How to Bail Out General Motors

NEWSWEEK

« Return to Article

Discuss

Member Comments

  • Posted By: keng52 @ 11/17/2008 5:56:06 PM

    If Detroit could produce a marketable product we wouldn't be worrying about a bailout.

  • Posted By: wilmo @ 11/17/2008 5:45:13 PM

    I agree with gw401. Raise the tariffs on Asian and European imports so that Detroit can continue to produce crappy cars, pay non-competitive wages and reward clueless management. Why settle for excellence if we can get away with mediocrity? Long live protectionism.

  • Posted By: gw401 @ 11/17/2008 5:20:42 PM

    WE SHOULD START TAXING ASIAN AND EUROPEAN AUTO MAKERS INSTEAD OF THE TAX BREAKS CLINTON GAVE THEM WITH THE FREE TRADE AGREEMENT.
    THE GOVERMENT SHOULD BAIL OUT DETROIT,THEY HELP CREATE THE PROBLEM.
    U.S. MANUFACTURING OF ALL KINDS IS AT A DISADVANTAGE AS LONG AS THE GOVERMENT CONTINUES TO GIVE TAX INCENTIVES TO ASIA AND OUR U.S COMPANYS TAX BREAKS FOR DOING BUSINESS WITH THEM.

  • Posted By: Rick Hale @ 11/17/2008 5:20:22 PM

    IF THE GOVERNMENT WANTS TO HELP GM ,, WHY DON'T THEY GIVE THE AMERICAN TAX PAYER $2000 TAX CREDIT TO BUY A NEW AMERICAN CAR.... THE PROBLEM IS GM NEEDS TO SELL CARS!!!!!!!!

  • Posted By: gw401 @ 11/17/2008 5:13:48 PM

    WE SHOULD STOP GIVING ASIAN AND EUROPEAN AUTO MANUFACTURES THE TAX BREAKS AND START TAXING THEM TO OFFSET THE MONEY NEEDED TO HELP DETROIT.
    U.S.MANUFACTURING HAS BEEN AT A DISAVANTGE SINCE CLINTION SOLD US OUT WITH THE FREE TRADE AGREEMENT

  • Posted By: PhillyRules @ 11/17/2008 4:59:00 PM

    There's no easy answer here. Normally, GM should suffer the consequences of poor management and excessive labor contracts. Unfortunately , these are not normal times. When you see Hartford, Genworth and Lincoln Financial all aquiring thrifts so they qualify for this bailout money, it seems that the government should help an industry who really does have a potential to throw our unemployment through the ceiling. Is if fair, definitely not. But think about how much more economic pressure 2-3 million more unemployed will bring - government benefits not to mention even more pressure on a depressed housing industry. It's sad that our country is in this much trouble, but if we're helping financial corporations (who equally or worse mismanaged their businesses), we should do the same for this industry.

  • Posted By: C. MacLean @ 11/17/2008 4:11:15 PM

    Throwing money at GM until the ecomomy rebounds is ridiculous - the economy isn't going to rebound enough for people to buy new cars for the next two years. We have a glut of cars on the market now, and in a recession, people won't be buying new cars until they have jobs, and until the glut is reduced - not unlike the housing market.

    We shouldn't bail out GM. We should bail out the people who will be out of work when GM fails. If we are going to commit more taxpayer money for a bail out, let it go to the people who will be laid off in the form of job-retraining - somebody has to put make the wind turbines for our new green economy, right?

    Declare Michigan a federal disaster area just like we would if it were hit by an earthquake or major hurricane, allow it to be eligible for federal disaster aid, and send the taxpayer money we would have sent to GM to the people instead.

    GM shouldn't file chapter 11 to reorganize - if they were capable of reorganizing they would have done it by now. GM should file chapter 7 and liquidate - sell all the assets, including the factories, land, patents, equipment, dealerships, and inventory.

    Some enterprising capitalist will buy what is salvagable and in 2 years we'll have better, cheaper, more energy efficient cars. Let the proceeds from the liquidation go into the pension and healthcare funds, and if there's anything left, a few cents on the dollar to the stockholders.

    GM is history - rather than prop up a dead company, let's figure out how to protect the employees, aid the communities that will be hurt the most, try to minimize the damage, and go forward.

