GM Govt. Bailout?

[GeneW]

In 1921 there was a recession. The Gross Domestic Product dropped 17 percent. Unemployment reached ten percent. The recession was not "dealt with" by President Harding. It ended in under one year. It sucked to be sure. The "Roaring Twenties" followed this recession. Good times followed for about six years.


In 1929 a recession began. President Hoover tried to keep wages high by encouraging business to raise them. He also tried to keep prices high. He encouraged the Federal Reserve to loosen up credit. Hoover was not a "do nothing" President, he just didn't do quite enough to suit some folks.

By 1932 unemployment reached 25 percent. President Roosevelt created the New Deal. Wage and price controls. Public Works projects. Bad banks were seized. A new agency, the SEC, was created to protect the stock market. It's first Director, Joseph Kennedy, was one of the guys who helped create the crash of 1929. When asked why he picked Joe Kennedy FDR said, "It takes a thief to catch a thief".

Unemployment didn't fall below double digits until 1941. We had to go down to War to end the Great Depression. When guys were being conscripted into the Armed Forces the Doctors noticed that they had evidence of malnutrition.

Some "New Deal", huh?

Moral of the Story - helping failing businesses helps failures. Helping failing businesses also keeps people working in those businesses instead of working elsewhere. Raising taxes and shoveling the money off to failing businesses takes money out of everyone else's mouths.

Letting failing business continue hurts everyone. GM screwed up in so many ways that it must fail. A newer leaner GM will build good cars at good prices.


I voted "no" even though my employer is already seeing the effects of GM's slowdown. I could end up on the street because of a failure of US business. I'm already warming up the getaway car. My skills can be used elsewhere.

Gene

[jclo3313]

Let them Fail!

[GeneW]

Originally Posted by TLyttle

The news yesterday reported that the GM plants in China are making big profits; can you see where this is going?

GM allegedly makes profit EVERYWHERE but in North America. China has not been a good deal for GM. China limits repatriation of profit and manages tightly what sort of cars you can make.

China is also going the way of Japan. They are creating a massive public works project program. They will suffer horribly in the coming global recession with this Keynesian non-sense.

As for GM North America - no surprise. They have Wharton/Harvard School grads running the show. It's massive group think upstairs. No wonder they cannot innovate with everyone thinking the same way!

I've had two friends who worked for GM R&D. The political piss contests and assorted group think keep them firmly "down". One friend piped up about safety at a meeting. He was pushed into a Window Office for TWO YEARS and then finally offered $70,000 to "go away". Imagine putting a staff PhD on the payroll for two years doing nothing and then offering them the equivalent of a year's salary to buzz off.

The other suggested an "off the shelf" motor solution for Saturn. They wanted to use an exotic electric motor for the wipers. He suggested a tiny change in mounting brackets that would let them use a standard solution.

During the meeting some kid, and I mean kid, shot it down. "That's not appropriate" His Lordship said. His Lordship did not examine the drawings, did not look at the figures, he just pronounced his Sentence.

Another Researcher created a special membrane switch for car horns that interfaced perfectly with air bags. Since he was "just a Technician" nobody paid attention to his idea. So he sold it to Chrysler. Later GM had to buy back the idea from Chrysler!


GM also has the UAW, which has created an intolerable situation. Union Content rules. Job Banks - where employees are paid to loaf.

Then we have this Guaranteed Benefit Pension non-sense. I could not imagine trying to run a business that carries six to seven retirees on the books at eighty percent of their wages and one hundred percent of their benefits for every person on the lines. Imagine carrying one hundred people on your books but only about twenty work?

GM spends more on medical services than they do on R&D. Their Viagra bill was over ten million US dollars in 2005! Must be a lot of older Execs and Line Workers who want to get down!

Toyota doesn't do this, you get a lump sum payment on retirement. Japan has a socialist health system. In their north American operations that are not unionized Toyota probably has a competitive health plan, not the obscene bloated system of GM.

Toyota's management doesn't interfere with car development. The task is given to a team with one highly experienced engineer running the project. They are given license to create, using all previous experience with successes and failures. The Team Leader is responsible for the car and based upon their track record can deliver the goods.

