By on April 27, 2009

The New York Times reports (and GM CEO Fritz Henderson’s comments at this morning’s press conference confirm) that the US treasury has plans to “own” GM. If the current bondholder offer goes through, “the Treasury and the UAW would own up to 89 percent of the company’s outstanding shares, while bondholders would hold no more than 10 percent and current shareholders would hold 1 percent. The Treasury would hold more than half of G.M. on its own and therefore have control over the election of its board of directors and other matters requiring the approval of shareholders.” A reporter brought up the fact that bondholders’ $10 billion debt swap would buy them 10 percent of the new GM, while the unions would get 39 percent for their $10 billion haircut. Fritz declined to address this issue—probably because there’s not a damn thing he can do about it. Of course, the offer won’t go through. But the principle will be established. And then, according to The Wall Street Journal, consummated in federal bankruptcy court.

That’s when some $21 billion worth of unpaid US loans to the old, broken ass GM for a majority stake in the new, clean and tidy post-bankruptcy GM. The plan would also translate a large chunk of the automaker’s health care obligations to the United Auto Workers (UAW) into a UAW share in the new “good” GM. When asked by the FInancial Times (shame on the US press contingent) how he feels about a nationalized GM, Henderson deployed the distinction without a difference defense. “The US Treasury doesn’t want to run the company,” Fritz soothed, “they just want to make sure it’s well run.” And girls just wanna have fun. No babies, no lifetime dependents, right?

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80 Comments on “U.S Treasury to Nationalize GM: American Leyland Is Born!...”


  • avatar
    Stingray

    Well… as Jim Morrison said:

    This is the end… this is the end…

    To this kind of action, I’d had preferred a C7.

    How humiliating.

  • avatar
    ca36gtp

    /facepalm

    The government and union slackers are now going to run our domestic auto industry. Might as well just liquidate it instead.

    The next step is going to be tariffs on non-GM vehicles. That’s how government works when it gets on a power trip.

  • avatar
    mikey610

    So…does this mean that Gov. Granholm can officially STOP calling them ‘bridge loans which are going to be paid back”

  • avatar
    twitchykun

    I wonder if the new GM workers will spend all of their time around braziers, like their british counterparts.

  • avatar
    gossard267

    Out of curiosity, would it be possible to skip the charade of legitimate business, and just select a given percentage of the current GM payroll to receive guaranteed taxpayer dollars in perpetuity? With public approval of these welfare payments, sorry, bailouts, already at staggering lows, why bother with the costumes of viability and value?

  • avatar
    psarhjinian

    Now, to be fair, this kind of thing worked fairly well for Renault: they were nationalized, cleaned up, and released back into the market as a healthier company.

    British Leyland is an example of how not to nationalize (eg, don’t do it half-assed). A full, brutal and well-lead nationalization, intent producing a stable, sustainable entity is a good thing. The problem that Leyland faces, and that GM likely will, is death by committee: I don’t see the kind of testicular fortitude in the American government that existed in the French; the kind required to stand up to kind of petty, self-absorbed small-time special interests that would wreck such and endeavour.

    It’s funny, really. The French having the balls to do what the Americans and British cannot.

  • avatar
    bluecon

    Funny that the French economy has been a disaster for years.

    Unless you’re a sheople.

  • avatar
    guyincognito

    This is exactly what I thought was going to come of the bailouts.

    As psarhjinian said, I don’t think anyone from the treasury to the PTFOA to Obama has the guts to fix GM’s problems. I also don’t see them releasing GM back into the free market anytime soon, if ever. First, GM won’t be in a position to survive on its own for some time. Second, I think this administration sees nationalization as a good thing.

  • avatar
    Martin Schwoerer

    Funny Psar, I was thinking about Renault too this morning, and actually looked up the data to see at what point in time they were state-owned. It brought to my mind how VW is 20% state-owned. And how Kuwait has held shares of Daimler for decades. They could be saying: GM, welcome to the club. IMHO, it makes a fear of public ownership look neurotic.

  • avatar
    Pch101

    The percentages going to each party are irrelevant to the taxpayer, just so long as the government is the first to get repaid and we aren’t stuck with the costs of the pensions.

    At this point, everyone would be receiving equity that, if the status quo continues, will quickly be worth zero. In the big picture, worrying about percentages is a Titanic-deck chairs sort of debate. The bigger question is whether operations can be improved enough to at least get our money back.

  • avatar

    Yep, here’s hoping that Ford avoids this fate.

  • avatar
    basuraDelFuego

    Dumped money-losing brands–check.
    Dumped money-losing CEO–check.
    Dumped GM board of bystanders–check.
    Slashed bloated dealership network–check.