    And in 6 months or a year, if we need to assist Ford and Chrysler to file chapter 7, we can do that, too.

  • Posted By: KathrynVD @ 11/17/2008 4:00:09 PM

    I like this article, except for one thing. I disagree that raising gas prices will positively affect the economy. Most hybrid cars today run on hydro-electric or electric-gas models, which require a battery replacement roughly every 4 years or so. The batteries can cost anywhere between $5000 to $15000 to replace. Add that on to the higher gas cost, and you'll bankrupt most consumers within 10 years. Not the goal here at all.

  • Posted By: MadTexan @ 11/17/2008 11:34:21 AM

    Over the last 20 years American companies GM Included have examined new and creative ways to make sure every job they could possibly take off shore was farmed out to low cost workers in other countries including India, China, Mexico, Canada and many many more. Now when there are no well paid US workers to buy their products they want the same US workers taxes to bail them out. I say let them call India, China, Mexico, Canada and all the other countries who benifited from their "off shoring" to bail them out. I dont have a job and cant pay for it now.

    • Posted By: nunatak @ 11/17/2008 1:03:58 PM

      Was that mad or insane Texan? Without access to the cheap resources guaranteed by NAFTA, Americans might not have enough gas to put in their cars, metals to build them, or markets to sell them back to. Look at a map, and then thank Canada for it's services.

      • Posted By: Doc Howl @ 11/17/2008 3:47:43 PM

        WTF? We did fine for 200 years without NAFTA. We can do it again.

    • Posted By: Mrflynn1 @ 11/17/2008 12:43:39 PM

      Comment: Over the last 20 years American companies GM Included have examined new and creative ways to make sure every job they could possibly take off shore was farmed out to low cost workers in other countries including India, China, Mexico, Canada and many many more. Now when there are no well paid US workers to buy their products they want the same US workers taxes to bail them out. I say let them call India, China, Mexico, Canada and all the other countries who benifited from their "off shoring" to bail them out. I dont have a job and cant pay for it now.

      You must not know how far Canada is from the GM Like 1 Mile away, and by the way Canada does not have cheap labor. Detroit and Windsor are sister cities. Check your map!!!!!

  • Posted By: raycoast @ 11/17/2008 1:00:20 PM

    I am sick and tired of the misconception that Toyota builds a better product. It just plain is not true anymore, This is coming from someone who used to be a Toyota Loyalist. Ford and GM quality has gone way up in the last decade and believe it or not Toyota quality has dropped signifcantly. The last two Camry's I purchased were junk, I bought a Ford Fusion this last time and it has been great. My friends bought a Camry the same time we bought the Fusion and they have needed the Tranny fixed and replaced twice in the first 8 months. My other friends bought one of the Toyota Sienna's and they needed to replace the engine because of a manufacturing fault that caused failure and black smoke to poor out. Of course everybody including the media buys into they myth well if Toyota is replacing it that means they are taking care of the customer but when Ford or GM have a recall for some trivial part its presented as front page news as a quality control problem.

    • Posted By: Doc Howl @ 11/17/2008 3:46:04 PM

      " I am sick and tired of the misconception that Toyota builds a better product. It just plain is not true anymore,"

      Toyotas sell. Toyota is not asking Japan for a bailout. I fail to see your point.

  • Posted By: LindanJW @ 11/17/2008 3:44:18 PM

    The govenment is bailing out banks. Those banks should be required to put up the DIP financing that GM will require in Chpt 11. This allows for a structured reorganization that permits labor contracts to be renegoiated and for GM to get the correct business model in place. Those executive managers do not get their golden gift in Chpt 11 and get replaced with turnaround specialist that understand what business model will work. There are so many start up companies attempting to solve the car fuel issue there will be demand for cars, just the cars that meet the market requirements. All of the car companies deserve the same options as any other company that has failed to innovate and change with the times. Do what every other cash strapped company does, file bankrupcty.
    But since we are bailing out the banks, require them to provide the credit that is required to get through a Chpt 11 filing. No ifs, buts about it, they are require to grant credit to the auto industry as a condition of their bailout funds.

    That gets the credit markets working again, the auto industry the time and ability to reorg and the consumer the opporunity to create the demand for the next products.

