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Bob Lutz, a retired vice chairman of GM and author of the book Car Guys vs. Bean Counters: The Battle for the Soul of American Business, was at GM at the time of the crisis. "Frankly, what we told ourselves at General Motors was we're sure he's a good governor, but he doesn't know what he's talking about in this instance," Lutz says. Lutz says he and other executives wrote off Romney's idea of a private-sector restructuring for one simple reason. "What he conveniently forgets is that there was zero liquidity in the country," Lutz says. "There was no way to fund a private Chapter 11 — even though, believe me, General Motors really tried to get private debt financing or organize a private Chapter 11. But there was no money to do it."
Quote:
Lutz describes himself as a conservative and a Republican and he's no fan of President Obama — that is, except in the case of the auto rescue. "He just went in and he put the right team together and he got it done and the results are there for all to see, and I think you have to give credit where credit is due," Lutz says.
If we had let the auto industry fail as Republicans wanted, would Ohio be better off today than it is now?
Quote:
Originally Posted by BajanYankee
When you bet against the American worker, as Mitt Romney did, YOU LOSE.
Your entire premise is flawed and smacks of Göbbeling.
Concerning the operation of any business, there are three Laws of Economics that cannot be violated:
1] You must provide a product or service that is in demand; and
2] The product or service you provide must be of the highest possible quality comparatively; and
3] You must market your product or service at the most competitive price.
If you fail to do any one of those three, you fail. GM provided cars that were boring and not really in demand, and the cars were not of any real quality comparatively, and they were not competitively priced.
In other words, other auto-makers built exciting cars that were in demand, of superior quality than GM and priced lower than GM. KIA comes to mind as do several other auto-makers.
Remember GM is a global corporation -- it must compete globally to survive.
The Laws of Economics also state that your business model must be of the highest order of efficiency in order to profit.
GM's business model is a freaking nightmare that would scare Dracula and Freddy Kruger to death.
Had GM failed, it would have entered Chapter 11 Bankruptcy Re-Organization. The bankruptcy court would have appointed a receiver to take over GM's operations, dump the unprofitable parts of GM and correct its business model.
How is that a bad thing?
GM is basically an heroin addict and instead of helping the addict get clean and sober, the government just gave the addict a few year's supply of heroin.
GM is still giving you boring cars that are not in demand, of low quality comparatively and not competitively priced, plus GM did not change its business model, so what will happen to GM eventually?
It will fail....congratulations.
We could re-phrase your silly question to "Would Ohio be better off if the government had subsidized the buggy-whip industry and the 8-track tape industry?
I'm curious, why do Liberals rail against sub-prime mortgages, yet remain silent about sub-prime car loans --- especially when it comes to GM?
You didn't learn anything from the sub-prime mortgage debacle?
What happens when GM can't collect on its sub-prime car loans?
I'm sure you will now resort to propaganda and disinformation claiming that the whole US is dependent on the US auto-industry.
Before you do that.....
Quote:
How Many Jobs Depend on the Big Three?
“The auto industry supports one of every 10 jobs in the United States,” Gov. Jennifer M. Granholm of Michigan wrote in a CNN.com plea for a bailout of Detroit’s Big Three. The day before, she told “The Early Show” on CBS that “this industry supports one in 10 jobs in the country,” adding, “If this industry is allowed to fail, there will be a ripple effect throughout the nation.” Manyothershaveusedthesamestatistic. That’s a scary figure. It’s also somewhat misleading.
The figure is routinely attributed to the Center for Automotive Research, but officials at the nonprofit organization, which has ties to labor and government, claim they never said it and have no idea where it came from. "It's such an exaggeration. I kind of grit my teeth every time I hear it," said Debbie Maranger Menk, a project manager at the center who researches the industry.
Would Ohio Be Better Off If the Auto-Industry Had Perished?
What makes you think the auto industry would "perish" if we'd let them go bankrupt as they should have?
There are a number of more viable auto companies that would LOVE to be able to buy up ready-made auto production plants, with supply chains set up and work forces already in place and living around them, especially for the low prices they would find at a bankruptcy proceeding. And not just to let them sit around and do nothing.
If we had let them go bankrupt, they would have been right back into production in a month or two, building everything from Fords to Hondas to Mercedes to Caterpillars to Cirruses. Yes, the workforces would have been unemployed for that month or two. (Notice that the Chevy Volt production line was shut down recently, and not for the first time.) Sh|t happens when you work for a poorly-run company. But they would have been re-hired in short order, all but the few really sloppy or lazy workers that companies that want to build good, economical products have no use for.
And those plants would have not only been up and running again, but running BETTER, if we had let them go bankrupts as they should have. And the poor management practices that had led them to bankruptcy, would have been GONE.
