We aren't often prone to agree with Andrew Ross Sorkin ("ARS" to his friends and when writing in third person). In fact, it is highly unusual that we wouldn't violently disagree with Mr. Sorkin. He is on our side of at least one debate other than the need to change the age of consent in the United States (we only differ here on the direction of the change, it should be noted). We agree that GM shouldn't get another dime from anyone (including customers) until its already declared bankruptcy. Says ARS:
G.M is using money so quickly that a $10 billion infusion made today would disappear by February. That is why taxpayers shouldn't fork over a cent, at least until shareholders are wiped out, management is tossed out and the industry is completely reorganized.
Somewhere, back I think when programmers bragged about (and were paid based on) the number of lines of code they had produced, the Big Three got into the business of measuring success with metrics like "we created the most jobs of any industry in the last two decades" or "We employ more people in your state than
Of course, all good things must come to an end and agreement with the ARSE is no exception. In this cause, our slow nodding of the head ceases abruptly with this passage from Sorkin:
So, first, the government would force G.M into a prepackaged bankruptcy now -- even before policy makers may think it needs to be.
Forgive us for feeling that, perhaps, the government of the United States shouldn't be in the business of "forcing" anyone into bankruptcy, particularly "before policy makers may think that it needs to be." The rather severe potential for abuse by government with discretionary power to force firms into bankruptcy before they seem to need it is a property of this plan that makes it indefensible. Who would review such a decision? Who would make it? Would bicameralism and presentment be required? Or simply an executive order or a finding by an agency? The entire concept sounds awfully "bill of attainder" like to us. We'll pass, thanks.
A Bridge Loan? U.S. Should Guide G.M. in a Chapter 11 [Dealbook]
Posted by guest , Nov 18, 2008 2:32PM
Would you like some "Big Ass Fries" with that?
Posted by guest , Nov 18, 2008 2:32PM
I know what it feels like to be persecuted by a governing body.
The commissioner of my fantasy football league is a fucking asshole.
Posted by guest , Nov 18, 2008 2:34PM
why is it when talking about gm, only "automaking" is mentioned in the argument. what about all those mortgages they packaged up like they were Angelo Mozillo to save their kit-car hobby? why doesn't anyone point to that fatal flaw?
Posted by guest , Nov 18, 2008 2:38PM
@2 cant we all agree with that?
Posted by guest , Nov 18, 2008 2:40PM
Typo in third P? ...your state than
Posted by guest , Nov 18, 2008 2:42PM
Why not just let them go bk and gubiment can provide DIP financing while they restructure. That way gov. is top of food chain of creditors via DIP and they are forced to restructure under bk and shed pension liabilities, dealer contracts and all the other tons of horseshit drowning them for the past 25 years.
Again - how is it that Honda and Toyota with 2/3 brands are more profitable than GM with however many brands? Shitty operations. Period.
Posted by guest , Nov 18, 2008 2:46PM
wait wait. GM is bankrupt? how did this happen? it can't be all $65+ per hour union employees who sort screws and manage assembly line robots, can it?
Posted by guest , Nov 18, 2008 2:48PM
Mark Haines is reporting that airlines are in trouble, too!
Posted by guest , Nov 18, 2008 2:50PM
apparently the screw sorters were underpaid. they subsequently became baggage handlers and sunk the airlines.
Posted by guest , Nov 18, 2008 2:52PM
why did I go to college. labor unions are where it's at.
Posted by guest , Nov 18, 2008 2:53PM
Let these Somali pirates hijack the auto industry. These guys know how to do hostile takeovers.
Posted by guest , Nov 18, 2008 2:53PM
Can we forget about the jobs for a moment and address the export issue? If GM declares bankruptcy, what country is going to want to do business with them? You can't ignore the impact the bankruptcy of GM or any of the Big 3 for that matter would have on the United States' Current Account...
-John Maynard Keynes Jr.
Posted by guest , Nov 18, 2008 2:54PM
I like the little quip about changing the age of consent...
Very nice EP
Posted by guest , Nov 18, 2008 2:57PM
O M G !! Don't tell me you were a programmer at one time in the distant past too!
Posted by guest , Nov 18, 2008 3:01PM
seriously. other than GM employees, who buys American cars anyway.
