Toon : The Auto Bailout

[n2doc]

[stockholmer]

1. too bad it is not true

To break even on GM, the remaining US government owned shares that had to be sold at $53 (and so many on here said that was no problem), as of today, GM is trading under $23. The only way GM will see $53 a share is when the US dollar is so hyper-inflated that is will take 10 or 20 of them to buy a loaf of bread.

GM also took billions of that bailout money to build factories over-seas, NOT in the US. GM had accrued $70 billion in losses in the two years before the bailout and debt 24 times its market capitalization. By contrast, Ford had eliminated money-losing brands and mortgaged all its assets raising funds to weather the economic downturn. By bailing out GM, the administration rewarded its recklessness and penalized Ford’s prudence.

The US continuing erosion/transition from superpower to failed domestic economy is killing GM. Only 1/3 or so of Ford's sales are in the USA, versus GM, which relied up until the recent past for 60%+ of its total sales coming from within the American market.

Look at GM's US core marques: Chevrolet, Cadillac, Buick, and GMC. All but Chevy are based on (compared to the rest of the world) petrol-guzzlers. GM is a day late and a dollar short. Most of their foreign acquisitions ended in tears, and just from 2005 to 2009, they lost over $100 billion dollars. It is a joke that they claim profit for 2010, as this is simply due to huge tax breaks ($45 billion over 10 years that was part of the bailout) and accounting practices that 20 years ago would have been illegal.

Current GM CEO CEO Daniel Akerson was a Managing Director of The Carlyle Group, 'nuff said there. This cruel joke is a pox on both parties. When those tax breaks, interest, and other hidden bankster/broker charges and fees are factored in, the bailout cost was over $100 billion. The US citizens, at the end of the day, are going to take a $50+ billion dollar loss on just the GM portion of this bloated pig of a stock/firm bailout when ALL costs are figured in. Not to mention the structural damage to the concept of legitimate bankruptcy.

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GM stock chart

http://www.google.com/finance?client=ob&q=NYSE:GM#

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The Real Cost of the Auto Bailouts The government's unnecessary disruption of the bankruptcy laws will do long-term damage to the economy.

http://online.wsj.com/article/SB10001424052702303745304576361663907855834.html

[underpants]

2. Great post but we do have to remember that part of Ford's turnaround was a loan from Dept. of Energy

Although Ford did not need money from the $80 billion bailout program, Ford did receive $5.9 billion in government loans in 2009 to retool its manufacturing plants to produce more fuel-efficient cars, and the company lobbied for and benefited from the cash-for-clunkers program — contrary to the ad’s testimonial that Ford is “standing on their own.”

http://www.factcheck.org/2011/09/ford-motor-co-does-u-turn-on-bailouts/

[Sen. Walter Sobchak]

6. The Boeing Boob mortgaged virtually all of Ford's assets on terrible terms

to assemble a 24 billion dollar debt facility that gave them the liquidity to see themselves through the recession. However the terms were so bad they would have been further ahead just going through bankruptcy with the rest of them.

[madmom]

3. But it did succeed in keeping an awful lot of people off the unemployment line, better the money go

there than to wall street.

[stockholmer]

4. billions of the bailout went to building non-US factories for GM,plus many of the so-called new jobs

came from tremendously expensive, front-loaded buyouts of well paid workers, who were then replaced by fresh hires making 1/3 to 1/2 the pay. It was like shuffling deck chairs on the Titanic.

As for 'saving' the workers' jobs, I think there is another way to look at it. When either a failed, or a corrupt business is allowed to go under, new firms always emerge to take their places. If new firms do not, then the entire business model of that bank or firm was no longer needed or was based on pure fraud and parasitic behaviour. You can't force success to flow from a permanently broken pump.

If the US is truly serious about transitioning back to a successful, non-oligarchic economic system, then it needs to invest trillions in rebuilding and expanding its infrastructure, via 50 to 100 year-maturity successive tranches of government ZERO-PERCENT interest credit. Nationalize the Fed, liquidate the zombie banks, and all the other rentier leaches on the system. Suspend all foreclosures for the duration of the crisis, and move with all deliberate spreed to a not-for-profit universal health care system and a replacement of the dying petrol fuel culture via scale-of-economy build out of alternative energy production.

This will create millions of jobs, versus what BOTH the Democrats and the Republicans are doing now (huge tax breaks and bailouts that socialize losses, thus simply further concentrating wealth into the top of pyramid, whilst indebting each citizen to a life of chattel debt peonage).

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GM Contract Would Increase Entry-Level Workers

http://online.wsj.com/article/SB10001424053111904194604576582771324537228.html

[madmom]

5. and in the mean time the people who were working these jobs are

suppose to do what? Many are too old to be rehired anywhere but not old enough to retire, many know no other kind of work. In the mean time in the years it would take for all this "reform" to take place these people would be on unemployment and welfare. Which is the better use of this money?

[stockholmer]

7. a false choice, your line of logic is somewhat the same as used by the banksters on the bailouts

'Give us trillions, or the world ends'.

I also highly doubt that an auto worker who has made $75,000 to 125,000 per annum for years on end will have to go on welfare. I do agree that if their pension funds were in danger, these should be backstopped by the government.

I am a eco-socialist, yet even I realize that it is not a government's place to prop up a PRIVATE, for profit firm that has been run into the ground by its horrific business model. Especially one whose products are so incredibly destructive as gas guzzling cars.

Eventually all this malinvestment will destroy much, much more than one auto firm. Time will show this to be right. Even here in Sweden, the government refused to bail out Saab auto, which is now bankrupt and finished. Choices like that are why we have an incredible social safety net and cultural support meme for all our citizens, yet we ran a surplus for government budget in 2011.

[madmom]

10. "I also highly doubt that an auto worker who has made $75,000 to 125,000 per annum for years on end

will have to go on welfare" , tell that to the people who live in Michigan. There were some who made "the big bucks" as so many like to infer, but a lot of that was counting what the company paid out for benefits not wages to employees. I'm glad things are going so well for you over there, here not so much!
I live with and around these people I see it first hand and yes many would be on welfare in short order.

[B Calm]

8. Republicans fought against saving US manufacturing jobs

and LOST!

I still don't like it being called a bailout, when it was in fact a loan.

It did save my job and I'm very grateful!!

[JNelson6563]

9. Ah, the human aspect!

Always fun to watch the ivory tower analysis by those who apparently had little to fear in regard to homelessness, hunger and the other things that come with no income.

I am glad you have your job and that many more will also soon have jobs in the American auto industry. 1,250 more jobs in Detroit with Chrysler announced last week.

Julie