General Motors, Do They Deserve Failure?

[02SE]

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

 

[bofa]

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

If that oversimplification makes you feel better about your position, so be it.

A government loan for which you must apply, qualify for based on financial viability, be used toward energy improvements and US jobs, and establish repayment terms is not the same as capital infusion.

 

[BrianSD_42]

But he's right ... Ford went to congress begging for the free money loans and only after they saw the requirements imposed by applying for and accepting the loans did they balk and back out.

IF congress had approved a loan for Ford and Ford had accepted the terms they would have had to operate under new rules for compensation and also disclose a whole bunch of information to the public. The government (and we the people) want to know how our money is being spent. Ford would have been scrutinized for every bonus it paid out and much more.

In all I agree that fords view of history is distorted to say the least.

 

[bofa]

But he's right ... Ford went to congress begging for the free money loans and only after they saw the requirements imposed by applying for and accepting the loans did they balk and back out.

IF congress had approved a loan for Ford and Ford had accepted the terms they would have had to operate under new rules for compensation and also disclose a whole bunch of information to the public. The government (and we the people) want to know how our money is being spent. Ford would have been scrutinized for every bonus it paid out and much more.

In all I agree that fords view of history is distorted to say the least.

Eh, it was a request for a line of credit. It wasn't the immediate injection GM and Chrysler needed to keep the lights on. Ford wasn't begging and even admitted up front that they may never actually use the money. I think it was more of a precaution than anything because they knew if GM failed it would rock commodities and the entire supply industry. In the end, you are right, they backed away when they realized the exposure it would create.

The DOE loan program is still very different... and there's a reason other auto makers didn't qualify and ended up withdrawing their applications after years of waiting.

 

[nevada]

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.

right, it wouldn't be a 1:1. it also wouldn't be ZERO, which is what I assume that article implies.

it wouldn't have been as bad as they said.
the long term things would have been better if they had been allowed to fail.

 

[bofa]

right, it wouldn't be a 1:1. it also wouldn't be ZERO, which is what I assume that article implies.

it wouldn't have been as bad as they said.
the long term things would have been better if they had been allowed to fail.

There's no telling if it would have been zero. It's not that outlandish considering this was at a time when stated unemployment was around 10% (actual was likely as much as 15% and already on its way to 17%).

The housing bubble had just popped, bankruptcies were at an all time high, GDP was still in the negative, and you think we were ready for another rug to be pulled out?

And how do you know the long term outcome would have been better? Based on what?

 

[02SE]

If that oversimplification makes you feel better about your position, so be it.

I would argue that you're attempting to make it more complicated than it is.

Do you by chance have some Ford stock in your portfolio? :tape:

 

[nevada]

There's no telling if it would have been zero. It's not that outlandish considering this was at a time when stated unemployment was around 10% (actual was likely as much as 15% and already on its way to 17%).

The housing bubble had just popped, bankruptcies were at an all time high, GDP was still in the negative, and you think we were ready for another rug to be pulled out?

And how do you know the long term outcome would have been better? Based on what?

there becomes a point where you stop bailing a sinking ship, and abandon it.

when a poorly managed private company needs the government to step in to keep it from going under, THAT is the time to stop.

 

[bofa]

I would argue that you're attempting to make it more complicated than it is.

Do you by chance have some Ford stock in your portfolio? :tape:

No direct ownership, but seeing that it's a component in the S&P 500 it's likely that most people with any kind of investment account has some skin in the game.

I'm kind of amused that people want to demolish GM because of poor management, but then we have an example of a positive change in management and self-sufficiency in Ford and you try to lump them in the same category.

there becomes a point where you stop bailing a sinking ship, and abandon it.

when a poorly managed private company needs the government to step in to keep it from going under, THAT is the time to stop.

You can keep repeating rhetoric (and believe me, I was saying the same thing initially so I understand it), but you dodged my question. How do you know the long term outcome would have been better? Based on what? Please tell me how a complete collapse would have been better for jobs, GDP, or even tax payers vs the repayment of a bailout and continued employment for hundreds of thousands, if not more, people.

And remember, the only reason there was a loss is because the government decided to cut ties before the full value was realized. The reality is that GM was capable of repaying the full sum and more, given enough time. I'd call that a success. They still need help at the management level though.