In contrast GM's R&D is a awful.

Something had to give with all of this non-sense. While I grew up Chevy Chevy has not grown up. They're still in the 1950s. Time for them to adapt or die.

Gene

[GeneW]

Originally Posted by TLyttle

Canada had its own auto industry for many years until the companies were bought out- or forced out- by the US. I see no reason why it can't be resurrected, other than the bureaucracies have made it as difficult as possible for a Canadian manufacturer to survive; something to do with GM et al supplying Deputy Ministers with new cars etc......

Please..... you make it sound like the US invaded Canada.

It's not our fault that Canadians elected to concentrate power into the hands of "Deputy Ministers", who then proceeded to beat down your domestic industry. If you'd been more laissez faire up there your Auto industries could have remained strong and competed globally.

Heck, maybe we Americans would be making Canadian cars or parts for same instead of Vice Versa.


As far as "resurrecting", you cannot look back. You don't resurrect anything, you create new opportunities. If you all want to make your own cars that's cool, except of course how do you keep all of those greedy grasping Politicians out of the way?

Alberta's Governor wants to levy his own tax on oil derived from tar sands. Just because, as Dillinger said, "I rob banks because that's where the money is". A car making plant is an incredible source of tax revenue for a greedy politician.

We have the same problem down here. Too many greedy grasping fingers want to poke into someone else's pies. They get elected every so often so they figure they have the public behind them. If the public knew how these birds interfere in their livelihoods I don't think they'd be so popular.

Gene

[stuffy]

Originally Posted by GeneW

Please..... you make it sound like the US invaded Canada.

It's not our fault that Canadians elected to concentrate power into the hands of "Deputy Ministers", who then proceeded to beat down your domestic industry. If you'd been more laissez faire up there your Auto industries could have remained strong and competed globally.

Heck, maybe we Americans would be making Canadian cars or parts for same instead of Vice Versa.


As far as "resurrecting", you cannot look back. You don't resurrect anything, you create new opportunities. If you all want to make your own cars that's cool, except of course how do you keep all of those greedy grasping Politicians out of the way?

Alberta's Governor wants to levy his own tax on oil derived from tar sands. Just because, as Dillinger said, "I rob banks because that's where the money is". A car making plant is an incredible source of tax revenue for a greedy politician.

We have the same problem down here. Too many greedy grasping fingers want to poke into someone else's pies. They get elected every so often so they figure they have the public behind them. If the public knew how these birds interfere in their livelihoods I don't think they'd be so popular.

Gene

fyi, alberta has a premier, not a governor. are you talking about alberta's desire to increase the royalties paid by the oil companies to the province?

canada never had many domestic auto manufacturers, our auto industry was always tied in with the u.s. auto industry, at least the past 60 years or more anyway.
and before free trade we had the auto pact which guaranteed canadian jobs relative to how many cars canadians purchased from the big 3.

not sure what our governments have done to stymie the canadian auto industry,
the u.s. auto manufaturers have recieved the corporate welfare handouts from the ontario government as well (in an effort to save jobs apparently), so i guess we've been helping to prop up these incompetent foreign companies in our own small way.

[GeneW]

Originally Posted by Altitude

Anytime someone complains about corporate corruption and greed the opposition rails on about market capitalism and how it is the only viable economic model.

Market Capitalism? Do you think that GM practiced market capitalism when it buried Preston Tucker? How about when it's begging for bailouts now? How many "Defense" contracts did GM get over the years? Is that Market capitalism too?

GM isn't a capitalist institution. It's been working as an extension of the Government since the 1930s if not earlier. Why else is anyone even seriously considering a "bail out"?

The reason GM is getting the snot pounded out of it by Toyota is because Toyota is giving better value for the money. That's capitalism at work.

Greed is limited by market restraints in capitalist nations. In socialist or social democracies greed is limited by the sufferance of the masses to repression.

