It’s Going to Cost Us About $50 Billion to Help General Motors
Written by: Kim Sawyer
Wow! That’s my first response to hearing about General Motors filing for bankruptcy. My next response was to question how in the world could this happen to the second-largest industrial company? How could this company be so mis-managed? I mean, because of this sorry example of management, General Motors is closing 17 factories and parts centers and will cut 20,000 more jobs by the end of 2011 in Michigan, Indiana, Ohio and Tennessee. What a travesty!
Now, keep in mind, the government has already given General Motors $20 billion in bailout funds. But, guess what? The government is going to give General Motors an extra $30 billion to help the company with their Chapter 11 (e.g. restructuring) bankruptcy. Because of the help this company has (and is) receiving from the government, the government now owns 60 percent of General Motors. 60 percent! Man, the government is now in charge of one of the largest US companies! Times are changing aren’t they?
President Obama says the government is a “reluctant shareholder.” You know what? I can understand why he says that. Can you? I see it this way – and please correct me if I’m wrong – if General Motors would not have gone to the government for help, the government would have NEVER become involved with running the company. It’s really as simple as that. I mean, it’s not personal – it’s just business! This is not like the banks, who were pretty much forced to take help from the government – General Motors had the option of denying the monetary help from government! But they didn’t deny it. So now, the government owns 60 percent. Think about it like this, if you go to an outside source to obtain funds to run your business, isn’t it only natural that the outside source is going to want to protect their investment by having a say in how the business is managed? That’s just natural. Why would the government, who is giving tons of money at the expense of taxpayers, not expect to have some sort of managerial position within the company?
Now, I know some of you feel the government is becoming too involved in our lives. I mean, some members of the Republican party say it’s, “another sign of the administration’s deepening incursion into the private sector.” That may be true, but in this case, General Motors went to the government for help, it was not forced upon them. So, you gotta give something in order to get something, right? General Motors wants to save the company, at the expense of taxpayers. Hence, the government will help run the company, to protect the taxpayers investment. It’s as simple as that. Really.
Tags: General Motors files for bankruptcy, Government becoming too involved in private sector, Government is a Reluctant General Motors Shareholder, Government owns 60% of General Motors, Government Rescues General Motors with $50 Billion
June 2nd, 2009 at 7:06 am
Does that mean GM isn't even worth $90 billion? That seems like the case since $50 billion bought the government 60%. I don't think this is going to do anything except keep the shareholders paid! Isn't the end goal, which they rarely talk about, supposed to be better cars coming from GM? Current technology, efficiency and nice design should be talked about more and all they talk about is being more lean, closing factories and stuff like that. I would think a good sign of faith would be to suspend all large truck and SUV production for two model years until they can really pack some technology into those things.
With the new bill that might pass, I'm going to look for a junker that I can buy for $250 so I can trade it in for a $4500 credit. If it averages 18mpg or less I should be in there! (rolling my eyes).
June 2nd, 2009 at 4:08 pm
You know I have to play devils advocate here.
First, to say GM's failure is purely bad management is a huge stretch but I understand that's all the media has to say about it. If anything, GM was just as guilty as anyone and everyone who thought the real estate bubble wasn't a bubble; that includes a majority of our own government. What is GM guilty of? They're guilty of allowing the United Auto Workers Union (UAW) to put them in a strangle hold which has killed their profitability and much like social security would have eventually bankrupted them anyway. However there is one thing I don't hear anyone focusing on, the economy. The economy is horrible, people are scared shitless and rightfully so. If you have any common sense whatsoever purchasing a new car is the last thing you'd do. It's certainly tough to make money when the demand is trumped by the massive supply of vehicles.
Again, something that isn't focused on either is the governments pure disregard of the voice of the American people. How many people do you know who supported bailing the big three out? Unless you know someone from Detroit the chances are zero. Sure the big three came to Washington asking for a bailout but the American people stood up and said NO! NO! NO! but just as our elected officials have grown accustomed to, they IGNORED the American people. The very people who elected them. I'd be wiling to bet that at least 90% of our elected officials have forgotten that they are there to serve us, “The People” and it's time they all go. Democrat or Republican, if they voted for the stimulus bills and the big three bailouts we need to vote them out. I actually watched an interview of a Democratic senator who said that he received over 2000 phone calls and emails with 95% of them telling him NOT to vote for the stimulus bill and what did he say after that? He said, I had to do what was right. Okay, Now correct me if I'm wrong but does that not mean that he believes he is somehow above or superior to those who elected him? I've had enough.
The Euro is almost 50% more valuable than the dollar and it's not going to stop there. Obama's spending is going to kill the dollar and cause SERIOUS inflation.