Posted by guest , Nov 18, 2008 3:04PM
What's everybody got against unions? They are part of the food chain. Senior Management scum screw the stockholders, hiring middle-management to screw the customers. Union scum screw the management. How else would the majority of the population - meaning the 75% that are semi-psychotic dumb-asses - get anything out of "their" society?
If you're not screwing somebody, you're not going to make any money. That's life.
Posted by guest , Nov 18, 2008 3:06PM
problem with unions in this case is that they have a gun to the heads of these auto makers while they are having a heart attack
their competitors don't have these union issues
Posted by Anal_yst , Nov 18, 2008 3:08PM
@ 16
The "semi-psychotic dumb-asses" have the opportunity to do something other than work on an assembly line. If you want to be cynical about your point, its 'screw or be screwed'.
@ 17
Exactly. Honda workers for exmaple, last I checked, "have the option" to unionize per Honda official policy.
Posted by guest , Nov 18, 2008 3:13PM
I have no problem with labor unions, but they should be called what they are: welfare
Posted by guest , Nov 18, 2008 3:19PM
Unions cater to the laziest of the employees who do not want to work harder to get ahead. This is 21st century USA - there is no need for specialized protection of labor beyond what the law already requires. This is an antiquated system that should be purged.
Unions bring out the worst in labor - laziness, unresponsiveness, entitlement, and just generally not giving a fuck
Posted by guest , Nov 18, 2008 3:22PM
@17. Nobody has a gun to anybody's head. Last I checked everybody "negotiated". Management "negotiated" pay (& bonuses) with "their" stockholders. Unions "negotiated" pay with management.
Both sided (management and unions) use all the sleaze they've got to squeeze the most they can out of the stockholders and the customers.
Posted by guest , Nov 18, 2008 3:22PM
What do you think environmental regulations and punitive tax regimes will do to certain energy producers?
Posted by guest , Nov 18, 2008 3:24PM
@20...agreed.
Now that the Big 3 are about to die what is the UAW going to do now to threaten them? Those workers are not going anywhere and doing anything. An 11 would cut off UAWs balls and they wouldn't be able to do shit about it. They'd take whatever the Big 3 and bk judge give them. They were one of many sucking sucking on the teets of the mother wolf (like Romulus) and now it's over.
IT'S OVER JOHNNIE!
Fuck them - why should they be protected? No one is on Wall St or in many other industries? Why, because factory work was all they could do in bumfuck OH, IN, MI? Fuck that - make something of yourselves. Losers.
Posted by guest , Nov 18, 2008 3:26PM
@18, @20 Uh. "semi-psychotic dumb-asses" are uh.. "semi-psychotic dumb-asses". What ELSE could they do EXCEPT assembly-line. They are lucky to find "the line" each day. Society is made up of huge numbers of semi-psychotic dumb-asses. What "opportunity" are these people going to do? They're DUMB-ASSES!!!
The majority of all societies are dumb-asses. Who do you think is watch American Idle.
Posted by Anal_yst , Nov 18, 2008 3:35PM
While I don't disagree with some of the above (clearly), we can't let them rot, it is not a viable option. As Bill Ackman pointed out, re-training, mandatory education, repurposing of labor, things like that are, in fact, not only viable but necessary in dealing with the Big 3/UAW/etc.
Posted by guest , Nov 18, 2008 3:45PM
Re-training, education = layoff ---> vocational/trade school.
Posted by Anal_yst , Nov 18, 2008 3:53PM
@ 26
something like that, give 'em all a spade and some mortar and lets get back to rebuilding our transportation infrastructure. Or put some of those bolt-sorting skills to work building high-speed rail, even better.
Maybe we can make this a joint effort to reorganize not just the big 3 but Amtrak and regional rail as well while we're at it?
Posted by guest , Nov 18, 2008 3:56PM
Hey GM - don't listen to any of these naysayers! Just keep crying hard enough to all those lobbying the government and you'll get your free money (even though you'll burn through it quicker than a crack whore)
Just remember, U Can't Touch Us -
U.A.W.
Posted by guest , Nov 18, 2008 4:00PM
Analyst, agreed. As well as with 26. With technology today and the shitty craftsman ship of american cars it shouldn't take all those assembly line people to build cars - robots have been designed and built - AUTOMIZE THE PROCESS FURTHER.
