going to strain the system… and the politicians know that. It may be better to keep dumping cash into GM and keep it “alive” for 4 to 8 years than face the consequences.
sutski, your RBE utopia will never work, for the same reason that communism didn’t work. It tries to negate human nature, rather than work with it to get the best from the majority and dampen the worst of the majority at the same time.
All of this stuff has been espoused and tried many different ways, from religious communists such as the Amana in 19th century Iowa, to the Soviet Union, to current day Cuba and Venezuela.
Here in North Venezuela (once known as the USA), it will work even less satisfactorily than in the real Venezuela, because there is a small minority of us who actually can see through the Bullsh*t and know what the end result will be.
Not pretty. And I don’t just mean for GM.
Rastus, the whole money gig is a racket and has been in this country (the USA) since 1913, when the Congress of the United States usurped the clearly written law of the land, and handed control of the money supply to the “Federal Reserve” – which is neither Federal, nor does it have much (if any) of a “reserve”.
The fault of all of this lies with foolish power hungry greedy men who thought they could skim off the top forever, gradually eroding the value of money, gradually taxing the people via inflation, gradually gradually gradually gaining control over every aspect of life. Look at Al Gore’s foolishness about global warming; do you see the mega-rich saving the earth by living in an 850 square foot, modest home? Driving a Prius instead of being driven in bullet-proof dino-SUV’s? No? Wow, imagine that… hypocrosy!
The bottom line is that there ARE a few hundred people who act much like The Wizard Of Oz behind the curtain. They don’t want to be known as just men, you see…. and yes, I do believe they do think they can run the whole show. Their egos are that over-inflated. Look at B.O. – he is their poster-child.
God has other ideas. He always has! Wait and see…
My favorite of the three biggest lies is, “I’m from the government, and I’m here to help you.”
We expect government to take care of big things and leave small, ordinary things to us, At best it is marginally competent at big stuff, and downright lousy at small stuff. The U.S. Constitution doesn’t even talk about small stuff. Thomas Jefferson never envisioned an America where bureaucrats tell the people how much water a toilet can hold. Now well-upholstered civil servants micromanage that, and a toilet has to be flushed three times get rid of the crap!
It may hurt the ideological conservatives, but the automaker situation and the task force response illustrate that the private sector is far from perfect and that there are occasions when government really does do a better job.
Outside of national defense, name one thing that the government does “a better job”.
Education? We have an administration that is the product of our educational system. Obama can’t open his mouth without making a factual error – that’s because outside of politics he’s an ignoramus. Obama’s administration has argued before the Supreme Court that it has the right to ban books.
Food safety. The FDA is doing a fine job keeping melamine out of Chinese food imports and salmonella out of peanut butter, isn’t it.
If you want to see overpaid, entitled, lazy, and over benefited employees, you don’t need to go to Detroit or a UAW staffed plant, just go to Washington or any local office of a federal agency.
I just noticed that California’s plan to fix their budget puts the burden on the taxpayers and none of the public employees in California have to take reduced pensions or any kind of haircut.
Like I said, if I get offered a federal job I’m going to strongly consider taking it and once the probationary period is over I’m gonna sit on my fat ass and do nothing. Why should Barney Frank and Chris Dodd get all the gravy?
name one thing that the government does “a better job”.
I just did. Rattner handled in a few weeks what GM’s inept “Board of Bystanders” couldn’t handle in years. They also identified core issues that Wall Street analysts who are allegedly industry experts failed to identify.
You can’t discuss the utter mismanagement of Detroit while extolling the alleged accountability of business, and keep a straight face. These incompetents have proven themselves to be a joke that private industry failed to identify and fix.
The alternative is to just let GM die. You want the best of both worlds (from a Michigander’s perspective) — you want our money AND have zero accountability.
Sorry, but it shouldn’t work that way. The minute that you imperiled the American economy was the day that you lost that privilege. Get used to it, you’re reaping what you sowed, so enjoy the crop.
PCH,
I love it when the left blames the private sector for failing after loading them down with regulation and labor laws to the point of absurdity. I haven’t read those reports, but if they don’t point out the overall chilling effect of the present labor laws on performance, then they missed a big problem that will likely cause yet another failure in a few decades or less. Fainling to see that car manufacturing in the US fails with the UAW, but succeeds without, is disengenuous at best.
Still, let’s go with your belief that the PTFOA did a better job than the stock analysts. I will assume they did since the stock guys so badly blew it. A more important question for our futures is why did the stock guys get it so wrong? The New York financial industry is supposed to be providing value by directing capital it’s best use, but they haven’t been doing that well lately. What do we change to improve that? I know you aren’t really for having them replaced with more task forces.