Greedy politicians in the EU who want to regulate everything that isn't nailed down or pensioners and loafers who idle while "guest workers" do the dirty work. The guest workers don't go home and in a generation or two are beating citizens (who get arrested for fighting back) and establishing "no go" zones where the nation's laws don't work because the police are pushed out.

For a purer example of how greed works in Socialist countries check out in the USSR when Brezhnev had a fleet of cars while some of his rural subjects walked around barefoot or Mao Tze Dung had his bodyguards "recruit" poor girls to have sex with him so he could "live forever" per the tenets of the Yellow Emperor. Today in North Korea where the "Dear Leader" flies in hookers from Sweden while rural North Koreans trade human meat in market places. Castro and his many "retreats" while Cuban kids suffer from blindness because of nutritional deficiencies.

The Yaris was shaped by market place demands. That's your capitalism at work for you.

Gene

[floydisrock]

I couldn't care less about any big business.
They can all fail.

[GeneW]

Originally Posted by stuffy

fyi, alberta has a premier, not a governor. are you talking about alberta's desire to increase the royalties paid by the oil companies to the province?

The semantics of your response indicate that the people of Alberta want more for their oil and that the Premier (thanks for the correction) is just speaking on behalf of the people - and not his own interests and benefactors as a politician. I've personally long since ceased indulging the fiction that politicians represent me, but for many a vote is an investment in the System.

The oil doesn't belong to Alberta nor to the people. The oil belongs to whoever gets it out of the ground, before that time it's just useless muck sitting beneath someone's land.

Raise the price of doing business high enough, or hobble a business with useless feel good regulation and the business doesn't get done like it has been today. Sometimes it doesn't get done at all. One can vote, shout or stage protests but the books gotta balance. Often it's not greed by simple necessity, you cannot run forever at a loss.

I am willing to bet that Tar Sand operations will be grossly curtailed in Alberta in any case because of low world market prices. Raising the taxes (or royalties) just makes it a little bit tougher to keep the operations going.

Originally Posted by stuffy

not sure what our governments have done to stymie the canadian auto industry

Probably nothing in particular. The US hasn't had a new automobile company of any big size since American Motors, which was dismembered as part of the Chrysler bailout in the 1980s. It's really really hard to build big companies in the US and probably in Canada too. Once the concern reaches a certain size politics enter into the picture. This has been ongoing in the US since the 1920s.

One exception in the US was Micosoft, which gained its size in part because of a partnership with IBM.

Interestingly enough, Canada did have a nice tractor concern going, Cockshutt. They were bought out by Minneapolis Moline decades ago. MM was bought out and buried by White in the 1970s in part because their Guaranteed Benefit Pension was too tempting a target. Later White was bought out and buried by AGCO, which I think does not have any domestic models.

Gene

[stuffy]

i know that your opinions are framed around your libertairian beliefs, some i share and some i don't.

i think it's perfectly logical for a government to charge royalties for the resources extracted from the land.
it's just the price of doing business as far as i'm concerned and i disagree with the notion that resources have no owner.
the tar sands are more subject to the market prices as you've mentioned than royalties anyway.
royalties and jobs from oil have made alberta (and by alberta i mean it's citizens) one of the richest regions in n america and even with a lower oil price and slowdown in worldwide economy, they havent' been affected nearly to the same degree that manufacturing-dependent ontario has been.
the alberta government has cut cheques for every citizen of alberta because of the huge government surpluses so just about all boats have been floated in alberta thanks to the resources in that province.

[GeneW]

Originally Posted by stuffy

i know that your opinions are framed around your libertairian beliefs, some i share and some i don't.

i think it's perfectly logical for a government to charge royalties for the resources extracted from the land. it's just the price of doing business as far as i'm concerned and i disagree with the notion that resources have no owner. the tar sands are more subject to the market prices as you've mentioned than royalties anyway.

The oil is useless unless someone takes a risk to extract it, transport it and market it. That risk taking ought to be rewarded and not punished with ever higher taxes (Royalties). If I had my say there would be no Royalties.