Posted by guest , Nov 18, 2008 4:05PM
$25B/3 = 8.333B
They think that will keep them alive until the economy improves? All forecast say DEEP (like Peter North deep) recession through 2009 - so no fucking way 8.3B last each of them for the next 14 months or more and does anything to substantially improve their business...
Posted by guest , Nov 18, 2008 4:08PM
Senator: I despise the way you pose yourself. You and your whole fucking family.
Big 3: We're both part of the same hypocrisy, senator, but never think it applies to my family.
Senator : I can get you a loan. The price is $25 billion.
Big 3: Now, the price of a gaming license it less than $20,000. Is that correct?
Senator: Yes.
Big 3: So why would I ever consider paying more than that?
Senator: Because I intend to squeeze you.
Posted by guest , Nov 18, 2008 4:09PM
Senator: I despise the way you pose yourself. You and your whole fucking family.
Big 3: We're both part of the same hypocrisy, senator, but never think it applies to my family.
Senator : I can get you a loan. The price is $25 billion.
Big 3: Now, the price of a loan is less than $20,000. Is that correct?
Senator: Yes.
Big 3: So why would I ever consider paying more than that?
Senator: Because I intend to squeeze you.
Posted by guest , Nov 18, 2008 4:34PM
analyst....we can re-educate & repurpose ...but at some point they have to accept that what they do is not worth what they get paid.
so even if they build rails.....it has to be for less to be sustainable
Posted by Anal_yst , Nov 18, 2008 4:37PM
@33
So obvious I didn't think it was worth mentioning the need to eliminate the job bank, many/most defined benefits, inflated wages, etc, etc, ad nauseum
Posted by guest , Nov 18, 2008 4:39PM
Anal_yst - couldn't agree more on the infrastructure and rail (in particular the high-speed rail). That has the potential for HUGE growth in this country, assuming we can get the clowns in Washington to want to adopt it.
Posted by guest , Nov 18, 2008 4:40PM
33 Is management not culpable in any of this? You and analyst seem to imply not. I would say the entire problem is theirs, beginning with the practice begun in the 80's of providing really rich retirement benefits (to be paid later) as an alternative to wage increases (which would have had to been paid immediately).
Posted by guest , Nov 18, 2008 4:42PM
I believe forcing them into bankruptcy probably boils down to: "No, we won't give you the loan." Not legislated or anything, but the car-makers don't have a lot of options other than taking whatever the guvmint will provide at this point.
Off-topic, when are you going to go back to your own blog, EP? It was much more fun than the financial news that DealBreaker and a million other sites chew over.
Posted by guest , Nov 18, 2008 4:43PM
35 Not a lot of support for that in washington. First, the benefit of such projects accrues disproportionately to urban areas, which have insufficient clout (see Alaska, bridge to nowhere). Second, the auto and oil companies lobby like mad to prevent spending on anything but roads.
Posted by guest , Nov 18, 2008 4:43PM
35 Not a lot of support for that in washington. First, the benefit of such projects accrues disproportionately to urban areas, which have insufficient clout (see Alaska, bridge to nowhere). Second, the auto and oil companies lobby like mad to prevent spending on anything but roads.
Posted by guest , Nov 18, 2008 4:49PM
Nice point @33 Anal_yst.
I agree with you and guest@35. I hate to go on a rant here but imagine a high-speed Maglev train running at ~275mph. That could mean Atlanta to DC or Chicago to DC in about 2.5 hours or less, LA to Vegas in about an hour, NYC to DC in under an hour (which would be faster than the Acela). Or expand the Acela throughout the US.
Posted by guest , Nov 18, 2008 4:53PM
I believe forcing them into bankruptcy probably boils down to: "No, we won't give you the loan." Not legislated or anything, but the car-makers don't have a lot of options other than taking whatever the guvmint will provide at this point.
Off-topic, when are you going to go back to your own blog, EP? It was much more fun than the financial news that DealBreaker and a million other sites chew over.
Posted by guest , Nov 18, 2008 4:59PM
Aren't there penalties for lying under oath? Waginer just said 'GM is has products that customers really want to buy."
Really? REALLY? Then why the fuck is he begging for money from the taxpayer when Toyota/Honda are not?