I love it when the left blames the private sector for failing after loading them down with regulation and labor laws to the point of absurdity.
Funny how Toyota, Honda, etc. can build a perfectly good car in the US that people want and is in compliance with US law, with no issues. It’s only the excuse makers in Detroit who can’t cut it. Maybe it’s time to put the blame on the excuse makers, instead of the bogeyman government that gave them breaks and preferences (”voluntary” quotas, chicken taxes, a two-tier CAFE and the rest) when they bellyached to get them.
A more important question for our futures is why did the stock guys get it so wrong?
Because like Detroit, they fixated on costs and blaming the little guy, and forgot all about revenue, retail demand and management accountability. The blame-the-union-at-all-costs mentality certainly supported this; they followed their political whims instead of the money, took the easy way out, and stopped analyzing with the grand assault on labor, even though labor costs are a relatively small component of vehicle assembly.
Part of the problem is that analysts relate more to the management than to labor, so they apply a double standard that places less scrutiny where it belongs. They belong to the same club, and tend to commiserate with their fellow members, rather than critique them. Far too inbred a group to provide an effective assessment; it’s much easier to blame the high school graduates who do the drudgery than to look in the mirror and take responsibility.
Even if Chevrolet and Cadillac create world-beating products with industry-leading customer service, they will have the stench of corruption.
Disagree. Robert, this is something on which we’ve always disagreed. You’ve esentially argued that the brand is the be all end all of a car company, so who would want a post-Ch.11 Chevy?
I’ll argue just the opposite. The product is the be all end all of selling cars. History just doesn’t matter to most people. You pay for a product, and if you can pay the same amount for a better product from Chevy, who wouldn’t?
That’s what precipitated the demise of GM, Chrysler, and maybe Ford in the first place. Everyone wanted the home team to win, but the competition was just better.
Forget about taxpayer bailouts. BMW made airplanes that killed American soldiers, and we still buy their automobiles. In 5 years, who’s going to care about an ancient history bailout, except maybe for the die-hard purists like yourself?
Pch101: You want the best of both worlds (from a Michigander’s perspective) — you want our money AND have zero accountability.
This, to me, is just mind-boggling. I know that the two of us have disagreed on whether a bailout is necessary, but I completely agree that once a company takes taxpayer money, its loses a great deal of freedom of action. (Which is why it’s best not to ask for taxpayer money – note that no heads are rolling at Ford.)
It’s entirely appropriate for the Obama Administration to demand a change in management as a condition of moving forward, particularly when said management is the one that brought the company to its knees in the first place.
The comments – and vitriol – from GM fans on various automotive weblogs are simply amazing. I didn’t vote for Obama and find myself defending him on this one.
Do these people live in an alternative universe???
“OK, maybe that’s a bit much. Americans love a comeback kid.”
Yes that’s a bit much. There are a lot of fans of GM (the car company – not the exec clowns) here. Me, not so much. But even I want them to succeed whether it’s thru C11 or some other way. Yes it will be difficult. But why all the doom and gloom?
“Sure, Chrysler repaid its loans way back when and . . . oh dear. Despite all that government help they’re in a bit of mess now aren’t they?”
A mess not of their doing I will add. And don’t mention Bob Eaton, a former GM man. He was never at Chrysler long enough to feel like he was part of Chrysler. He was there just long enough to sell it out.
Pch101:
“Funny how Toyota, Honda, etc. can build a perfectly good car in the US that people want and is in compliance with US law, with no issues.”
Hmm… last I heard Toyota, Honda, etc. haven’t been doing too well. And even when they were you can put up with a lot of regulatory crap when you sell your cars for $3000 more than your competition because you don’t have lagacy costs to cover. Oh, and the Japanese have been on record opposing some of the same regulations that the domestics oppose. Maybe it has something to do with Sequoias, Armadas, Tundras and Titans.
last I heard Toyota, Honda, etc. haven’t been doing too well.
The transplants are obviously in far better shape. Let’s not forget that GM and Chrysler were both losing money, even when the economy was going gangbusters. Aside from the fact that they all make cars, Detroit has very little in common with the transplants.
Do these people live in an alternative universe???
It’s a bubble of their own creation. The fact that they believe that they deserve the bailouts isn’t so astounding when you remember that these same people have spent decades blaming everyone but themselves for their problems. Accountability doesn’t appear to be in their dictionary.