  • Posted By: LindanJW @ 11/17/2008 3:36:58 PM

    The govenment is bailing out banks. Those banks should be required to put up the DIP financing that GM will require in Chpt 11. This allows for a structured reorganization that permits labor contracts to be renegoiated and for GM to get the correct business model in place. Those executive managers do not get their golden gift in Chpt 11 and get replaced with turnaround specialist that understand what business model will work. There are so many start up companies attempting to solve the car fuel issue there will be demand for cars, just the cars that meet the market requirements.

  • Posted By: Jim1348 @ 11/17/2008 3:35:36 PM

    When you spend $3T invading the wrong country, the money has to come from somewhere. Since W. did not chose to raise taxes to pay for it (just as LBJ refused to pay for the Vietnam War), the money can only come from borrowing. And when you don't regulate the credit markets in order to allow the banks to gamble with insured investor's money, the result is sure to be a disaster. So GM gets hurt. That is too bad, but what else is new?

  • Posted By: YashBudini @ 11/17/2008 3:30:11 PM

    The author doesn't get it. You can't fix stupid.

  • Posted By: Holly201 @ 11/16/2008 12:15:30 PM

    Petition Congress at:

    http://www.rallycongress.com/no-bailout-for-the-auto-industry/1409/

    NO BAILOUT FOR THE AUTO INDUSTRY



    Nancy Pelosi, with the help of Barney Frank, wants to bail out yet another failed sector of the economy. It is not government???s role to reward incompetent, overpaid executives pursuing a failed and anachronistic business model. The American auto industry is in trouble because it produces a shoddy, polluting, gas guzzling product at noncompetitive prices driven by trade union benefit packages. It is a waste of taxpayer money to try to shore up an industry that needs to be radically restructured. The Big Three should be allowed to fail and file for reorganization under Chapter 11 of the Bankruptcy Code. They will not cease to exist, but will be restructured under the supervision of the bankruptcy courts. Congress cannot do a better job than the courts. The courts will supervise the reorganization of the industry without being tempted to reward lobbyists, campaign contributors and unions for their political and financial support.

    Congress must allow the economy, existing laws and judicial bodies to resolve the Big Three???s financial problems and not throw more taxpayer money away under a hasty and ill conceived bailout.

    • Posted By: purdue1 @ 11/16/2008 12:28:30 PM

      I just love a spoon fed idiot that comes back for seconds. CHAPTER 11 ISN"T AN OPTION. Let me repeat that....CHAPTER 11 ISN"T AN OPTION.

      Do you possibly have the strength to turn off Fox News and try not to look at this along party lines? Believe it or not GM, Ford, and Chrysler (and the entire supply base) employ both Democrats and Republicans. I would assume that Democrats and Republicans purchase cars also.

      Has the American public actually been dumbed down to the point where they just take opinions from pundits and have no capacity to form their own educated (or at least somewhat informed) opinions and views?

      • Posted By: bighappy @ 11/16/2008 4:09:02 PM

        Hey, Detroit Director, where do you see GOP-only opinion? The great majority here are strongly against the bailout. And don't say here are only Republicans, because pre-elections responses were mostly pro-Obama's. As for your doomsday scenarios: Chapter 7 will not close immediately (if ever) all auto factories and will not stop production. And I will not hesitate buying Ford (which I have now) or other Big 3 car if it does not get worse. but I think twice before buying anything from "constatntly" and irreversably bancrupt company temporarily releaved (for couple years max) by huge bailout. And in 2 years bancruptcy will be so huge - Detroit will be no more and you will lose your job forever. Go watch CNN and keep ypur hope.

        • Posted By: purdue1 @ 11/16/2008 4:28:21 PM

          A 'great majority' here are opposed to the 'bailout' because they are flat-out too friggin' stupid to realize they are hurting themselves or too stubborn to get past party thinking. As a matter of fact, and although it might be insulting, I can tell just by how your comment is a grammatical mess that you are exactly hitting on all cylinders yourself. Have you considered pursuing a G.E.D.? What's comical is that although you sling stones at me, I'm actually in favor of protecting the jobs for people like yourself (or 'you' in uneducated slang).

          Look, have some faith in us 'morons' in Detroit. Believe it or not, and as much as we dislike it at times, we're just as much in favor of seeing the guy twisting wrenches make it as we are ourselves.

