General Motors

[Addendum]

It would have to be something on the scale of World War 2, but even then I couldn't say for certain either way. I was simply talking about the set up that exists with some of the auto makers now, and applying that to the other auto makers in the States. The contracts that the military presents has to be appealing to the auto makers, and the product that the auto makers propose or make has to appeal to the military.

 

[BlackLantern]

http://www.bloomberg.com/apps/news?pid=20601087&sid=alVGKKMtmQV4&refer=home

GM to start notifying 1,100 dealerships of closure....

my question...what happens to all those cars??

 

[BlackLantern]

http://money.cnn.com/2009/05/27/news/companies/gm_bond_offer/index.htm?postversion=2009052707

The ship is sinking

 

[Handsome Rob]

What were they thinking trying to short-change the bondholders like that???

I'm not sure how many of those bonds were being held by managers of retirement funds and investment funds, but trying to make them out as evil and greedy (as I've seen comments on other sites imply) shows a fundamental lack of understanding about bonds.

For all the bondholders who had these bonds in funds for people's retirement and investment, they have a fiduciary duty to their clients to make prudent investment decisions. If they felt that the bonds-for-stock swap wasn't in the best interest of their clients (and it certainly looks like it wasn't from what I've seen), they didn't have a choice but to reject the offer. If they accepted and the return was reasonably less than they would have made in a bankruptcy settlement, then the clients could sue. If they did the swap, then the bondholders would lose their place in line if (and more likely when) GM eventually did go into bankruptcy--secured creditors are first in line for the distribution of assets in a bankruptcy (and common stockholders are at the end of the line). A fiduciary duty is a legal obligation, and breach of it entitles the wronged party to damages.

I wish some of these people would even make an effort to think this through--they gripe and moan about the employees of GM losing their jobs and act as if all of the bondholders are sitting up in their ivory towers, lighting their Cuban cigars with hundred dollar bills from their GM investment and laughing at the lost jobs. But, they don't bother to examine the other side--that these bonds are funding other people's retirements, college educations, etc. And not just the wealthy. If you have a 401k, you almost certainly have investments in bonds--they provide a lower rate of return on average than stocks, but they are considered a safer investment in return.

OK . . . rant over.

 

[BlackLantern]

well it looks like today might be the day

 

[SuBe]

Well, guess I am trading in my Chevy Truck then.

 

[BatMatt]

Well, guess I am trading in my Chevy Truck then.

go hybrid

 

[SuBe]

I'm getting a Mercedes E-Class.

 

[BlackLantern]

Well, guess I am trading in my Chevy Truck then.

get while the gettings good....I have a friend who works at a Nissan dealership, they sell used cars as well and her boss just bought a chunk of GM cars on the cheap

 

[Kurosawa]

I'm getting a Mercedes E-Class.

I've owned 3 foreign cars. Never again.

This battle was lost long ago when the US allowed Japan to declare economic war on the US auto industry and they refused to stand up to them.

 

[SuBe]

I refuse to own a vehicle from a company that accepted bailouts. I paid them a bail out with my Tax Dollars, I don't get a Discount? Screw you Mr Car Salesman.

 

[Kurosawa]

We bailed Germany and Japan both out decades ago.

 

[SuBe]

It wasn't my money decades ago.

 

[Carcharodon]

I've owned 3 foreign cars. Never again.

This battle was lost long ago when the US allowed Japan to declare economic war on the US auto industry and they refused to stand up to them.

That's funny; statistically, Japanese cars are more reliable than American cars, IIRC.

Oh, and SuBe, be careful: Mercedes are prone to electrical problems. Jaguar used to have that problem until they got bought out by Ford. Now their transmissions are the problem.

 

[SuBe]

I saw that Car, thanks for the advice. I've been doing a lot of research and about 20% has problems, and about 5% has electrical problems. Most of the complaints are about the Break system. I test drove it and it so far seems fine. I mean, you can never be 100% certain about any vehicle, it is a gamble anyways.

 

[BatMatt]

What's the MPG? Around 17/25 or so?

 

[The Overlord]

I refuse to own a vehicle from a company that accepted bailouts. I paid them a bail out with my Tax Dollars, I don't get a Discount? Screw you Mr Car Salesman.

Well I guess they are hoping for something similar to happened with 80s, where Lee Iacocca got a massive loan from the government, revitalized Chrysler and then paid the loan back.

It wasn't my money decades ago.

But was that bad idea? Leaving Germany in an economic mess, after WWI, led to the rise of the Nazis, so leaving Germany and Japan in an economic mess after WWII could have led to rise new bad regimes there, the communists could have taken over in those places without the Marshall plan, that wouldn't have good.

 

[SuBe]

What's the MPG? Around 17/25 or so?

I think it's closer to 20/25.

 

[SuBe]

Well I guess they are hoping for something similar to happened with 80s, where Lee Iacocca got a massive loan from the government, revitalized Chrysler and then paid the loan back.



But was that bad idea? Leaving Germany in an economic mess, after WWI, led to the rise of the Nazis, so leaving Germany and Japan in an economic mess after WWII could have led to rise new bad regimes there, the communists could have taken over in those places without the Marshall plan, that wouldn't have good.

As much as I hate Government Loans, it's worse when the Government "owns" 72% of the Business, yet we are not "socialist".

 

[The Overlord]

As much as I hate Government Loans, it's worse when the Government "owns" 72% of the Business, yet we are not "socialist".

But was the Lee Iacocca loan a bad thing, if he used to it revitalize the company, then paid it back? That is an interesting question.

Most socialists don't believe in corporate welfare, which is what this is. Socialists don't think this is socialism. Socialism has an ethos, you just can't say anything you don't like is socialism.

Its not nationalization, if the company lets the government take over, GM got in bed with the government of their own free will, its like taking loans from the bank, the bank gets some control or your life if you take out massive loans with them.

 

[SuBe]

At what point IS it Nationalization? Because, that's what the News is calling it.

http://news.yahoo.com/s/ap/20090601/ap_on_go_pr_wh/us_obama_gm

 

[The Overlord]

At what point IS it Nationalization? Because, that's what the News is calling it.

http://news.yahoo.com/s/ap/20090601/ap_on_go_pr_wh/us_obama_gm

Its not the standard example when one thinks of nationalization. A standard would be say the government taking over a, say mining company or a nuclear plant, for what they see as a national good.

This is like the government acting like a corporation, buying a controlling interest in a failing company, at the company's request. Its not quite same thing and I doubt many socialists would like the government acting as a corporation.

 

[BlackLantern]

wouldn't nationalization be the point where the government is actively running the business....making the day to day decisions and such???

 

[The Overlord]

wouldn't nationalization be the point where the government is actively running the business....making the day to day decisions and such???

But is it nationalization if the company let's government take over? No forced GM to get in bed with the government, they begged for these loans and by taking them they reduced their own control.

Again its hard to call this socialism, when most socialists wouldn't like this.

 

[Kelly]

After WWII most of Europe's manufacturing needed help, the people needed government as far as their basic necessities....and nationalization happened on a huge scale, and is still there today.

Government control of an industry, is government control no matter if it was asked for or not. Nationalization without the concent of the people, is probably better described as Communism, rather than Socialism.