Let me get back to GM's Bankruptcy. If our Ignorant ass leaders would have listened to the American people when it came to bailing them out to begin with we would have saved 20 billion dollars and GM would have entered bankruptcy a couple months ago. Do you know why they bailed them out even though they knew damn well they wouldn't succeed? Because Obama is in bed with the unions. They helped get him elected and letting them go into bankruptcy initially would have been devastating to the UAW. Now, not only does the government control GM (soon Chrysler) but the unions now posses significant ownership. How is it that everyone isn't up in arms that the UAW has more ownership of GM than the shareholders? The government has no business running the car companies and let me go ahead and say it, it is Socialism. They should have let them fail. The auto industry is going to continue to decline until the economy turns around and the economy is not going to turn around anytime soon if at all. Who in their right mind would purchase a brand new vehicle not knowing if they'll have a job the next day. America's love affair with mass debt is over but the governments love affair with mass debt has only begun. I only pray that more and more Americans wake up and realize the Obama administration is stealing our country from us. One last thing, why do you think Obama is in such a hurry with everything? Bailout, bills, Single Payer Health Care, etc… Answer: Because soon people will realize what's going on and his 60+% approval ratings won't be there anymore, but will it be too late?
One last point. Social security and medicare has drastically increased at the rate each government program will be going bankrupt and assuming the unemployment numbers won't get worse (We know they will) social security will be going bankrupt in less than seven years and medicare in less than three (could be slightly off on the three, might be sooner). For those of you who don't realize just how screwed up social security is, it's basically a ponzi/madoff scheme. The government has been stealing from the social security fund for years now and all of us working right now are paying the benefits of those who are already retired. Considering all of this, Obama wants to pass universal health care at a cost of over 700 billion dollars? WTF? I actually got a message from a friend of mine who lives in Canada. I asked him how the Canadian government taxes them to cover their health care. His response.
“Our health care system is not a good example Ryan. I pay 48% of my
imcome to taxes (federal and provincial), and right now the average
waiting time when you go to an emergency hospital is 17 hours! That
is totally terrible and everybody prays not to get sick! But I think
the problem is bad management of the money, not the lack of money
itself.”
Okay, I set a new record for comment length.
June 2nd, 2009 at 9:51 pm
Ryan, you came through again with a thoughtful comment, but I don't totally agree with what you are saying.
First and foremost, GM is guilty of being sorry at what they exist to do: build automobiles. To say they are behind in technology would be an understatement – I say this in general terms because there are a few exceptions like the Corvette. When I say technology, I'm talking about things that contribute directly to reliability and total cost of ownership. Generally, fit and finish on American vehicles is horrible. To see a good example of what I'm talking about don't look at brand new vehicles in the showroom, look at vehicles 3-years-old and compare them to their foreign counterparts. Technology like direct-injection is basically missing. Foreign vehicles are getting 300 horsepower with 3.5 liter naturally aspirated engines or 3.0 liter turbo-charged engines. Meanwhile, American cars use V8 engines for the same amount of horsepower. Those V8s don't get equal MPG so basically the cars aren't as efficient and the total cost of ownership goes up.
Let's talk about how American cars look. Surely this is an objective category, but you can't tell me that a blue emblem (Ford) looks good on every color car – the only company that can get away with this has a propellar on the hood. Additionally, Americans' love of big (American) trucks and SUVs has come back to bite us hard! It just doesn't make sense to crowd the roads with huge vehicles carrying 1 or 2 people (most of the time) that get bad gas mileage. Detroit has lived off of selling these vehicles and when the gas prices went up people stopped buying them as much which hurt big time! Meanwhile, people scoff at Smart cars and Mini Coopers.
I say all the American car companies get a huge F for failing to deliver the kinds of cars that people need in this economy. If the cars were sitting on the lot or were at least in the pipeline they would be available to purchase. Since the American vehicles are somewhat crappy and lose their value people with those trucks/SUVs were facing negative equity of up to $8,000 just because of the economy. The smart thing to do would be to never buy that brand again. The sad part is I don't think things are going to change one bit with the newly organized American car companies. The money will be used to keep the lights on and the executives paid.
You always say Obama, Obama, Obama, but never mention Bush. Obama was back peddling as soon as he got into office, but that is rarely mentioned. It is like Bush is “Teflon Don” even though common sense points to him being a Monumental Idiot! Why does it seem like people don't hold him responsible for much of what happened during his 8 years? Clinton is to blame for some things and now Obama. Amazing!
Why did Colin Powell, one of the smartest military minds of our time, choose to leave his administration? Did the Bush family benefit, in any way, when gas prices went up? Was Bush doing business, any kind of business, with the Bin Laden family before 9/11? I'm no political expert, but I would like to know the true answers these questions.