 

[02SE]

No direct ownership, but seeing that it's a component in the S&P 500 it's likely that most people with any kind of investment account has some skin in the game.

I'm kind of amused that people want to demolish GM because of poor management, but then we have an example of a positive change in management and self-sufficiency in Ford and you try to lump them in the same category.

Buddy, I ran my own successful business. I know how the financial markets work. You don't need to explain anything to me.

You may or may have not noticed that I haven't voted in the poll. The reason is that the questions are too vague for me to vote for either option.

I don't want to demolish GM. I absolutely want them to succeed on their own merit. The only problem I have (besides the 10.5 billion loss of taxpayer dollars) is that once the Government starts bailing out private business, where does it stop? If it's fair to bailout one poorly run business, why not all of them? It's a slippery slope that leads to a place we don't want to be.

The problem I have with Ford and Mr. Mulally, is a simple lack of honesty. If they were forthright with the truth, and didn't try to rewrite history, I would think much more highly of them.

 

[bofa]

Buddy, I ran my own successful business. I know how the financial markets work. You don't need to explain anything to me.

You may or may have not noticed that I haven't voted in the poll. The reason is that the questions are too vague for me to vote for either option.

I don't want to demolish GM. I absolutely want them to succeed on their own merit. The only problem I have (besides the 10.5 billion loss of taxpayer dollars) is that once the Government starts bailing out private business, where does it stop? If it's fair to bailout one poorly run business, why not all of them? It's a slippery slope that leads to a place we don't want to be.

The problem I have with Ford and Mr. Mulally, is a simple lack of honesty. If they were forthright with the truth, and didn't try to rewrite history, I would think much more highly of them.

I haven't voted either. I am against the idea of a bailout in general, but in this case it was the right call. I think this proves my original point that it's not always black and white. Sometimes when you have the capacity to do something and can justify it, you move forward.

I'm also against losses of taxpayer money, obviously, but that was the government's decision and not GM's. The fact that good chunks of that sale went to Berkshire Hathaway and Statestreet raises eyebrows too.

Mulally didn't lie. Ford did not need the money. They did not request capital infusion. They simply sought a line of credit to create cashflow as insurance against future market decline (because as we saw post housing-bubble, when markets contract, access to credit tightens). It was a smart decision to test the waters for the LOC and even smarter to turn it down once they realized the terms. They said up front they may not even use it. They didn't proceed with the formality of getting the LOC and obviously didn't need it. They stayed afloat on their own and are now profitable once again.

Trying to compare their participation in the DOE loans to that of the "bailout" is just naive. They are two separate programs, serve separate purposes, and completely different in terms of what it meant to the industry. Ford survived just fine on their own. The loan was a separate program for energy improvements and the supposed creation of jobs. The money is being repaid in full with interest by a company that has fully recovered and proven it's viability. The terms of the program specifically precluded the companies that needed the government bailout, which again proves that Ford didn't need the money.

 

[02SE]

I'm also against losses of taxpayer money, obviously, but that was the government's decision and not GM's. The fact that good chunks of that sale went to Berkshire Hathaway and Statestreet raises eyebrows too.

I'm well aware that was the Obama Administrations call. I never said otherwise.

Mulally didn't lie. Ford did not need the money.

I don't care if they needed it or not.

They took a Government (taxpayer dollars) loan, and have since tried to imply that they never did. That is the rewriting of history I'm talking about. It is also dishonest on Mulally's part.

 

[bofa]

I'm well aware that was the Obama Administrations call. I never said otherwise.



I don't care if they needed it or not.

They took a Government (taxpayer dollars) loan, and have since tried to imply that they never did. That is the rewriting of history I'm talking about. It is also dishonest on Mulally's part.

The implication was that they were never bailed out. You can stick to your point. But I personally have no problem with them participating in a DOE loan program that was meant to accelerate implementation of fuel efficiency standards and create jobs and I won't mind the ROI we receive either... now if we could only get it to come back to the taxpayers.

 

[bofa]

That awkward moment when your test drive turns into a fire drill...

(no, not the chinese kind)

http://autos.yahoo.com/blogs/motora...catches-fire-during-test-drive-191522831.html