    All the above items have been called for repeatedly in this blog as the only way to save GM, and all of them occurred after the government began to take an active roll in GM’s affairs. So why again is it such a disaster to have gub’mint involved in GM’s affairs? At least the government is accountable to voters. Clearly GM leadership hasn’t been accountable to anyone for decades.

  • avatar

    Depends. Is the Obama administration going to have the final say? Will GM have some leeway?

  • avatar
    dgduris

    Nationalization is on the way! Read this article from the WSJ…

    http://online.wsj.com/article/SB124061268797954397.html

  • avatar
    basuraDelFuego

    Can’t help but notice GM’s stock is up this morning. Clearly the market isn’t too concerned about American Leyland.

  • avatar
    Rastus

    basuraDelFuego: “At least the government is accountable to voters.”

    Really? Is this why the “figures” show between 60-90% of Americans are AGAINST this?

    No, Gov’t is accountable to Gov’t…not the people. Stop deluding yourself. …or is this simply a case of “Father knows best”??

    When the taxpayers say NO- what part of NO do you fail to see?

  • avatar
    basuraDelFuego

    Rastus,
    We have a representative democracy, not a direct one where everyone takes a vote by poll and the decision is then made. If voters are unhappy about the decisions their government makes, they vote them out of power. See last two election cycles as an example.

  • avatar

    basuraDelFuego

    I know: it’s confusing.

    While the government is following our/my previous advice, timing. Is everything. It’s too late to save GM. To protect OTHER automobile workers and the American consumer, GM (and the UAW) needs to go away.

    By keeping GM and God help us Chrysler alive as taxpayer-funded zombie, the feds are interfering in the “normal” operation of the free market. There will be unintended consequences aplenty, such as political concerns interfering with plant closures.

    Also, on general principle, the government is lousy at providing goods and services. Voters’ and consumers’ interests are not necessarily the same thing.

  • avatar
    John Horner

    Considering what the sacred Private Enterprise System did with GM these past several decades, it is hard to imagine a government directed enterprise doing worse.

    Well run enterprises are well run. Badly run enterprises are badly run. The simple minded mental equations private=good, government=bad have gotten us into the fix we find ourselves in today. Good is good, bad is bad.

    Which is more screwed up today, the Medicare system or the patchwork of private health insurance?

  • avatar
    Rastus

    You will need to come up with a better example than the last election you mention.

    GW: Bailouts.

    >>>Election Time, vote GW out…thus vote out the bailout mentality.

    BO: Bailouts.

    Try again.

    John Horner: “Badly run enterprises are badly run.”

    John, I know this is a tough concept to deal with- but the IDEA behind “badly run enterprises” is that they will be allowed to DIE.

    Once they DIE, they are no longer “badly run enterprises”…because they no longer exist.

    Wow- what a concept. I should coin a new term for that: “Capitalism”.

  • avatar
    Pch101

    To protect OTHER automobile workers and the American consumer, GM (and the UAW) needs to go away.

    The consumer and worker will be fine. The public will keep buying Accords, and the workers in Marysville will continue to get paid to build them.

    The public will protect itself from GM by doing what it has always done, which is to avoid buying GM products. If the vehicles become worth buying, then they’ll benefit from having more and better choices.

    There will be unintended consequences aplenty, such as political concerns interfering with plant closures.

    They just announced 20,000 job cuts today. Hell, they’re playing bait-and-switch with the union’s benefits package yet again, this time giving them stock that might well be worthless soon enough.

    Despite the handwringing, it’s fairly obvious that the task force has no problem with taking a knife to the payroll. These guys have done more to turn around GM in 30 days than GM management could in 30 years. I’d give them a chance, with the understanding that the odds are stacked against them from the get go.

    Well run enterprises are well run. Badly run enterprises are badly run. The simple minded mental equations private=good, government=bad have gotten us into the fix we find ourselves in today. Good is good, bad is bad.

    Amen to that. We’d all be better off if we focused on results. Good results are good, bad ones are not. A free enterprise weapon of mass financial destruction has no merits greater than a government initiative that works, and vice versa.

  • avatar
    bluecon

    Rastus,
    We have a representative democracy,

    No, you have a Constitutional Republic.

    Which gives the government no right to confiscate the money of the winners and give it to the losers.

  • avatar
    bluecon

    Maybe the government could bring in some people from government run Fannie and Freddie to run this. Another government corporation that has experience with bankrupty and wasting tens of billions of other peoples money.

