General Motors, Do They Deserve Failure?

[cdrewferd]

Didn't Toyota execs have to go in front of a congressional committe when they had the stuck accelerator problem? That didn't kill anywhere near 300 people, I remember it being less than 20. How many think that GM will have to go before congress over their disreguard for safety?

 

[ChildrenOfBodom]

Didn't Toyota execs have to go in front of a congressional committe when they had the stuck accelerator problem? That didn't kill anywhere near 300 people, I remember it being less than 20. How many think that GM will have to go before congress over their disreguard for safety?

Just to add to this... Toyota was not at fault for what happened. The conclusion was pedal confusion and sue-happy people.

GM knew exactly what they were selling.

 

[cdrewferd]

Just to add to this... Toyota was not at fault for what happened. The conclusion was pedal confusion and sue-happy people.

GM knew exactly what they were selling.

That's my point. When Toyota found out about the problem, they investigated it and fixed it. GM decided to risk peoples lives and got a bunch killed. They won't have to go before anybody and answer questions. Heck, they won't be penelized at all since they are an American car maker. Had this happened to a foreign car maker, it would be all over the news.

 

[Lester Lugnut]

Just to add to this... Toyota was not at fault for what happened. The conclusion was pedal confusion and sue-happy people.

If that's the case, why were 1000s of Toyota's recalled for the pedal issue? My '06 Avalon was. I stood 30 ft. away near the service area and watched a dealer tech remove mine and many others. The pedals were taken over to a work bench where some sort of mod was made.

How would this eliminate "pedal confusion" ?

 

[TEQ.FZJ]

GM needs to fail. Plain and simple. I believe it would send a strong message to other car manufacturers. Better get your act together because the gub'ment is NOT gonna step in and help.

A lot of people blame only executive/senior management but I think it's more widespread. That organization has become corrupt and toxic over the years. The mentality trickles down, don't think it's just the higher ups. And the Board? Those old fossils are so disconnected from the business they haven't got a clue to what's going on. The entire idea of a Board of Directors makes no sense to me anyways. Public companies should be held accountable to...you guessed it, the public.

It's time to stop the bleeding and flush them out. Let another auto maker step in and take over operations. Let them decide what parts of the business they will keep and what they will kill off during the restructure.

 

[lastlaugh]

[MENTION=65101]BrianSD_42[/MENTION]

Thank you for the post. I had never heard of the NUUMI plant, or This American Life before you posted that. I love intellectual reporting that really makes me think, and there is so little of it happening today. After listening to the NUUMI report, I downloaded the entire first 500 episodes, and will be listening to them for awhile! Thanks again!

 

[TheArkMaster]

That's very good! On the point of tax dollars though: Where did the money come from to bail them out? Taxes. What about the loss we still have of over 10B? Taxes. How much would it cost to cover unemployment for the employees that could not find a job if they failed? Still taxes but less of them. The truth is that part of the country would close up shop if we let them fail because they are a big piece of the puzzle. I voted for to let them sink or swim but when we did bail them out I understood the reasoning and the politics of both sides.

I agree with you 100%. Thats why I say in reality, who knows what is/could happen, I would like to see them fail, but either way, the taxpayers pay. Might as well do the ethical and logical thing at this point.

 

[bofa]

That's very good! On the point of tax dollars though: Where did the money come from to bail them out? Taxes. What about the loss we still have of over 10B? Taxes. How much would it cost to cover unemployment for the employees that could not find a job if they failed? Still taxes but less of them. The truth is that part of the country would close up shop if we let them fail because they are a big piece of the puzzle. I voted for to let them sink or swim but when we did bail them out I understood the reasoning and the politics of both sides.

Oddly enough $10B loss was much less than what could have happened without intervention.

I hate to quote info from Bloomberg, but this is interesting and directly pertains to this discussion:

A total automobile-industry shutdown from a liquidation of GM and Chrysler would have cut 2.63 million jobs from the U.S. economy in 2009, according to a study by the Center for Automotive Research released just hours before the Treasury announced its stake sale. The bailout saved or avoided the loss of $105 billion in transfer payments and the loss of personal and social insurance tax collection in 2009 and 2010, according to CAR.