However this is the real world. People will demand what they can get from whoever has more. That's how it is. The attitude of "Cost of Doing Business" to me is really the attitude that business exists at the sufferance of the State. "They'll manage". What happens when "they" can no longer manage to pay those Royalties or the marginal cost of the Royalties plus the costs of extraction exceed the income from the oil?


My point is, what happens when the Royalties get so large that one cannot do business?

The Tar Sands have been there a very long time. Extraction of the sands was not practical until recently because of market Will the Premier cut the Royalty rates if the market prices of oil continue to fall?

What of all of the new dependents who take that extra revenue? Will they manage without it too if the Rates fall? Perhaps the Government cannot lower the revenue from the Royalties because someone is now dependent upon it?

I see a lot of this problem where I live. When the Steel Mills were fully operational governments expanded to fully use the tax revenue. The Steel Mills are mostly gone now. Those local governments who grew fat on manufacturing taxes now run speed traps (speed limits are made artificially lower and then police entrap people who "speed" through the area). These governments have also raised property taxes and income taxes and go begging to the State Capital for money.

You have to focus on the long term, not take more money because businesses "are doing so well". So even if we disagree on the idea of Royalties it's still reasonable to set them at levels which do not endanger the businesses.

Originally Posted by stuffy

royalties and jobs from oil have made alberta (and by alberta i mean it's citizens) one of the richest regions in n america and even with a lower oil price and slowdown in worldwide economy, they havent' been affected nearly to the same degree that manufacturing-dependent ontario has been. the alberta government has cut cheques for every citizen of alberta because of the huge government surpluses so just about all boats have been floated in alberta thanks to the resources in that province.

Lots of good paying jobs in the fields. To me that is reward enough for having a business nearby.

As far as "checks" go....Bastiat warned that once citizens of a Democracy can vote themselves money out of the Treasury hard times are not too far behind.

As best evidence let me offer the spectacle of the US Congress "bailing out" big banks and investment firms which followed the lead of US Home Loan agencies by chasing shaky borrowers and then "bundling" loans into "securities". The program to buy the "toxic debt" will no longer be taken, instead banks can just get the money. Welfare for the super rich, which to me is just as wrong as welfare for able bodied folk who would rather loaf than work.

Gene

[Snyprwlf47]

The problem with Ameriauto is the high labor cost. Ford has been trying to keep up with the small fuel efficient car industry but cant because they would lose money due to labor cost!!!

[SailDesign]

Originally Posted by Snyprwlf47

The problem with Ameriauto is the high labor cost. Ford has been trying to keep up with the small fuel efficient car industry but cant because they would lose money due to labor cost!!!

I call
ford Europe has a higher (yup!) labour cost, and they keep up very well with the European and Japanese "small fuel efficient" markets. They just choose not to import the smaller cars and their technology here.... Look at the Ford Focus diesel that just came out - Ford won't import it because "Americans view diesel as a dirty fuel"

[Nigal]

Originally Posted by TLyttle

What's with the Canada/Mexico thing? Canada runs the most efficient plants in the system, are we going to be blamed for the crap that the Big Three designed? Geez, we're sorry.......

Having owned a number of US-built cars and trucks: crude on crude, always to big, always too fuel INefficient, always ready to fall apart at the slightest provocation. I have also owned Volvos and Toyotas: won't light the tires, but reliable to a fault. There is not ANY US-built vehicle that I would trade for my old 245 Volvo.

Let 'em sink.

My main point was why are/should the U.S. tax payers put up our money to save Canadian and Mexican jobs? GM wants it both ways. They want to be global and cash in on cheaper taxes and labor in other countries but when the shit hits the fan they come running back to our government with their hands out.

[GeneW]

Originally Posted by ChinoCharles

No, see, I don't think you guys understand. You can't just completely disenfranchise 1 million + American workers, many of which came out of high school and directed their lives towards one industry. Those million people (who pay taxes too, by the way) are innocent victims of a much smaller contingent at the top.

Yeah, right..... "disenfranchise". Where's my franchise, Charles?

They earn more than I earn now. They didn't get a college degree or tech school degree like me. They went "into the Mill" as we put it hereabouts.