  • avatar
    Rod Panhard

    From a political perspective, the Presidential Ta(x)sk Force on Autos appears, on the surface, to have saved UAW jobs for the time being. Keep in mind, the Pres is a Democrat and so are the auto unions. The dealers (probably not Democrats) appear to be thrown to the wolves, as are GM managerial types. The problems that faced GM and Chrysler will remain, even after C11 or whatever they do. High labor & legacy costs, bad management, non-competitive products, too many dealers.

    Also, by carving up a huge chunk of GM and giving it to the UAW, the PTFOA washes their hands of any future blame when the whole shebang collapses further on down the road. At that point, the politicians will be able to say, “Well, we put you in charge so you could help make those decisions, and it didn’t work and it’s not our fault.”

    President Bush was smart. He knew this was a dead-end, no-win situation and he let his successor handle it.

    So now the question is, “How much longer until the head gets blown off this zombie and it actually dies?”

  • avatar

    Pch101

    I love you man. But Rastus is right: any system that not only protects businesses from themselves—in fact rewards failure and incompetence—is destined to create monsters.

    Again, on the face of this, good! Philosophically and (you wait) practically, noooooooooooooooo,

  • avatar
    Rastus

    bluecon, I never said that. Please update your post before the edit window expires.

    I agree with YOU totally- I do not support this Grand Theft Taxpayer!

  • avatar
    Bigsby

    In what sense are off shore automakers committed to the US? The presumption is that if the D3 die all US transport needs will be met by the Eurasian transplants. But since these are here mostly for political rather than economic reasons, the US being a high cost producer even without the UAW/CAW, if you were the king of Toyota post D3 C7 would the idea of moving back to Asian production not be very attractive?

    In other words post D3 C7 what choice would American consumers have other than import? The coming of imports in the sixties and seventies destroyed the D3 de facto monopoly. But the demise of the D3 will thereby institute a de facto Japanese/Asian monopoly.

    Question thus to our man Robert. How does the destruction of a home based auto industry protect the American autoworker and the American consumer?

  • avatar
    basuraDelFuego

    Rastus,
    Recall there was this misadventure called the Iraq war, and this big Hurricane that flattened New Orleans, and then the economy tanked, and few hundred other things went wrong that soured the public on the ruling party. By 2006 voters were done with Bush. Bailouts where icing on the cake, but they didn’t cost him the election.

  • avatar
    moedaman

    While I’m happy to see that changes that should have happened years ago will finally occur, I don’t like the fact that GM will become nationalized.

    The big problem I have with the government taking over GM is that in the “free enterprise” system a badly run company will eventually disappear (like GM should/would have done). A badly run government enterprise will still exist and will just be highly subsidised.

    This is why nationalizing GM is a bad idea. If the “new” GM is poorly run and can’t make a dime, it will have a negative affect on the economy and the federal budget.

    Also having the Feds/UAW as majority shareholders means that jobs come first and quality vehicles will be a distant second or third or fourth.

  • avatar
    Rastus

    basuraDelFuego,

    Oh, so you voted for “Change”, did you? Mmmmkay, I recall now. It took me a moment…you know, I have a VERY short memory.

    BO: We will WITHDRAW our TROOPS FROM IRAQ!!! END THE *WAR*!!!

    Thanks, I just LOVE your examples…keep them coming:

    http://www.mcclatchydc.com/homepage/story/62930.html

    http://www.cnn.com/2009/POLITICS/02/17/obama.troops/index.html

    Are you catching my drift when I say Gov’t answers to Gov’t???

    CHANGE!!!!

  • avatar
    jkross22

    @Ratsus:

    No, you have a Constitutional Republic.

    Which gives the government no right to confiscate the money of the winners and give it to the losers.

    Ratsus, I’m not sure of the name of a type of government that willy nilly rewrites the rules of commerce mid-stream, protecting companies that fail from their own poor decisions while simultaneously hurting productive companies in the same industry. And sticking the bill for all this on the taxpayers, current and future.

    I feel like I’m watching a Roadrunner/Coyote cartoon and the coyote keeps redrawing the line for the road runner to cross.

  • avatar
    basuraDelFuego

    I second pch101: Results matter, the rest is just ideological posturing. I’m watching the stock.

  • avatar
    psarhjinian

    Well run enterprises are well run. Badly run enterprises are badly run. The simple minded mental equations private=good, government=bad have gotten us into the fix we find ourselves in today. Good is good, bad is bad.

    +1.
    Which is more screwed up today, the Medicare system or the patchwork of private health insurance?

    Isn’t this two sides to the same coin?

  • avatar
    Pch101

    the Presidential Ta(x)sk Force on Autos appears, on the surface, to have saved UAW jobs for the time being

    Some of you guys must read different news wires than I do. Here’s the lead of the latest AP headline:

    General Motors Corp. could be majority owned by the federal government and the United Auto Workers under a massive restructuring plan laid out Monday that will cut 21,000 U.S. factory jobs by next year and phase out the storied Pontiac brand.