The auto bailout will rank as “one of the most important interventions, maybe the most important, in U.S. economic history,” Sean McAlinden, CAR’s chief economist, who led the analysis, said yesterday in a telephone interview. Without it, “the upper Midwest would still be a gaping, double-digit unemployment hole in the economy, 600,000 retirees would’ve lost their pensions.”

Also, interesting point from a competitor and a guy I admire for his business savvy:

CEO Alan Mullaly said, "If GM and Chrysler would've gone into free-fall, that could've taken the entire supply base into free-fall also, and taken the U.S. from a recession into a depression. That is why we testified on the behalf of our competitors even though we clearly did not need precious taxpayer money."

 

[BrianSD_42]

[MENTION=103374]lastlaugh[/MENTION]


This one is also a must listen to ....

Trends With Benefits | This American Life

he number of Americans receiving federal disability payments has nearly doubled over the last 15 years. There are towns and counties around the nation where almost 1/4 of adults are on disability. Planet Money's Chana Joffe-Walt spent 6 months exploring the disability program, and emerges with a story of the U.S. economy quite different than the one we've been hearing.

There are sooooo many really good episodes. Not every one is great but quite a few. Here are some episodes I have listened to an can vouch for as being entertaining. Some of these are also on their favorites list.



The Giant Pool of Money | This American Life



Kid Politics | This American Life


Switched At Birth | This American Life


Middle School | This American Life


129 Cars | This American Life



When Patents Attack... Part Two! | This American Life



Harper High School, Part One | This American Life


Harper High School, Part Two | This American Life


Testosterone | This American Life



Inside Job | This American Life



Turncoat | This American Life



:fro:

 

[BrianSD_42]

Just to add to this... Toyota was not at fault for what happened. The conclusion was pedal confusion and sue-happy people.

GM knew exactly what they were selling.

I don't know man .... they just announced today a $1.2 BILLION settlement with the justice department. Toyota chose to settle. Although they did not admin any criminal guilt.

 

[02SE]

Also, interesting point from a competitor and a guy I admire for his business savvy:

CEO Alan Mullaly said, "If GM and Chrysler would've gone into free-fall, that could've taken the entire supply base into free-fall also, and taken the U.S. from a recession into a depression. That is why we testified on the behalf of our competitors even though we clearly did not need precious taxpayer money."

Mr. Mulally may have business savvy, but he is also apparently adept at not telling the full story. He was quick to take a 5.9 Billion Government loan, funded by "precious taxpayer money".

Maybe he should consider politics..

Ford Motor Co. Does U-turn on Bailouts

 

[bofa]

Mr. Mulally may have business savvy, but he is also apparently adept at not telling the full story. He was quick to take a 5.9 Billion Government loan, funded by "precious taxpayer money".

Maybe he should consider politics..

Ford Motor Co. Does U-turn on Bailouts

Are you talking about the $25B DOE loan program? That was hardly a bailout and the "green energy" loans program is a different animal, imo (another program I disagree with in general). This was not set up just for Ford, nor was it exclusive to them. Other companies like Nissan and Tesla also participated in the program... as well as, *gulp* Fisker. At least Ford has the ability to repay and didn't need the funds to stay solvent.

There's still about $15B up for grabs from what I recall, if anyone is feeling frisky.

 

[Brique]

Things that feel good in the short run are often bad in the long run. Things that are good in the long run are often painful in the short run.

Employees losing their jobs from GM or BofA or any other large company folding would be painful in the short run, but in the long run would lead to a more resilient, more robust economy and would reward companies that are run well.

Bailing out companies that misbehave and mismanage only guarantees a repeat of that activity. If you relish the thought of constant crises and unemployment, bailouts are a sure fire recipe for it.

