Comments on: Let’s All Take Some Blame for the GM Bailout http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 23:28:32 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: brianoh http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/comment-page-1/#comment-126717 brianoh Sun, 16 Nov 2008 22:43:38 +0000 http://www.ritholtz.com/blog/?p=9109#comment-126717 I think your article chooses to ignore history - remember the GM EV1? This is a case of "be careful what you wish for". GM fought the California Clean Air policies and won - or did they lose? GM chose to pursue gas-guzzlers and ignored all of the warnings about the oil crisis. Ovonics conveniently disappeared - taken over by who? - an oil company. One would not have to be a conspiracy theorist to smell fish. So, GM made its own bed and now must lie in it. The GM Volt looks like good technology, but is a case of too much too late - price-wise. A bailout may happen and may succeed short term, but long term there are many worries. Chapter 11 could be better in some respects, but risks the consumers abandoning GM. Perhaps the die is cast. I think your article chooses to ignore history – remember the GM EV1? This is a case of “be careful what you wish for”. GM fought the California Clean Air policies and won – or did they lose? GM chose to pursue gas-guzzlers and ignored all of the warnings about the oil crisis. Ovonics conveniently disappeared – taken over by who? – an oil company. One would not have to be a conspiracy theorist to smell fish. So, GM made its own bed and now must lie in it. The GM Volt looks like good technology, but is a case of too much too late – price-wise. A bailout may happen and may succeed short term, but long term there are many worries. Chapter 11 could be better in some respects, but risks the consumers abandoning GM. Perhaps the die is cast.

]]> By: Mike in Nola http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/comment-page-1/#comment-125828 Mike in Nola Wed, 12 Nov 2008 19:44:11 +0000 http://www.ritholtz.com/blog/?p=9109#comment-125828 BTW, don't know if anyone remembers this further example of really stupid energy/industrial policy: http://abcnews.go.com/Technology/Hybrid/Story?id=97505&page=1 BTW, don’t know if anyone remembers this further example of really stupid energy/industrial policy:

http://abcnews.go.com/Technology/Hybrid/Story?id=97505&page=1

]]> By: Mike in Nola http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/comment-page-1/#comment-125827 Mike in Nola Wed, 12 Nov 2008 19:35:29 +0000 http://www.ritholtz.com/blog/?p=9109#comment-125827 Chuck: I don't think he was wrong about protectionism just because he didn't foresee that once manufacturers got their appetites whetted by maquiladora factories just on the other side of the border, they saw no reason not to move them further afield. And, as is now becoming apparent, the whole globalization and free trade theory was based on the faulty premise that we could get by without making anything for export, but just by borrowing from those who sold us the goods in order to finance our trade deficit. This was the major cause of the debt that is now being unwound. Chuck:

I don’t think he was wrong about protectionism just because he didn’t foresee that once manufacturers got their appetites whetted by maquiladora factories just on the other side of the border, they saw no reason not to move them further afield.

And, as is now becoming apparent, the whole globalization and free trade theory was based on the faulty premise that we could get by without making anything for export, but just by borrowing from those who sold us the goods in order to finance our trade deficit. This was the major cause of the debt that is now being unwound.

]]> By: Winston Munn http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/comment-page-1/#comment-125818 Winston Munn Wed, 12 Nov 2008 19:03:33 +0000 http://www.ritholtz.com/blog/?p=9109#comment-125818 "They–the American companies and the Japanese–made the cars and trucks we wanted to buy. Cars that we could afford to drive because cheap gasoline made our reckless choices possible." Yes, and this profligacy has driven our foreign policy - Question: other than oil of what stategic importance is the Middle East? Answer: None. How many wars have we fought in the past 10 years over this non-stategic bit of land? “They–the American companies and the Japanese–made the cars and trucks we wanted to buy. Cars that we could afford to drive because cheap gasoline made our reckless choices possible.”

Yes, and this profligacy has driven our foreign policy – Question: other than oil of what stategic importance is the Middle East? Answer: None.

How many wars have we fought in the past 10 years over this non-stategic bit of land?

]]> By: Chuck Ponzi http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/comment-page-1/#comment-125817 Chuck Ponzi Wed, 12 Nov 2008 19:02:42 +0000 http://www.ritholtz.com/blog/?p=9109#comment-125817 Mike in Nola, I'll agree that there was a great sucking sound, but it wasn't to Mexico like he presumed... and the basis for his anti-nafta agenda. Perot was wrong about protectionism. He just didn't see the incredible sucking sound from India and China. chuck Mike in Nola,

I’ll agree that there was a great sucking sound, but it wasn’t to Mexico like he presumed… and the basis for his anti-nafta agenda.