    The worker payroll is clearly on the chopping block. Meanwhile, they’re being “paid” with equity that, if the company is not turned around, will have as much value as did Confederate money in 1866.

    Look, I understand that there is no love for the union, and frankly, I’m almost offended with anything that I have to do that may resemble defending them. But blaming them for everything does not factually compute, and it is really obvious that they are not coming out of this with much to show for it.

    any system that not only protects businesses from themselves—in fact rewards failure and incompetence—is destined to create monsters.

    That’s great theory, but not true in practice. The system is already managed to prevent complete disaster, and when you compare the last 70 years to the 70 years that preceded them, that is definitely a good thing.

    Before 1933, it was commonplace to have depressions, including widespread bank failures and spikes in unemployment. Now, we are all comforted by our ability to smooth those things out, and we’ve had the greatest spike in mass prosperity in the history of mankind. Good stuff.

    This reminds me of people who complain about environmental regulations on cars because the air is allegedly clean enough. They conveniently forget that the air got cleaner because of those regulations, and it would be worse if we didn’t have them.

    You are all benefiting from the upsides of economic management, and it would be far, far worse if we didn’t have it. Fortunately, we don’t have to grab the stove to know that it burns to the touch, even if some believe in a disproven Stove Theory that says otherwise.

  • avatar

    John Horner,

    Outside of the military and the Mackinaw Bridge, can you think of a well run US government enterprise?

  • avatar
    Robert Schwartz

    When will they rebadge the Accura RL as a Stirling?

  • avatar
    psarhjinian

    The big problem I have with the government taking over GM is that in the “free enterprise” system a badly run company will eventually disappear (like GM should/would have done). A badly run government enterprise will still exist and will just be highly subsidised.

    Possibly, possibly not. A government with will and foresight will kill programs that are not viable. The problem is that government is often beholden to a million little special interests, and that the resulting compromise ends up being that which offends everyone as little as is possible, rather than one that is better, but pisses a few people off royally.

    GM, right now, runs very much like the kind of bad government entity you describe and has shown no signs of changing that behaviour. If the government has some (any?) guts, they’ll do better, but I worry about the effort being railroaded by the representatives and lobbyists, each with their own agenda.

  • avatar
    psarhjinian

    Outside of the military and the Mackinaw Bridge, can you think of a well run US government enterprise?

    Unserious note: I don’t the issue is “well run”, as much as it’s “better than what GM is doing now”. By that exceedingly low bar, even Medicare or DHS would qualify.

    Serious note: government is better run than most people think. The problem is that people don’t appreciate the scope or the depth, that the “government=bad” meme is a popular one in the US, and that the media never runs stories about the programs and services that work well . I’ve worked with (not the US, mind you) some very good government departments and some very bad ones, but the good:bad ratio wasn’t appreciably different from private enterprise.

  • avatar
    05gt

    Ronnie Schreiber,

    “Outside of the military and the Mackinaw Bridge, can you think of a well run US government enterprise?”

    Post Office? Im just kidding. Pretty much nothing

  • avatar
    HEATHROI

    Pch101

    “the upsides of economic management”, could you enlighten me as to what those are please.

    Fortunately, we don’t have to grab the stove to know that it burns to the touch, even if some believe in a disproven Stove Theory that says otherwise.

    nope we have a myriad of government officials to each give us a different opinion of the temperature without being able to judge for ourselves (and if you make an error you get sent to jail for transgressing the “rules”, as well as making a mistake)

  • avatar
    ronin

    The inevitable consequence is that there will be zero motivation to retain any sort of Quality. No longer concerned with the Asian threat, and relying solely on the forced labor of the US taxpayer, manufacture can continue with cost cutting as necessary.

    Let’s forget the American Leyland tag.

    Let’s call it American AvtoVAZ, after the state maker of the famous Lada. Or American GAZ, after the state manufacturer of the famous Volga.

  • avatar
    GS650G

    SO a left of center government now gets control of an automaker. There are lots of problems with this, not to mention the screwing debt holders are going to get.

    The UAW won’t care if they build shopping carts as long as the salary, bennies and retirement are guaranteed.

  • avatar
    HEATHROI

    government is better run than most people think.

    And that is probably quite true. I read somethat the US State dept issued a 13 vol series on a huge range of possible outcomes of the Invasion of Iraq . I don’t believe that got checked out very often.

    so really it maybe the bottom 2/3rd of govt who conscientiously file reports on what to do which are ignored by politicians and top civil servants who have ‘different’ priorities.