I'll also point out that when GM went bankrupt, the people who were owed money due to previous recall fatalities were shafted, while the union contracts were preserved in violation of federal bankruptcy law. I'm not mad at unions, but I'm frustrated that we're right back where we started, only with another 300 people dead.

 

[nevada]

Oddly enough $10B loss was much less than what could have happened without intervention.

I hate to quote info from Bloomberg, but this is interesting and directly pertains to this discussion:



Also, interesting point from a competitor and a guy I admire for his business savvy:

i don't think that's accurate. I would ASSume those figures are based on nobody taking over, or filling the gap that was left. yes it would have had an immediate short term negative impact, but the long term gains would have outweighed it.

most of those people are skilled workers, they WOULD find more work.
another company likely would step in and take over, KEEPING many of those previously skilled workers. I don't believe it would be any near as bad as that report says.

 

[bofa]

i don't think that's accurate. I would ASSume those figures are based on nobody taking over, or filling the gap that was left. yes it would have had an immediate short term negative impact, but the long term gains would have outweighed it.

most of those people are skilled workers, they WOULD find more work.
another company likely would step in and take over, KEEPING many of those previously skilled workers. I don't believe it would be any near as bad as that report says.

No, what would happen is you would flood the market, employers would be even more selective than they are now and offer lower wages (which is why wages are already stagnant and many current skilled worker positions remain unfilled), and that would land on the government's balance sheet once again.

There is not a 1:1 job ratio when a competitor folds and another company absorbs the demand... not even close! As as I mentioned earlier, this could have other downstream effects like price increases due to demand out-scaling supply at the manufacturing level.

I fail to see how increased unemployment, lower wages for skilled workers, and higher prices helps any of us.

The bailout alternative was a risky investment but gave GM a chance repay the funds. Really the only reason the government even lost money is because they cashed out their chips early.

 

[TEQ.FZJ]

I fail to see how increased unemployment, lower wages for skilled workers, and higher prices helps any of us.

You're not looking at the bigger picture, the long term effect. You're just worried about the now. Bailing GM out is like putting a band-aid over a gunshot wound. You're just prolonging the inevitable. That company is destined to fail because of how it's managed. They are a sinking ship that will never be able to stay afloat on their own.

When do you say enough is enough?

 

[BrianSD_42]

If you guys really want to know what led to the collapse of 2008 listen to or read "The Big Short" by Michael Lewis.

F'n awesome book that is a gripping read.

 

[02SE]

Are you talking about the $25B DOE loan program? That was hardly a bailout

Read the link I posted. I never said it was a bailout. I said Ford was more than happy to take a Government loan backed by taxpayers, even though according to Mulally from your quote "We clearly did not need precious taxpayer money".

Bottom line, Ford DID take taxpayer money, even though they like to claim they didn't.

 

[bofa]

You're not looking at the bigger picture, the long term effect. You're just worried about the now. Bailing GM out is like putting a band-aid over a gunshot wound. You're just prolonging the inevitable. That company is destined to fail because of how it's managed. They are a sinking ship that will never be able to stay afloat on their own.

When do you say enough is enough?

And you are too quick to throw in the towel. This is a 100+ year old company that led the the global auto industry in sales for almost 80 of those years and, despite it's issues, still consistently ranks in the top 10 on the Fortune 500, not to mention is a top 25 employer in the US. This isn't some dot com start up that nobody will miss in the morning. Sometimes you need a little gumption to stick things through and can't just throw your hands up in the air.

 

[bofa]

Read the link I posted. I never said it was a bailout. I said Ford was more than happy to take a Government loan backed by taxpayers, even though according to Mulally from your quote "We clearly did not need precious taxpayer money".

Bottom line, Ford DID take taxpayer money, even though they like to claim they didn't.

They didn't need it.. they took advantage of a government loan program that was meant to encourage faster implementation of new energy standards. Taxpayers will make money on this deal. This money was allocated rather Ford borrowed or not.. I'd rather make interest on the $5B they borrowed than have it sitting there like the remaining $15B.