They didn't "pay their dues" working scut work, then finally getting an entry level job, then working their way up the ladder earning experience.

They didn't, after many years of working, get a decent job, then get another decent job. They didn't eat shit from stupid bosses, instead they got settled into a routine and whenever the Boss got out of line they whined to their Union Steward.

They joined the UAW and got a job in an assembly line. They got a pension, they got great health benefits, and they lived the middle class life. Doing work that was easier than any job I ever worked in my life, excluding perhaps McDonald's.

Certainly their work was safer than my experience in Dialysis, where I was exposed to Hepatitis and AIDS every day, or when I could have been fried or burned in other jobs. What could happen to them? Get burned by the spot welder? Get gagged by the paint booth? Maybe drop a part on their toes? Get squashed by a load improperly slung (I risk that too today)?

Sorry, Charles, my sympathy, and those of people who today work in Wal-Mart, Target and other "service jobs" only goes so far. I for one am sick and tired of Organized Labor and their "You owe me" routine.

They can take their "franchise" and stuff it.

Originally Posted by ChinoCharles

The question is how do you provide help to the industry and ensure that this won't happen again. There has to be oversight, but to what extent? Yes, this is the government dipping hands into the private sector. Yes, it is mildly socialist... but the alternative would put some towns to bed and throw millions of people into an already bleak job market. Don't forget those workers have families... they'll suffer, too.

Yeah, where was all of this bailout money when I needed it....? I've been laid off seven times in my life. Aside unemployment, which I pay into every paycheck, I never got a dime. Never asked for it either, but never got it offered to me.

Originally Posted by ChinoCharles

I think what you'll see is a bailout and then a phased retooling of the industry to make it more compact and specialized. I wouldn't be surprised if a lot of the offshoot makes (Saturn, Mercury, etc.) are discontinued and more focus put into the major brands that own them. A section of the bailout will probably be earmarked for R&D, and these companies are going to be expected to be turning out a much more viable product IE: no more Dodge Challengers and other absolutely moronic business moves. Lets see some innovation. Where is the damn petroleum-free vehicle?!

The Challenger was a good idea. It sold well.

As far as "petroleum free vehicle".... hey, lead the way, my man. Nobody is stopping you from electrifying your Yaris.

Of course there isn't enough electricity generating capacity in the US to completely replace the US fleet. A little simple arithmetic and dimensional analysis will bear that one out fast.

A nice fuel efficient car would do, except that the average American consumer won't buy it. My Yaris is the poorest accelerating vehicle I've ever owned. I have friends who are afraid to ride in it. I have one friend who is too obese to fit in it. I really like my Yaris but I know what the average American likes and that's not it.

Gene

[GeneW]

Originally Posted by SailDesign

I call
ford Europe has a higher (yup!) labour cost, and they keep up very well with the European and Japanese "small fuel efficient" markets.

Ford makes their smaller cars all over the globe. Wouldn't surprise me if the Focus were made in Europe and it would not surprise me if Ford got a subsidy or two for doing it there.

Originally Posted by SailDesign

They just choose not to import the smaller cars and their technology here.... Look at the Ford Focus diesel that just came out - Ford won't import it because "Americans view diesel as a dirty fuel"

Also because of NOx emissions... some diesels are pretty bad that way.

Also, perhaps, because the Ford Focus diesel lacks the acceleration needed to compete in US markets. Perhaps the real cause is that the American consumer does not want a slow plodding car?

I'd have sprung for a Yaris diesel. No doubt about it.

Gene

[stuffy]

Originally Posted by GeneW

The oil is useless unless someone takes a risk to extract it, transport it and market it. That risk taking ought to be rewarded and not punished with ever higher taxes (Royalties). If I had my say there would be no Royalties.

However this is the real world. People will demand what they can get from whoever has more. That's how it is. The attitude of "Cost of Doing Business" to me is really the attitude that business exists at the sufferance of the State. "They'll manage". What happens when "they" can no longer manage to pay those Royalties or the marginal cost of the Royalties plus the costs of extraction exceed the income from the oil?


My point is, what happens when the Royalties get so large that one cannot do business?