  • avatar
    Pch101

    “the upsides of economic management”, could you enlighten me as to what those are please.

    Ah, to long for the era of non-management. The good old days looked something like this:

    -Panic of 1819
    -Panic of 1825
    -Panic of 1837
    -Panic of 1847
    -Panic of 1857
    -Panic of 1866
    -Panic of 1873
    -Panic of 1884
    -Panic of 1890
    -Panic of 1893
    -Panic of 1896
    -Panic of 1901
    -Panic of 1907
    -Panic of 1910
    -Great Depression

    The list of disasters following this period is pretty short, and interestingly enough, was cooked up by the very same people who kept complaining about regulation.

  • avatar
    HEATHROI

    Pch101

    no doubt there where a lot of ‘panics’ however they were mostly very short lived maybe a couple of years max. the 1837 one is interesting as it lasted long enough just to cripple Martin Van Burens election chances in 1840. (he was also trying to prevent 2 separate invasions; one of Mexico and one of Canada so he might have got distracted.

    Why didn’t you include the 1920 panic, you know the one where nobody really realized they where in a depression until the figures came in sometime later.

    after 1929 (I count the Hoover years as Part of the Managed Economy) depressions would last for years (1929-46) (1970-82) and (08-?????) because of the Wonder boys in Washington.

  • avatar
    jpcavanaugh

    I’ll be an optimist. This COULD work. Would require the politically loaded task force to appoint an effective board which will, in turn, find some genuine turnaround talent. (Any available veterans available from the Chrysler workout of 30 yrs ago?) They run the company with a fresh, entreprenurial outlook and GM will pull out of its death spiral.

    Odds of this happening? My guess is about 3%.

    Look, all. The problem with government owning and running the company is that governments are about making political decisions, not business decisions. Political decisions will not save this company. Hard, unpopular decisions will be very rare indeed. The last guy in the federal govt that made hard, unpopular decisions (G W Bush) just exited DC as one of the most reviled guys in America. I am not defending Bush. In fact, he failed to make the hard decision on this issue when he had the chance, leaving us with this mess.

    It should be scaring us all that the B&B have heard no names floated to come in and run this company. There is plenty of executive talent out there, and some guys with auto experience. Jerry York comes to mind. But someone like York will never stick a wet finger into the political breeze before making a management call.

    I think that GovMo’s fate is all but sealed. My concern is with FoMoCo. If GM is run as politial motors and gets all the breaks it can from a sympathetic federal gummint, how can Ford compete with that. The playing field will not be level. The only hope is that these guys at Ford can really do superior product that can sell in sufficient numbers to outweigh the disadvantage of being the last privately owned auto company standing.

  • avatar
    Pch101

    after 1929 (I count the Hoover years as Part of the Managed Economy) depressions would last for years (1929-46) (1970-82) and (08-?????) because of the Wonder boys in Washington.

    So you want to redefine “depression” to suit your political agenda?

    Nobody who knows the history considers those post-Great Depression periods to have been depressions. There certainly were recessions, but no depressions by any reasonable measure.

  • avatar
    GS650G

    Ford and the transplants are going to be in trouble with this deal and the one for chrysler because the government will have a financial stake in these two beating the others. When they don’t win with product they will batter the others until they do.

    Almost makes me want to go out today and buy a Ford. I would if they were actually making money on the sale but I suspect they are merely treading water with every set of keys they hand over.

  • avatar
    Spitfire

    As my friend of mine just responded to me in an email:

    “GM being owned by the UAW would be awesome.

    The first week would go like this:

    Day 1, “yeah management is ours!” and they give all the union workers more money and promise no outsourcing and healthcare for life etc.

    Day 2 they look at the books, “oh crap did you know how much we pay these people?”

    Day 3, headline reads, “GM moves all production to India.”

    Day 4, Detroit burn, no one cares.

    Day 5 quality hits 10 year high.

    Day 6 everyone in India buys a Denali.

    Day 7 stock hit’s 30 year high.” – Jeff

  • avatar
    HEATHROI

    now that’s the rub, What is a reasonable measure? depends on who you’re asking and which figures you whose.

    All I pointed out was that depression/recessions/hangovers pre 33 where short where “managed” ones post 33 were long and equally miserable

    the question is why those depressions happened in the 1st place and who caused that to happen.

  • avatar
    Pch101

    What is a reasonable measure?

    Severe GDP contraction (-10%) is a common standard for depressions. They’re typically accompanied by high unemployment (15%+) and widespread bank failures.

    These things have not occurred in the United States since the Great Depression. We have been far better off than our predecessors during the 19th century.

