Comments on: Would you bail out GM? http://www.thickenmywallet.com/blog/wp/2008/11/18/would-you-bail-out-gm/ Everything to do with thickening your wallet Wed, 01 Feb 2012 15:44:00 +0000 hourly 1 http://wordpress.org/?v=3.3 By: Geoff http://www.thickenmywallet.com/blog/wp/2008/11/18/would-you-bail-out-gm/comment-page-1/#comment-17306 Geoff Tue, 18 Nov 2008 17:29:19 +0000 http://www.thickenmywallet.com/blog/wp/?p=545#comment-17306 Here is how I approach this: 1. GM is worth saving because it contributes positively to society, and we want to make sure people have jobs, 2. GM is worth saving because it contributes positively to society, and we don't care about its employees having jobs 3. GM is not worth saving because it contributes negatively to society, and we don't care about its employees having jobs 4. GM is not worth saving because it contributes negatively to society, and we care about its employees having jobs If GM contributed positively to society then breaking it up will mean the pieces will continue to contribute in their own way. If GM contributes negatively to society - we shouldn't bail them out because there's nothing worth saving. GM's level of success can be found on its balance sheet. Clearly it can't allocate the resources it attained properly. Why entrust it with more so they can squander them? As for the employees - I think its safe to assume most people don't want to see them lose jobs. A government has no knowledge of the auto business. Its business is governing. It would be irresponsible to give an auto company money. Especially since GM has proved to be unable to adapt to the free market's needs (unless you consider adapting as doing nothing and expecting a handout). As for the employees - if we are compelled to throw money at something for their sake lets direct their energies to something good for society, and not just keep the status quo: big SUV's, fuel inefficient cars, etc. Either that or cut taxes and let the free market employ them. Who has a guaranteed job for life? I don't. Here is how I approach this:

1. GM is worth saving because it contributes positively to society, and we want to make sure people have jobs,
2. GM is worth saving because it contributes positively to society, and we don’t care about its employees having jobs
3. GM is not worth saving because it contributes negatively to society, and we don’t care about its employees having jobs
4. GM is not worth saving because it contributes negatively to society, and we care about its employees having jobs

If GM contributed positively to society then breaking it up will mean the pieces will continue to contribute in their own way. If GM contributes negatively to society – we shouldn’t bail them out because there’s nothing worth saving.

GM’s level of success can be found on its balance sheet. Clearly it can’t allocate the resources it attained properly. Why entrust it with more so they can squander them?

As for the employees – I think its safe to assume most people don’t want to see them lose jobs.

A government has no knowledge of the auto business. Its business is governing. It would be irresponsible to give an auto company money. Especially since GM has proved to be unable to adapt to the free market’s needs (unless you consider adapting as doing nothing and expecting a handout).

As for the employees – if we are compelled to throw money at something for their sake lets direct their energies to something good for society, and not just keep the status quo: big SUV’s, fuel inefficient cars, etc. Either that or cut taxes and let the free market employ them. Who has a guaranteed job for life? I don’t.

]]> By: 45free.com http://www.thickenmywallet.com/blog/wp/2008/11/18/would-you-bail-out-gm/comment-page-1/#comment-17305 45free.com Tue, 18 Nov 2008 17:06:01 +0000 http://www.thickenmywallet.com/blog/wp/?p=545#comment-17305 While GM/F/Chrysler are not individually too big to fail, the impact on the economy through all of the inter-related suppliers is huge. Further to that, were GM to fail, the impact would cripple many of those suppliers and force them into bankruptcy. This would ripple through all the other automakers (I am suspecting the foreign makers as well) and destroy the industry and millions of jobs along the way (F's chairman quoted the auto industry as being as big as 10% of the economy). I think they need to be bailed out with some very specific conditions. FNM and FRE are being forced to shrink...so should the big 3 (does GM need all of their brands?). They should be mandated to supply alternative energy vehicles to the market including CNG (as an aside, pressuring the oil companies to include CNG in their distribution network is a far better policy than any windfall tax). Extreme mandates on fuel efficiency standards. Lawmakers should also make it easier for them to bring the smaller autos from overseas into the US market (to be made and sold here not imported). I think if the US is serious about "getting off foreign oil", here is an opportunity to right size the auto industry AND take drastic steps to fix their fuel consumption needs. While GM/F/Chrysler are not individually too big to fail, the impact on the economy through all of the inter-related suppliers is huge. Further to that, were GM to fail, the impact would cripple many of those suppliers and force them into bankruptcy. This would ripple through all the other automakers (I am suspecting the foreign makers as well) and destroy the industry and millions of jobs along the way (F’s chairman quoted the auto industry as being as big as 10% of the economy). I think they need to be bailed out with some very specific conditions. FNM and FRE are being forced to shrink…so should the big 3 (does GM need all of their brands?). They should be mandated to supply alternative energy vehicles to the market including CNG (as an aside, pressuring the oil companies to include CNG in their distribution network is a far better policy than any windfall tax). Extreme mandates on fuel efficiency standards. Lawmakers should also make it easier for them to bring the smaller autos from overseas into the US market (to be made and sold here not imported). I think if the US is serious about “getting off foreign oil”, here is an opportunity to right size the auto industry AND take drastic steps to fix their fuel consumption needs.

