Tuesday, November 11, 2008
BAILING OUT G.M. AND FORD HA HA
General Motors and Ford burned through a stunning $14.6 billion in cash last quarter. G.M.'s stock has sunk so low that you could buy the entire company for $2 billion. Bankruptcy seems all but inevitable. Why are "we the people" bailing these blunder heads out? I thought the bailout was for BANKS so they could loan money to business's they thought might be able to repay. That's called BANKING. When Billy Ford and the CEO's at GM are willing to take a pay cut and show they CARE then will talk. And don't tell me the worker's benefits and health care are part of the problem, the Problem is you chose to make the the wrong SIZE cars. I doubt Bubba on the line made the decision to make Gas Guzzlers. How did Toyota figure it out.
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4 comments:
This is very sad. Ford today closed @ $1.80, GM @ $2.92. 2.5 million jobs are directly at risk. What to do?
Dubya ought to loan them enough to get through the first quarter of '09. Do the same, as need be, with Ford + Chrysler. Then, the Obama administration will have to deal with it. I think Dubya ought to insist on the Colombia trade deal in exchange, as is rumored.
If Bush does this, Obama's people need to immediately (pre-inauguration) get together with all three automakers with the idea of cutting a grand deal. The US needs to see a plan that will show the automakers thrive - not just survive - if implemented. We need to address this once and for all.
I think this will mean that the workers take 35% +/- pay cuts. Retirees too. Health benefits need to be further rationalized. In exchange, the workers will get to keep their jobs. In addition, they ought to get a share of future profits, perhaps through direct stock ownership. The retirees will see the benefits continue, albeit at a lower level, which would otherwise be jeopardized.
Many other cuts need to be made. Dealership rosters need to be cut in half and the losing outlets need to be compensated as provided in their contracts. Loads of redundant real estate needs to be unloaded. Weak brands need to go away (Buick, Pontiac, GMC, Mercury).
Revolutionary changes are needed from stem to stern. Anyone who thinks this is merely the union's fault are sadly mistaken. The workers have been giving back since the late '70's, after grossly overreaching in the 50's and '60's. Alas, they have not given back enough. Not yet.
Any + all government funds should be treated with debtor-in-possession status; first in line to collect in the event of failure.
Ordinarily, I wouldn't mind just letting them all go BK and handle it that way. The problem is, we can't have everything collapsing at once. Housing, banking, retail, commercial real estate, etc. It is all coming undone. Again, there are 2.5 millions jobs directly at risk and ten times as many indirectly. The ripple effect would be huge - internationally - not just in the US or the industrial heartland. Honestly, the future looks a lot more like the '30s than the '70s these days.
I don't think our government did a very good job so far.
I'm am becoming more Libertarian by the moment.
Bax,
Nice post.
I do support bankruptcy because I think it is the best way to get rid of Management while restructuring. Throw those bums out! They actually suck more than Bush does.
BK will bring new capital and new management. BK does not mean the production lines stop, but it could mean the BS stops. Negotiations between Politicians and existing Management cannot be expected to result in a paradigm shift. BK offers the best chance for real change.
Hags
Hags - I appreciate your thoughtful posts.
I agree that Chapter 11 offers a lot of advantages. The rub is that it may make sales further implode. The otherwise conservative talking heads favoring the bailout make several points: car buyers don't want to be associated with a loser. They want to take pride in their new wheels. They don't want to have to worry if warranties will be honored. BK has never worked before with such a consumer product . Airlines and retailers, no problem as the consumer isn't making a big commitment. A car is their second largest asset. Why buy from a BK company when there are so many other cars (imports) to buy?
Lastly - a BK for one will mean a BK for all, including most suppliers. It won't be isolated. A huge part of our industrial economy will be in bankruptcy. The timing couldn't be worse.
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