  • avatar
    HEATHROI

    Severe GDP contraction (-10%) is a common standard for depressions.

    Ten percent drop from what? the market at the height of bubble?

    and widespread bank failures? secret “stress tests” anyone?

    That definition doesn’t hold up to scrutiny.

  • avatar
    Pch101

    Ten percent drop from what?

    Annual decline.

    That definition doesn’t hold up to scrutiny.

    This is fairly normal. Not sure what you expect, but if you’re defining those post-war periods as depressions, then you have a rulebook that nobody else is using.

  • avatar
    Luther

    Why make products that people might want to buy when you can buy a political mafia to steal for you…This is a wealth transfer (aka, Theft) from those who earn to those who don’t…Stolen using death threats.

    USS GM is a Pirate Ship with a tax-evading treasury secretary at the helm…Can voters be more stupid and childish?

  • avatar
    derm81

    All the above items have been called for repeatedly in this blog as the only way to save GM, and all of them occurred after the government began to take an active roll in GM’s affairs

    No offense to some here on the board but talking on a blog and actually doing these type of things are two differenr things. Takes much more than a few verbal agreements and a few blog posts to cut 21 thousand jobs and kill of a brand.

  • avatar

    Outside of the military and the Mackinaw Bridge, can you think of a well run US government enterprise?

    Medicare

  • avatar
    HEATHROI

    get in chorus pch101 “the fundamentals are sound” – “the fundamentals are sound”

  • avatar

    # David Holzman :
    April 27th, 2009 at 4:26 pm

    Outside of the military and the Mackinaw Bridge, can you think of a well run US government enterprise?

    Medicare

    I’m sure there is massive fraud concerning Medicare both within and outside of HHS. In any case, they’re going to have to ration Medicare benefits if they have any hope of reducing the deficit.

    Here’s Charles Krauthammer, a conservative, saying how Obama will ration health care (Krauthammer is a former chief resident in psychiatry at Massachusetts General Hospital so he knows something about health care).

    And here is Mickey Kaus discussing liberals Ezra Klein and Matt Yglesias more or less agreeing with Krauthammer’s conclusion that health care will be rationed – though they put a positive spin on it.

  • avatar

    # psarhjinian :

    Serious note: government is better run than most people think. The problem is that people don’t appreciate the scope or the depth, that the “government=bad” meme is a popular one in the US, and that the media never runs stories about the programs and services that work well . I’ve worked with (not the US, mind you) some very good government departments and some very bad ones, but the good:bad ratio wasn’t appreciably different from private enterprise.

    The difference is that if GM screws up I can go to their competitors. When a government provides a service it’s an absolute monopoly. Where can I go to get a better police force that doesn’t abuse its authority?

    The idea that the least government is, all things being equal, the best government, is as old as the United States.

    You may think that there’s a better system elsewhere. I contend that there’s a word for Europeans, Asians, Latinos and Africans who disagree with you. That word is American.

    The founding fathers, both federalists and anti-federalists, were deeply suspicious of the power of government and how that power can be abused. They fought a revolution against such a powerful and abusive government.

  • avatar

    Post Office? Im just kidding. Pretty much nothing

    Actually the PO is one of the better functioning agencies. While it runs a deficit, the mail indeed does get delivered on time. I do a lot of shipping and I don’t see that UPS or FedEx do a demonstrably better job than the USPS. They also don’t charge me for pickups like the commercial carriers do.

    The USPS isn’t perfect but it does get the job done. The USPS, however, isn’t run like any other gov’t agency. It pretty much operates like a business.

  • avatar

    The list of disasters following this period is pretty short, and interestingly enough, was cooked up by the very same people who kept complaining about regulation.

    While there hasn’t been a depression since the 1930s, there have been at least 5 major recessions since WWII. The one in 1957-58 was pretty much caused by the UAW striking GM for months. GM was making money hand over fist in the 1950s and the long strike convinced them to pay for labor peace at any cost, a factor in their unsustainable labor costs today.

  • avatar

    These things have not occurred in the United States since the Great Depression. We have been far better off than our predecessors during the 19th century.

    The point is still made that prior to the Great Depression (there’s a reason why it’s distinguished from the others as “Great”), the panics or depressions (often caused, by the way, but securitized debt – sound familiar?) were fairly short and the economy started growing fairly quickly. To be sure, there were more boom and bust cycles, but people got by.

    Compare that to what happened when the gov’t intervened first by Hoover, and then by FDR. The New Deal didn’t get us out of the Depression, many of FDR’s policies prolonged it. What got the US out of the Depression (unemployment was over 10% into the late 1930s) was WWII.