Bankruptcy. Scary in the short run, beneficial in the long run. It cuts out the dead wood, and lets a company come back in better condition.
So why did we bail them out instead of change management and come back?
Because some of the dead wood to cut out, were UNION CONTRACTS that forced the companies to pay $30/hour for some guy to put Part A into Slot B all day, an unskilled function not worth half that, and collect an 80% pension after retiring at age 45, for the rest of his life while doing nothing.
But unions manipulate huge numbers of VOTES, more than the biggest lobbyist ever could... and so to the politicians doing the bailing out, their demands came before the needs of the companies.
Yes, bankruptcy meant the end of union coercion and bloodsucking in the auto companies. They would have had to negotiate brand-new contracts, and even negotiate their very existence in those companies. And without their old muscle and ability to threaten the companies, those negotiations might have resulted in something far less lucrative for the union bosses, and more fair for the companies trying to compete.
And the unions could never have tolerated such fairness, nor lived with it. The idea of their workers getting paid what their labor was worth, rather than what the unions would have destroyed the companies for if they didn't get it (and here we're talking really destroyed, not just reorganized and reopened as bankruptcy would have done), was completely the opposite of what the unions intended.
AMERICAN WORKER - American citizen or legal immigrant available to be or already employed in America.
FWIW - Mitt Romney, as leader of Bain Capital, bet against the American Worker and WON a lot of money while causing severe economic pain to the communities and people he robbed.
If you are going to make a claim you have to back it up!
I'm curious, why do Liberals rail against sub-prime mortgages, yet remain silent about sub-prime car loans --- especially when it comes to GM?
You didn't learn anything from the sub-prime mortgage debacle?
What happens when GM can't collect on its sub-prime car loans?
Mircea
I appreciate most of your posts since you tend to be very well informed.
Since I work peripherally to this situation, the sub-prime car loans are not the problem that the home loans are. They have grown but are still nowhere near the pre-collapse levels so don't get caught up into the *surge* because they shrank to a TINY amount and are now just rebounding.
In fact, it was the home loans that killed banking which then no one could get a car loan which then screwed the car sales.
People have to drive, they make their car payments when they can't make others.
So to reiterate, what sunk the car companies wasn't auto loan defaults, it was the fact that no one could get credit to buy a car and they got suffocated by existing inventory.
The expanding sub-prime loans for the auto industry is just a normal rebound.
Would Ohio Be Better Off If the Auto-Industry Had Perished?
What makes you think the auto industry would "perish" if we'd let them go bankrupt as they should have?
There are a number of more viable auto companies that would LOVE to be able to buy up ready-made auto production plants, with supply chains set up and work forces already in place and living around them, especially for the low prices they would find at a bankruptcy proceeding. And not just to let them sit around and do nothing.
If we had let them go bankrupt, they would have been right back into production in a month or two, building everything from Fords to Hondas to Mercedes to Caterpillars to Cirruses. Yes, the workforces would have been unemployed for that month or two. (Notice that the Chevy Volt production line was shut down recently, and not for the first time.) Sh|t happens when you work for a poorly-run company. But they would have been re-hired in short order, all but the few really sloppy or lazy workers that companies that want to build good, economical products have no use for.
And those plants would have not only been up and running again, but running BETTER, if we had let them go bankrupts as they should have. And the poor management practices that had led them to bankruptcy, would have been GONE.
Bankruptcy. Scary in the short run, beneficial in the long run. It cuts out the dead wood, and lets a company come back in better condition.
So why did we bail them out instead of change management and come back?
Because some of the dead wood to cut out, were UNION CONTRACTS that forced the companies to pay $30/hour for some guy to put Part A into Slot B all day, an unskilled function not worth half that, and collect an 80% pension after retiring at age 45, for the rest of his life while doing nothing.
But unions manipulate huge numbers of VOTES, more than the biggest lobbyist ever could... and so to the politicians doing the bailing out, their demands came before the needs of the companies.
Yes, bankruptcy meant the end of union coercion and bloodsucking in the auto companies. They would have had to negotiate brand-new contracts, and even negotiate their very existence in those companies. And without their old muscle and ability to threaten the companies, those negotiations might have resulted in something far less lucrative for the union bosses, and more fair for the companies trying to compete.
And the unions could never have tolerated such fairness, nor lived with it. The idea of their workers getting paid what their labor was worth, rather than what the unions would have destroyed the companies for if they didn't get it (and here we're talking really destroyed, not just reorganized and reopened as bankruptcy would have done), was completely the opposite of what the unions intended.
A lot of theory in there.
Other companies would have surely snapped up those car plants because that's what happened in Detroit and Flint, right?
Right?
Right wing garbage.
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