Posted by guest , Nov 18, 2008 5:03PM
@42...match point.
Posted by guest , Nov 18, 2008 5:12PM
All these people say that it is not their fault but the credit freeze is not letting consumers buy cars.
Fine. Then give the consumers the money and let them chose what car they want to buy! If it is not the big-3's 'products, willingness of employees, costs or long term strategy' (as wagoner said) then that should solve all their problems!
Posted by guest , Nov 18, 2008 5:18PM
Where is all the Democratic fire and brimstone against corporate welfare???? chris Dodd is feeding words to the CEOs.
"AIG was a systemic risk, isnt yours also?"
"Your bankruptcy will impact financial markets, CDS wont it?"
"Wont one of you going bankrupt bankrupt and wipe out everyone else also?"
Wow. Where are all the egalitarian Dems who so cursed conservatives for any and everything? this is all that you have on display?
Posted by guest , Nov 18, 2008 5:18PM
Where is all the Democratic fire and brimstone against corporate welfare???? chris Dodd is feeding words to the CEOs.
"AIG was a systemic risk, isnt yours also?"
"Your bankruptcy will impact financial markets, CDS wont it?"
"Wont one of you going bankrupt bankrupt and wipe out everyone else also?"
Wow. Where are all the egalitarian Dems who so cursed conservatives for any and everything? this is all that you have on display?
Posted by Anal_yst , Nov 18, 2008 5:24PM
Ok gents a few points need to be made here (not ignoring the points myself and others have made thus-far).
The domestic automakers have made tremendous strides in most all areas in terms of product: reliability, fuel efficiency, design, etc.
Unfortunately, product mix was, uh, how do you say it, fail.
CAFE needs to be looked at here, go google the Car & Driver piece on it from a year or so ago by Patrick Bedard (maybe it was Csebe Csere?), but the gov't that so claims to want to help the Big 3 hasn't been for years.
Oh, and if you think the UAW is going to lose out to more automation, go pick up some ABB stock on the cheap.
Happy hunting.
Posted by guest , Nov 18, 2008 5:51PM
105k to terminate an illiterate high school dropout worker?
Why did my parents lie to me and send me to college?
Posted by guest , Nov 18, 2008 6:02PM
the whole situation is pathetic. at chrysler total comp for 2008 is $6bn over 56,000 headcount. this means $107,000 per worker. unless the gov't agrees to perpetually pay 2/3 of it, they will not be competitive ever, no matter what they produce.
Posted by guest , Nov 18, 2008 6:47PM
Anal_yst and crew,
I agree with all of the above, just wish to add a detail: stay away from fancy trains that operate on a grid whose electricity comes from coal. The infrastructure the US needs is an updated -within 50yrs. of other countries by US stnds.- power grid. Labour unions were there for a reason, at the outset, but I agree that now all the UAW seems to do is struggle for power with GM, inevitably causing their own demise; it's a form of non-Harvard educated hubris.
Seal Clubber
Posted by guest , Nov 18, 2008 6:50PM
Total compensation per hour for the big-three carmakers is $73.20.
That's all overtime, buddy.
That's about the only way for a worker to make a good living these days.
BTW, no entries on EDGAR again for Chrysler since the 90's, except for Chrysler financial..
Posted by guest , Nov 19, 2008 2:17AM
I can't believe that people who earn (or used to earn) loads of money hold so much against small-time workers who committed the sin of earning decent money. You guys reek of entitlement. Only a week back most of you were justifying bonuses in a shrinking economy. But yeah you guys deserve it because you are so smart and intelligent.
Posted by guest , Nov 19, 2008 8:38AM
52, no analyst or associate (which would make up for most of this blog) berates Stevie Cohen or crab hands for their wealth, neither does he/she think that he/she is entitled to those folks lifestyle.
If analysts started living in penthouses then that would be unsustainable and sooner or later break down.
Similarly illiterate unsksilled workers living charmed lives when billions like then have trouble eating twice a day is unsustainable and bound to breakdow.
It has nothing to do with who - rich or poor - expresses that view. It is the law of nature. Resources are not infinite and they will be distributed unequally based on some parameter - be it education, skill, intelligence, hard work or whatever. Socialism tries to overrule that law of nature and this usually fails after a short period of time.