  • avatar
    agenthex

    no doubt there where a lot of ‘panics’ however they were mostly very short lived maybe a couple of years max.

    Sure, but you can’t have a discussion of how far up to fly if you can never get off the ground. The competition between nations is essentially one of stable sustained growth. No one can compete without a system of rules and tools which mitigate the crashes.

    Also, the complexity of the game is only increasing. The modern corp didn’t emerge until around the turn of last century and subsequently became ubiquitous. Understanding of monetary measures has likewise grown, sometimes through mistakes. Philosophies that idealize bygone days are doomed to explain that which their creators could hardly imagine.

    Finally, I’ve mentioned before how the axioms of the laisse crowd are all contrary to our scientific understanding, so it’s not as if those ideas have any leg to stand on except copious amounts of faith and popular repetition.

    Charles Krauthammer

    LOL. In any case, basic health care is always going to be rationed, just like any social service. People better off pay for extra service/insurance, but a basic level of care (vs only emergency care) is considered a necessity of modern life. This is just an attempt to obfuscate the obvious.


    The USPS, however, isn’t run like any other gov’t agency. It pretty much operates like a business.

    That’s because much of the gov can’t be run like a business, because its functionality is to mitigate their external costs.

    Looking at everything from inside commerce makes for a pretty incomplete view of the world.

  • avatar
    HEATHROI

    No one can compete without a system of rules and tools which mitigate the crashes.

    The Bretton Woods agreement failed by the early 70s remember

    so if the world is so complex why do you think that government is so qualified to run it

  • avatar
    Pch101

    The point is still made that prior to the Great Depression (there’s a reason why it’s distinguished from the others as “Great”), the panics or depressions (often caused, by the way, but securitized debt – sound familiar?) were fairly short and the economy started growing fairly quickly.

    That point is factually wrong. The Panic of 1873 was actually the longest we’ve had, lasting 65 months. It is sometimes referred to as the Long Depression.

    We just don’t tend to talk much about the economic disasters of the 19th century these days because everyone who lived through them is dead, and there is no film of it. That doesn’t mean that those periods were particularly easy for everyone or that everything just snapped back.

    Conservatives don’t seem to understand that the reason that we’ve created these mechanisms is because we did it your way for a century, and it didn’t bloody work. Now that we’ve added some brakes to the downdrafts, we have higher employment, fewer people suffering and better growth when times are good.

    Post-1945 growth cycles have tended to be longer, while the negative effects of the contractions have been lower. We are much better off. The only way to believe that we aren’t is to rewrite history and ignore most of what actually happened, a nasty habit that seems to be quite popular as of late…

  • avatar
    PeteMoran

    Outside of the military and the Mackinaw Bridge, can you think of a well run US government enterprise?

    Military? Well run? That’s a joke right, like the bridge bit?

    What project or purchasing was EVER delivered on time, on budget by ANY military anywhere, at ANYTIME in history.

    The Military in the US is more a welfare system for large and very wasteful arms corporations.

  • avatar
    lutonmoore

    “Military? Well run? That’s a joke right, like the bridge bit? What project or purchasing was EVER delivered on time, on budget by ANY military anywhere, at ANYTIME in history. The Military in the US is more a welfare system for large and very wasteful arms corporations.”

    Remember that if you ever need the U. S. Coast Guard.

  • avatar
    HEATHROI

    Pch101 re the long deression

    What sort of depression is it which saw an huge expansion of industry, of railroads, of output, of net national product, or real per capita income?
    The decade from 1869 to 1879 saw a 3-percent-per annum increase in money national product, an outstanding real national product growth of 6.8 percent per year in this period, and a phenomenal rise of 4.5 percent per year in real product per capita. and a drop in the general price level between 1869-1879 of just under 4 percent p.a.

    Where is the depression?

    no film, people still alive thats true but their words remain but you generally have to look through the stacks to find it.

    I don’t like conservative label thank you very much. I would have sat on the left on the French revolutionary Parliament.

    You guys snuffed out the aspirations of the working class to a decent life with your welfare systems and inflation.

  • avatar
    HEATHROI

    come to think of it your Wars as well.

  • avatar
    agenthex

    The rate of growth was because it’s squat in the middle of an industrial revolution.

    Yet in spite of this, employment was high, railroads and banks and businesses in general collapsed, with misery all around.

    If anyone is feeling the nostalgia, feel free to experience that life in any number of developing 3rd world countries today.

  • avatar
    rodsterinfl

    Nobody cares anymore about America. It is sad. Even our president is running all over the world apologizing to other countries and cutting us down. I heard about this then saw the video clips. Sad.