]]> By: Phantasmix http://www.thickenmywallet.com/blog/wp/2008/11/18/would-you-bail-out-gm/comment-page-1/#comment-17304 Phantasmix Tue, 18 Nov 2008 14:23:58 +0000 http://www.thickenmywallet.com/blog/wp/?p=545#comment-17304 The "word on the street" is that GMAC is as big as Countrywide. Not as big as Lehman, but still dangerous. The “word on the street” is that GMAC is as big as Countrywide. Not as big as Lehman, but still dangerous.

]]> By: admin http://www.thickenmywallet.com/blog/wp/2008/11/18/would-you-bail-out-gm/comment-page-1/#comment-17303 admin Tue, 18 Nov 2008 14:16:17 +0000 http://www.thickenmywallet.com/blog/wp/?p=545#comment-17303 FYI, GM owns 51% of GMAC. It sold the rest to private equity in 2006. FYI, GM owns 51% of GMAC. It sold the rest to private equity in 2006.

]]> By: admin http://www.thickenmywallet.com/blog/wp/2008/11/18/would-you-bail-out-gm/comment-page-1/#comment-17302 admin Tue, 18 Nov 2008 14:14:28 +0000 http://www.thickenmywallet.com/blog/wp/?p=545#comment-17302 I think the issue of giving any of the Big 3 a bailout on the condition they dismiss their executives is that it is premised on the assumption that, after you cut off the head, the rest of the body is still healthy and I am not sure it is not. GM has done little in terms of innovation and quality in decades. That speaks to a more systemic problem than just who leads the company. I think the issue of giving any of the Big 3 a bailout on the condition they dismiss their executives is that it is premised on the assumption that, after you cut off the head, the rest of the body is still healthy and I am not sure it is not.

GM has done little in terms of innovation and quality in decades. That speaks to a more systemic problem than just who leads the company.

]]> By: Phantasmix http://www.thickenmywallet.com/blog/wp/2008/11/18/would-you-bail-out-gm/comment-page-1/#comment-17301 Phantasmix Tue, 18 Nov 2008 14:02:23 +0000 http://www.thickenmywallet.com/blog/wp/?p=545#comment-17301 (Doo doo bird LOL) (Doo doo bird LOL)

]]> By: Phantasmix http://www.thickenmywallet.com/blog/wp/2008/11/18/would-you-bail-out-gm/comment-page-1/#comment-17300 Phantasmix Tue, 18 Nov 2008 14:02:07 +0000 http://www.thickenmywallet.com/blog/wp/?p=545#comment-17300 They must bailout GM. GMAC a very large financial institution that accounts for half of GM's business. They don't lose majority of money with cars, but with their financial arm. It's not about the cars at all. I'd be willing to bet money that they get the bailout. Otherwise US Congress is run by complete imbeciles - or saboteurs. They must bailout GM. GMAC a very large financial institution that accounts for half of GM’s business.

They don’t lose majority of money with cars, but with their financial arm. It’s not about the cars at all.

I’d be willing to bet money that they get the bailout. Otherwise US Congress is run by complete imbeciles – or saboteurs.

]]> By: Nurseb911 http://www.thickenmywallet.com/blog/wp/2008/11/18/would-you-bail-out-gm/comment-page-1/#comment-17298 Nurseb911 Tue, 18 Nov 2008 12:55:09 +0000 http://www.thickenmywallet.com/blog/wp/?p=545#comment-17298 A true bailout or guaranteed loan doesn't address the fundamental problems of the business models of the big 3 North American autos. Chapter 11 will preserve their long-term sustainability by allowing them to shed most of those legacy costs that are weighing them down so much. If there was a bailout I would hope that the government would dismiss all current executive management as a sign of how you need to be accountable for the businesses you run. They've done a poor job of that and workers deserve better (especially if the tax payer in on the hook). A true bailout or guaranteed loan doesn’t address the fundamental problems of the business models of the big 3 North American autos. Chapter 11 will preserve their long-term sustainability by allowing them to shed most of those legacy costs that are weighing them down so much. If there was a bailout I would hope that the government would dismiss all current executive management as a sign of how you need to be accountable for the businesses you run. They’ve done a poor job of that and workers deserve better (especially if the tax payer in on the hook).

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