Perot was wrong about protectionism.

He just didn’t see the incredible sucking sound from India and China.

chuck

]]> By: deanscamaro http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/comment-page-1/#comment-125813 deanscamaro Wed, 12 Nov 2008 18:49:46 +0000 http://www.ritholtz.com/blog/?p=9109#comment-125813 The only agreement I, (as a representative of society) is that "we" were sucker enough to continue to buy humongous SUV's because the Big 3 advertised and pushed to sell them for big profits. Strange how the foreign manufacturers recognized the strategy that needed to be followed (fuel efficiency, quality, etc.) and made a success of it in the U.S. They are being hit now, not because of many bad decisions, as the Big 3 has made in the past, but because the economy is presently in the tank. Watch who comes out of this economy hit first when it starts to pick up. The only thing that will change that is if "we" are sucker enough to take the hook from the Big 3 if they are bailed out and go back to the same old rag. The only agreement I, (as a representative of society) is that “we” were sucker enough to continue to buy humongous SUV’s because the Big 3 advertised and pushed to sell them for big profits. Strange how the foreign manufacturers recognized the strategy that needed to be followed (fuel efficiency, quality, etc.) and made a success of it in the U.S. They are being hit now, not because of many bad decisions, as the Big 3 has made in the past, but because the economy is presently in the tank. Watch who comes out of this economy hit first when it starts to pick up. The only thing that will change that is if “we” are sucker enough to take the hook from the Big 3 if they are bailed out and go back to the same old rag.

]]> By: Mike in Nola http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/comment-page-1/#comment-125783 Mike in Nola Wed, 12 Nov 2008 17:00:06 +0000 http://www.ritholtz.com/blog/?p=9109#comment-125783 I like, john haskell have never owned an SUV. My wife worked about a mile and a half from our house. I was a few miles away. So, I don't feel guilty, just po'd and having to pay for all the fat idiots in their fat vehicles. The problem shows crazy old Ross Perot was right. He proposed a $1/gallon gasoline tax fifteen years ago. Use the money to pay off the national debt and the tax to give an incentive for fuel efficiency. Think he was right about the "great sucking sound" too. BTW, we did have a mechanism in place to give an incentive to buy more fuel-efficient cars: It was the gas guzzler tax. Would have done something if enforced. I remember a 120 lb lady lawyer friend who insisted on buying an Escalade back in the early part of the century even though she had to commute 30-40 miles each way to the office. If the gas guzzler tax had been enforced, it would have added $8k to the cost of about $40k at the time. But as wikipedia says: "This does not include minivans, sport utility vehicles or pick-up trucks." I suppose that last was John Dingell's doing; he's the shill for Detroit. I like, john haskell have never owned an SUV. My wife worked about a mile and a half from our house. I was a few miles away. So, I don’t feel guilty, just po’d and having to pay for all the fat idiots in their fat vehicles.

The problem shows crazy old Ross Perot was right. He proposed a $1/gallon gasoline tax fifteen years ago. Use the money to pay off the national debt and the tax to give an incentive for fuel efficiency.

Think he was right about the “great sucking sound” too.

BTW, we did have a mechanism in place to give an incentive to buy more fuel-efficient cars: It was the gas guzzler tax. Would have done something if enforced. I remember a 120 lb lady lawyer friend who insisted on buying an Escalade back in the early part of the century even though she had to commute 30-40 miles each way to the office. If the gas guzzler tax had been enforced, it would have added $8k to the cost of about $40k at the time. But as wikipedia says: “This does not include minivans, sport utility vehicles or pick-up trucks.” I suppose that last was John Dingell’s doing; he’s the shill for Detroit.

]]> By: KJMClark http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/comment-page-1/#comment-125782 KJMClark Wed, 12 Nov 2008 16:59:57 +0000 http://www.ritholtz.com/blog/?p=9109#comment-125782 Have to agree with John. Many of us have long been in favor of higher gas taxes, or better yet carbon taxes. I'm not ready to absolve the auto industry of their problems, either. They could have negotiated more favorable contracts, they could have helped push for national health care, they didn't have to spend so much money advertising trucks and SUVs, and they didn't have to fight CAFE standards. I get a farm magazine, Progressive Farmer, and this past issue was pretty astounding. GM shipped a big, glossy calendar with every issue that mostly advertises their trucks and SUVs. Even with that, they took the back cover of the magazine for a truck ad as well. Dodge bought a full two-page spread for their trucks. I didn't see a Ford ad; I guess they're being responsible. The auto industry has been doing this kind of advertising for years because it works. Their advertising played a large roll in the increased public appetite for trucks and SUVs. My conditions for an industry bailout: no advertising on anything that doesn't get 28mpg or better combined - and flexfuel doesn't count, bonuses and golden parachutes are banned, no one can earn more than 25% more than the staff level below them, no one may earn more than the US President, and an immediate end to any jobs bank. Have to agree with John. Many of us have long been in favor of higher gas taxes, or better yet carbon taxes. I’m not ready to absolve the auto industry of their problems, either. They could have negotiated more favorable contracts, they could have helped push for national health care, they didn’t have to spend so much money advertising trucks and SUVs, and they didn’t have to fight CAFE standards.