          • Posted By: bighappy @ 11/16/2008 4:52:31 PM

            1. My "grammatical mess" is because my original language is not English (even I american citizen), to your knowledge I have Ph.D. degree (math, physics), much better education than you and equal position.
            2. Your tendency to insult your opponents proves that as a Director you should be fired even before the bancruptcy.
            3. I believe your latest response (insults only) entitled me to name you a moron (grammatically correct, yes?) and stop talking to you, as I also encourage the others here to do. Good buy, moron.

            • Posted By: purdue1 @ 11/16/2008 5:13:51 PM

              OK, good bye imbecille. I also find it comical that someone that comes to this country as an immigrant finds it easy to call our products junk and our professionals morons. Although I appreciate and admire the legal immigrants that come to this country to pursue a better life and, as such, agree to contribute to our society....you flat suck. You're just another euro-trash moron here because you can make more money. You're not even an American citizen. You just have a an American passport. That, sir, makes you a freaking douche bag.

              • Posted By: bighappy @ 11/16/2008 5:50:26 PM

                Let me answer one last time. You are a typical Democratic hypocrite, you talk about immigrants rights (even illegal) - and suddenly "euro-trash", you were the worst US rasists in 60th (let alone 160 years ago) - and suddenly you are the minorities best friends. Yes, you are native born american, but you are typical american parasite, one of those who brought this great country to the brink of bancruptcy. Even you name yourself americam citizen - you represent it pure anti-american, anti-business part of it, you don't fight for american workers, just try to keep your priveleges. As owner of American passport - I contribute, and as "pure American citizen and "respectful" manager - you suck american blood. And yes, big part of american professionals unfortunately are incompetent and /or corrupt (you are one of them), because american education is a joke (not my observation) despite all the money (mostly looks like this baylout), but it is a subject of another discussion.

                • Posted By: purdue1 @ 11/16/2008 7:44:26 PM

                  There you go folks, American education is a joke. Therefore, since our Universities are flooded with jerk offs like bighappy (paying no tuition, I might add), I suggest we just end our programs designed for foreign students. Of course, that would expel hundreds of thousands of their students. But, then again, why not just end it early since it's such a joke. I guess I'll call up NASA and tell them to stop hiring engineers from US Universities while I'm at it. They'll never accomplish anything anyway.

                  • Posted By: bighappy @ 11/16/2008 8:26:27 PM

                    Yes it is a joke, Not the teachers, not the ability to learn - the requirements are a joke. To your ill-educated knowledge, I pay my daughter $26K tuition in one of the best US univercities. It is one half, because she is straight As, 100% SAT student. To achieve it - she even does not break a sweat, so easy the requirements are. I know that their math and physics program are on 9th grade level of Russian, Chiniese or Israel High Schools. If you want to learn volunteerely - you have opportunities, if you like parties - you will be a typical American graduate. No surprise, "off-boat" foreigners are welcomed here and contribute in American future (as it happen for decades), and such low-educated roaches like you have to rely on parents money and self-criminal activities (I mean Detroit-like way of business).

                    • Posted By: Doc Howl @ 11/17/2008 3:24:46 PM

                      "volunteerely"?

                    • Posted By: purdue1 @ 11/16/2008 11:03:02 PM

                      Now, THIS is comical stuff. Have you considered working a stage in Vegas? You're a sure fire hit with this caliber of material.

            • Posted By: purdue1 @ 11/16/2008 6:08:02 PM

              I'd put my Master's degree in engineering from Purdue against your Bulgarian Ph.D. any day of the week. Do you know how many jerk offs I've met from Europe/Asia and (god forbid) Asia with Ph.D.s that didn't the know the difference between butter and poop? Please...spare me...in fact, spare all of us.

  • Posted By: Doc Howl @ 11/17/2008 3:19:45 PM

    Here's a tough condition: No bailout. Period.

