Comments on: GM Halted

By: 49er

49er — Mon, 10 Nov 2008 06:48:21 +0000

GM is an HMO masquerading as an auto manufacturer, AIG was a hedge fund masquerading as an insurance provider. Perhaps if they would have focused on their original lines of business, they would have been in less pain.

By: johnny

johnny — Sun, 09 Nov 2008 02:49:05 +0000

great time to be a lawyer that’s for sure.

By: Theodore D.

Theodore D. — Sat, 08 Nov 2008 06:44:53 +0000

Can bankruptcy laws really handle something this size. Am I overly cynical of lawyers if I say I am not sure I want them adding to this mess. I was reading on the Becker-posner blog about how bankruptcy laws may have played a hand, albeit, small hand in all of this. I am just nervous about letting the courts get involved. This seems like a problem that is bigger than the court system at this point and it might be dangerous to put it in a judges hands.

I doubt this would happen but how great would it be if, as others suggested, we let them fail – have a bad 3 years and invest the 25b Obama is going to give them in alternative fuel vehicles. We could make the prius look like a hummer. Too bad it won’t happen.

By: Greg0658

Greg0658 — Fri, 07 Nov 2008 23:01:35 +0000

Henry – “You think he wants to drive up to the club in a car made by a bankrupt company?”
FYI – in the construction trades – it used to be a black mark to drive up to a jobsite in a foreign car or truck.
As foeign imoney started buying up (or investing) America that changed. But … imo Wall Street never saw the world that way. Cause it was the money play trade of the day and cool to boot.

By: Mannwich

Mannwich — Fri, 07 Nov 2008 19:39:59 +0000

@SaneInSF: Add to that list credit cards…….”and a-down we go” is right. Until incomes for the rank and file go up significantly we will be merely running fast just to stay in place.

By: SaneInSF

SaneInSF — Fri, 07 Nov 2008 19:37:44 +0000

Yes, they can’t afford $25K, but, lo-and-behold, with favorable financing or a great lease, they “could.”

Hmm. Sounds similar to Real Estate — excess liquidity from leasing and financing. And a-down we go….

By: DL

DL — Fri, 07 Nov 2008 19:24:14 +0000

Henry1807 @ 2:13

No question that bankruptcy would hurt sales. But the CEO’s could make it very clear to the public exactly which models they would continue to support, and which they will discontinue. What matters, from a practical perspective, is that the companies continue to provide parts. And even for cars that have been discontinued, parts continue to be readily available for many years thereafter.

If another $25B would really solve all the problems and prevent job losses, then maybe it would be worth considering. But the U.S. auto companies are in a long term decline regardless, to say nothing of the next 12 months which is going to be bad with or without the bailout.

I say NO BAILOUT, but let Obama go ahead and use some of his “political capital” to do just that.

By: John

John — Fri, 07 Nov 2008 19:14:12 +0000

Yes, both management and employees via their unions are to blame. But another is the federal government for coddling the industry. All three groups must understand that, as constantnormal wrote, “It is not essential to the USofA that we have a domestic auto industry”!

By: Henry1807

Henry1807 — Fri, 07 Nov 2008 19:13:49 +0000

I think people are missing an important point when they say that GM or Ford or Chrysler can use bankruptcy to reorganize and improve, just like the steel companies or airlines. The difference is this:

A lot of people relate the car they drive to their ego, at least to some extent. Imagine this scenario: Guy is comparing a Caddy and a Benz. Good income, can afford either. You think he wants to drive up to the club in a car made by a bankrupt company? Same thing with the other GM brands.

Another issue: People would worry about quality. A lot of the car-buying decision is based on perceived quality. A bankrupt company does not inspire much confidence in terms of build quality, service, etc.

By: KJ Foehr

KJ Foehr — Fri, 07 Nov 2008 19:06:52 +0000

Joe S. Pack said, “Winston Mun has it nailed. I work for these guys (supplier) and can’t afford a new Detroit vehicle. Most average income families can’t afford a new car, Detroit or Foreign.”

Yes, Henry Ford knew this 94 years ago,

“The same year [In 1914] , Henry Ford shocked the world with what probably stands as his greatest contribution ever: the $5-a-day minimum-wage scheme. The average wage in the auto industry then was $2.34 for a 9-hr. shift. Ford not only doubled that, he also shaved an hour off the workday. In those years it was unthinkable that a guy could be paid that much for doing something that didn’t involve an awful lot of training or education. The Wall Street Journal called the plan “an economic crime,” and critics everywhere heaped “Fordism” with equal scorn. But as the wage increased later to a daily $10, it proved a critical component of Ford’s quest to make the automobile accessible to all. The critics were too stupid to comprehend that because Ford had lowered his costs per car, the higher wages didn’t matter — except for making it feasible for more people to buy cars.”
http://www.time.com/time/time100/builder/profile/ford3.html