I get a farm magazine, Progressive Farmer, and this past issue was pretty astounding. GM shipped a big, glossy calendar with every issue that mostly advertises their trucks and SUVs. Even with that, they took the back cover of the magazine for a truck ad as well. Dodge bought a full two-page spread for their trucks. I didn’t see a Ford ad; I guess they’re being responsible. The auto industry has been doing this kind of advertising for years because it works. Their advertising played a large roll in the increased public appetite for trucks and SUVs.

My conditions for an industry bailout: no advertising on anything that doesn’t get 28mpg or better combined – and flexfuel doesn’t count, bonuses and golden parachutes are banned, no one can earn more than 25% more than the staff level below them, no one may earn more than the US President, and an immediate end to any jobs bank.

]]> By: KJ Foehr http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/comment-page-1/#comment-125780 KJ Foehr Wed, 12 Nov 2008 16:57:17 +0000 http://www.ritholtz.com/blog/?p=9109#comment-125780 Their failure was not that they fed into Americans egoistic desire for BIG status symbols, but that they failed to make high quality small cars to prepare for the inevitable increase in oil prices. This was exemplified by Ford’s former CEO Nasser who said he didn’t want to sell low margin “econoboxes”. Their failure was in not developing higher margin small cars like Toyota (and Lexus), Honda (and Accura) and Nissan (and Infiniti) did. Detroit always equated small with cheap, unless it was a big engine sports car like Corvette, which always was a niche market. And so they missed the fact that many Americans really did want a more upscale small car. Their model line-up was / is too unbalanced, which left them unprepared for $4 gas; exactly like they were caught with their pants down during the 1970s oil embargo. Fool me once shame on you; fool me twice shame on me. They have no one to blame but themselves. Their failure was not that they fed into Americans egoistic desire for BIG status symbols, but that they failed to make high quality small cars to prepare for the inevitable increase in oil prices. This was exemplified by Ford’s former CEO Nasser who said he didn’t want to sell low margin “econoboxes”. Their failure was in not developing higher margin small cars like Toyota (and Lexus), Honda (and Accura) and Nissan (and Infiniti) did.

Detroit always equated small with cheap, unless it was a big engine sports car like Corvette, which always was a niche market. And so they missed the fact that many Americans really did want a more upscale small car.

Their model line-up was / is too unbalanced, which left them unprepared for $4 gas; exactly like they were caught with their pants down during the 1970s oil embargo.

Fool me once shame on you; fool me twice shame on me. They have no one to blame but themselves.

]]> By: john haskell http://www.ritholtz.com/blog/2008/11/lets-all-take-some-blame-for-the-gm-bailout/comment-page-1/#comment-125773 john haskell Wed, 12 Nov 2008 16:38:33 +0000 http://www.ritholtz.com/blog/?p=9109#comment-125773 I own a Nissan Sentra and drive 2 miles to work. My wife takes the bus. I disclaim any and all responsibility for this clusterf*ck. Oil prices are unpredictable. Sort of like the price of the US Dollar or the Icelandic kronor for that matter. There is always an argument for letting Nancy Pelosi, Nikita Khruschev or Mao Zedong control the price in order to "cut waste." For my part I think we should start with a blue-ribbon commission in Washington which will regulate the number of wasteful blog posts in the blogosphere. I own a Nissan Sentra and drive 2 miles to work. My wife takes the bus. I disclaim any and all responsibility for this clusterf*ck.

Oil prices are unpredictable. Sort of like the price of the US Dollar or the Icelandic kronor for that matter. There is always an argument for letting Nancy Pelosi, Nikita Khruschev or Mao Zedong control the price in order to “cut waste.”

For my part I think we should start with a blue-ribbon commission in Washington which will regulate the number of wasteful blog posts in the blogosphere.

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