The Tar Sands have been there a very long time. Extraction of the sands was not practical until recently because of market Will the Premier cut the Royalty rates if the market prices of oil continue to fall?

What of all of the new dependents who take that extra revenue? Will they manage without it too if the Rates fall? Perhaps the Government cannot lower the revenue from the Royalties because someone is now dependent upon it?

I see a lot of this problem where I live. When the Steel Mills were fully operational governments expanded to fully use the tax revenue. The Steel Mills are mostly gone now. Those local governments who grew fat on manufacturing taxes now run speed traps (speed limits are made artificially lower and then police entrap people who "speed" through the area). These governments have also raised property taxes and income taxes and go begging to the State Capital for money.

You have to focus on the long term, not take more money because businesses "are doing so well". So even if we disagree on the idea of Royalties it's still reasonable to set them at levels which do not endanger the businesses.



Lots of good paying jobs in the fields. To me that is reward enough for having a business nearby.

As far as "checks" go....Bastiat warned that once citizens of a Democracy can vote themselves money out of the Treasury hard times are not too far behind.

As best evidence let me offer the spectacle of the US Congress "bailing out" big banks and investment firms which followed the lead of US Home Loan agencies by chasing shaky borrowers and then "bundling" loans into "securities". The program to buy the "toxic debt" will no longer be taken, instead banks can just get the money. Welfare for the super rich, which to me is just as wrong as welfare for able bodied folk who would rather loaf than work.

Gene

a company that makes cakes does not get their raw material (let's say flour) for free because it's useless without them to make something edible out of it.
they have to pay for the flour just like an oil company has to pay for the raw material from whoever owns it, which in this case is the people of alberta.


sure, i agree that corporate welfare is wrong,
but the government got themselves into this trouble by deregulating the banking industry.
the only reason why canada's banks are in such good shape compare to those in the u.s. and europe was that our government resisted deregulating the banking sector in the mid 90's.
as far as i'm concerned, industry has proven that they cannot police themselves.

[GeneW]

Originally Posted by stuffy

a company that makes cakes does not get their raw material (let's say flour) for free because it's useless without them to make something edible out of it.

If they raised their own wheat and ground it into flour would they owe the local government money because the wheat grew out of the land? How about the people in the local area, since it's on "their" land?

It's not the much of a difference... raising wheat requires land. So does mining tar sands.

Why does the farmer not pay by the bushel for raising corn or wheat but the oil company pays for mining tar sand? Maybe because there is enough money being made to "justify" the reasoning?

Originally Posted by stuffy

but the government got themselves into this trouble by deregulating the banking industry. the only reason why canada's banks are in such good shape compare to those in the u.s. and europe was that our government resisted deregulating the banking sector in the mid 90's.

as far as i'm concerned, industry has proven that they cannot police themselves.

First of all, it was the US Mortgage industry that got into trouble, not the banks.

The cause of all of this was when two US agencies that loan money for mortgages, Fannie Mae and Freddy Mac, were told to loan money to minorities in order to curb "unfair lending practices". This was done by the Clinton Administration in the 1990s.

For the Reader's digest version go here

http://www.lewrockwell.com/suprynowi...ynowicz95.html

The original New York Times Article about the disaster, nine years before it happened, go here...

link

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Canada didn't play this shit and hence isn't in the shit today.

For a very long time Fannie Mae and Freddy Mac have also "bundled" securities. Much longer than the current period. Fannie Mae certificates were rock solid investments, before it became fashionable to Social Engineer via the Banks.

The US Mortgage Industry "followed" suit, a safe thing to do. Too bad that a few bad actors really did entice a few dummies to sign on the dotted line, because their over reach and foolishness is going to hurt an industry which has done nothing wrong except blindly follow the two leaders- Freddy Mac and Fannie Mae.

The people who deserve punishment are Bill Clinton, Andrew Cuomo, and both Dems and Reps who watched this train wreck and sat on their hands because they figured that the Housing Market was a "measure of prosperity".

Gene

[jclo3313]

Gene,
What is the third letter in your name?