  • Posted By: Bestglenn @ 11/17/2008 3:13:41 PM

    Okay people, quit trying to think about it. Pretend you are 5 years old and every Saturday you play marbles with Tom from the next street over. Every Saturday Tom ends up with 3 of your marbles ( you have an ongoing trade deficit) after a few weeks even your dumb 5 year old brain figures out that eventually Tom will end up with all your marbles. Quit playing marbles with Tom. Foreign manufacturers do not have to abide by CFR 29 Labor laws or CFR 40 EPA laws. Of course they can produce cars cheaper and that creates an opportunity for a "capitalist" to exploit the inequity between the systems. The net result is that the US manufacturing (mercantilism) is transfered offshore in an attempt to "compete" It is no longer US manufacturing at that point. The US manufacturing foundation of our entire economy has been subverted by "capitalists". Tariff the imports to equalize the inequities. Ayn Rand was a fiction writer and if you suffered through "Atlas Shrugged" you should have set it down when the altruism crept in. As Ms. Rand taught altruism can not exist in a true capitalist society. That is why we created government.

  • Posted By: Richard Helfrich @ 11/16/2008 9:07:41 PM

    Mr Samuelson,
    The Center for Automotive Research source document to which you refer is available at: http://www.cargroup.org/documents/FINALDetroitThreeContractionImpact_3__001.pdf. This document gives an estimate of 2.5 million jobs lost in the first year predicated on the unlikely contingency of ???... the Detroit Three automakers ceasing all operations in United States, or the 100 percent contraction scenario ...??? You suggest that this estimate 'may' be too pessemistic. You then go on to discuss Chapter 11 reorganization for GM alone, which in context suggests that the 2.5 million jobs lost would be attributable to the GM Capter 11 reorganization. The conflation of the estimate of jobs lost and a GM bankruptcy proceding is either a function of extraordinary carelessness, extraordinary dishonesty, or extraodinary contempt for the intellect of your readers.

    • Posted By: purdue1 @ 11/16/2008 10:05:35 PM

      This is what people just can't grasp. This isn't Circuit City. This is a manufacturer of vehicles. There is no Chapter 11 option. No automaker has went through Chapter 11. Don't you think they would have done that already? Don't you think Chrysler would have done that in the 80s instead of the (successful) bailout then?

      Look, GM goes down, that forces Ford & Chrysler to go down because it bankrupts the parts manufactureres (like us). Then we can't pay our suppliers of raw materials. Then they can't pay thiers.

      Not only would that be awful enough, but alot of great companies are also going to get slaughtered. Caterpillar, Cummins, Detroit Diesel, PACCAR, Navistar, John Deere....guess what? They all use the same suppliers as the big 3.

      You are going to see a clusterf*% of biblical proportions. I'm sorry people don't want to accept that or can't see the light. But, that's the bold hard truth.

      • Posted By: valark @ 11/17/2008 3:08:00 PM

        So you are saying just because your company overextended itself by letting out over 6 million in AR invoices out the door without any security, then we should pick up the pieces?

        I really think it would be fair that you do a short cut and paste with a full disclosure every time you post. The fact remains there will still be suppliers, it just may not be you and your company.

  • Posted By: nunatak @ 11/17/2008 2:55:20 PM

    ... and while the remnants of our once proud manufacturing base continue to burn away, the american electorate argue whether we should send firefighters to it's rescue? There will be enough time to point fingers, but the real question now is whether Americans should shock the taxpayer or the economy? Is it possible to shock one without the other? How much damage control now or later? How many years will it take to heal and will it be done gracefully with American investment -- or under foreign ownership? How much Independence are Americans willing to mortgage for the return of these amenities?

    Don't look to me for the answer -- I'm only asking questions we should all be asking of ourselves.

  • Posted By: powerguy @ 11/17/2008 2:54:40 PM

    Wake up Wal Mart shoppers ! This is the great sucking sound that Perot warned us about oh so long ago.

    Consumer greed for poor quality cheap imports has paved the way for this debacle. in the back of their minds consumers actualy know but will never admit it. The unlevel playing field has destroyed our auto industry and many others. No regs on imports. Decent paying jobs, health care, enviro concerns here; low wages, no health care, etc. with our 3rd world competitors.

    Our auto indsutry has improved quality and is poised to go green and now we won't help them thru this tough time ?

    The auto industry should have been the first in line and received most of the bail-out funds before the financial industry; or no bail-out for anyone. The taxpayer would have received more for their investment. As I recall, Iacocca paid the Chrysler loan off early and made many investors rich with the K Car.

    Kias, Hyundais, Daiwoos ? No thank you.

Reply

Report Abuse

Enter comments if any for reporting abuse