    Who we are is about to change drastically. GM is just one example. With no industry what do you think the people will do here? The middle class will be non-existent and there will only be the haves and have-not groups. If they succeed from the G summit to take national laws away and replace it with international law (basically no constitution) what will that make us as far as rights are concerned. Scary. My family nearly all worked for GM and they made a good living but worked many hours a week. Little by little the industries are drying up and the opportunities along with it.

  • avatar
    HEATHROI

    It may be on monty python but you guys sound like the joke about two Yorkshiremen trying to out do each other in misery stories “well, we had to walk ten miles, in the snow, barefoot, carrying 50 pound bags of coal, backwards”.

  • avatar
    PeteMoran

    Four Yorkshiremen, and not quite Monty Python, but close.

  • avatar
    Luther

    “The US Treasury doesn’t want to run the company,” Fritz soothed, “they just want to make sure it’s well run.”

    Fritz was quoting Benito Mussolini…Or was it FDR…Maybe Abraham Lincoln.

  • avatar
    russification

    and then all we need is a 3-4 percent gdp growth rate over the next 3 to four years and plenty of rain to replenish all the water were going to be going through in that time notwithstanding the amount of housing starts to shelter the ballooning civilian population who is being structurally obsoleted by newer generations of technology, I can hardly wait to see how this ends…more plot thickening industrialized meat grinding.

  • avatar
    John Horner

    ” … can you think of a well run US government enterprise?”

    The post office does an excellent job at a fair price, though it is technically semi-private these days. Our local public library system is first class. Most state run public universities do at least as good of a job as their private counterparts. Most of China’s major companies are at least party government owned, and they are competing extraordinarily well on the world markets.

    “….Krauthammer’s conclusion that health care will be rationed…”

    Does anyone really think health care isn’t being rationed in the US today? Do you think that the child of an IBM executive gets the same health care as is available to the child of the guy who mows the executive’s lawn? Did you know that unexpected medical costs are #1 triggering cause of personal bankruptcy? The rationing bogey-man has no clothes.

  • avatar
    Pch101

    The decade from 1869 to 1879 saw a 3-percent-per annum increase in money national product…

    If you use the boom period toward the beginning and the recovery period at the end as your comparison points, then you are going to get distorted numbers. Stick to the period in question if you want to discuss what happened.

    After the 1873 crash, much of the country’s rail system went bankrupt, and the mileage constructed dropped to a fraction of what it had been. While there was no BLS at the time, unemployment was likely in the double digits, with NYC estimated as having 25% unemployment. Wage and commodity price deflation, as well as homelessness, became growing problems. There were labor riots and social unrest.

    All of that suggests that times weren’t all that great. I’m assuming that you looked at some revisionist history from the Austrian economists, who do a good job of ignoring the facts that don’t fit into their arguments, which means that they omit quite a bit.

  • avatar
    geeber

    John Horner: Does anyone really think health care isn’t being rationed in the US today? Do you think that the child of an IBM executive gets the same health care as is available to the child of the guy who mows the executive’s lawn? Did you know that unexpected medical costs are #1 triggering cause of personal bankruptcy? The rationing bogey-man has no clothes.

    It’s no different in Europe, despite the presence of nationalized health care. Anyone who can afford to supplement their government provided insurance with private insurance does so.

    The child of a VW executive is not getting the same health care as the child of the man who mows lawns for a living.

  • avatar
    rodsterinfl

    As I read through these posts the majority seem to think the end of GM is a good thing? Wow! It is true that the UAW stretched the benefits and salaries up but they also did what unions do. protect the little guy. There is definitely wrong done but there are multiple reasons and most of it has little to do with the blue collar workers.

    Our government is irresponsible with money. Stories of that have been shared for years. Just recently Air Force One flew into New York city in a 3.5 hour or so trip that cost us about $200,000 or so just for a photo shoot all while scaring people to death. No one knew anything about it including the mayor. Why? How can they manage GM better?

    What happened to GM, the strongest one will probably happen to all US car companies. What is so interesting is that Japan announced today that they are moving in the opposite direction of our country by cutting taxes in corporations, etc. Sounds VERY U.S. Republican in strategy. We will see.

  • avatar
    JohnHowardOxley

    @ PeteMoran:

    Although the press likes to hammer on, well, $500 hammers [and although military procurement has definitely performed a lot worse in the past decade] it is hardly true that *every* military project has been over-budget.

    The classic example of this is the “Polaris” missile and its associated submarine, which worked extremely well, and was on time and within budget. This is not the only example — though again, over-runs [not necessarily poorly performing products, but that too, sometimes] have become a lot more prominent in the last decade or so.

    This is a result of deep structural problems in the Pentagon which probably cannot be cured.

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