I looked up Socialism and here is what I found: Socialists mainly share the belief that capitalism unfairly concentrates power and wealth among a small segment of society that controls capital, creates an unequal society, and does not provide equal opportunities for everyone in society.
I'm not sure if we are going that far, but I believe the government shouldn't own companies like GM. I think GM and Chrysler should have been left on their own and another company would have emerged. Maybe Toyota and Honda would have grown resulting in more jobs for Americans since many of their cars are made here.
I also don't necessarily agree with the proposed healthcare system, but then again I already don't think we are the “Land of the free.” We already pay enough taxes as it is.
I don't even want to touch the Social Security issue because it really scares me. Maybe we need to put together the biggest class action lawsuit in the history of mankind if the money taken from us isn't there when we are supposed to get it. I guess we should file now.
I can tell you one thing I'm in favor of: improve our education system. I would like to do this primarily through increased wages for teachers. We need to attract better teachers and become a smarter nation. We also need to improve our work ethics, morals and integrity across the board. I think doing this will keep us out of situations like the one we find ourselves in right now. How can the greatest nation in the world be in such a bind when we have the resources to do so much better? I think it all comes down to greed. People wanted the interest only loans and the mortgage companies were so willing to give them out and make more money. When it was time to pay up, it really hit the fan. As far as gas prices go, the oil companies were making record profits at a time when gas was sky high and we had to take it on the chin. Again, greed. The car companies were putting out relative crap, but it was selling. Once their crap met up with high gas prices, it hit the fan (again).
Sorry for the rambling, but the discussion is easily an emotional one. While I agree with you partially, I think the situation as a whole is horrible while you want to place a large part of the blame on someone who has been in power for less than 6 months. I hope Obama changes some things he is doing, but he is not the only one who must change.
June 3rd, 2009 at 3:38 am
Great response Tom! I'm off to work but will reply to your questions and add some of my own when I get home.
Sincerely,
Ryan
June 3rd, 2009 at 10:52 am
You two have both posted excellent comments! I have learned more about this topic from reading both of your comments than what it generally reported in the media. I still don't agree that we should've let the company fail, but to continuously pour money into a company that is not being monetarily responsible, is well questionable, at best. I don't think things are being thought through as much as they should. I, too, don't agree with the constant spending that the Obama Administration is doing, but what are the alternatives? I haven't really heard any viable alternatives to solve the current situation the country is in.
June 3rd, 2009 at 5:31 pm
Tom,
First off, I agree wholeheartedly in regards to the American car quality. The only American car I've ever owned was a Geo Metro which funny enough had a suzuki 3 cylinder engine. Other than vehicle I've only owned Honda's and Acura's (same company). You can certainly attribute the lack of quality to bad management but I don't think that was what put the dagger in GM's heart. Regardless of the quality people still purchased the vehicles. What killed them was not earning enough profit per vehicle and with that considered not having any form of a rainy day fund. Even if they had a huge amount of capital set aside for down turns in the economy it wouldn't have lasted long as you saw with the speed they blew through the tax dollars we gave them initially. The problem with them is the Union and the amount of money in labor costs, benefit costs, pension costs, and retirement costs associated with UAW employees. Of course, a more intelligent manufacturing model could likely cut costs but the underlying problem is the UAW. The American car companies are not equipped to handle down turns in the economy due to the profit margin per vehicle.
In regards to saying Obama, Obama, Obama, that's not entirely true. I left a comment a week or so ago scolding Bush for his horrendous spending as well. In all fairness I do think a majority of Republicans overlooked a lot of Bush's spending during his presidency but there is a reason why. The economy was booming up until the end and if it isn't broken, don't worry about it. (Was a bit naive but you get my point) Now to be perfectly honest it wouldn't matter who was in office right now; whoever it was would be under a microscope due to the state of our economy. My anger and frustration with Obama has nothing to do with the problems he inherited. (Democrats aren't free of blame for what he inherited either) My problem with Obama is what he is doing to our country. I spend a lot of time (too much time if you were to ask my wife) researching everything going on in plain sight as well as whats going on behind the scenes and there is a whole lot the media doesn't tell us and to be honest it's quite alarming. Obama inherited a massive National Debt and he also followed up a president who set records with his high deficits but the answer to a disappointing eight years is not to spend so much money that we will never be able to pay it back. The answer is fiscal responsibility. The answer isn't forcing through every single social dream he's had since a young lad learning of social inequality and justice. I've predicted on several occasions our once great nation will be unrecognizable in just a few short months and it's already changing form.
Kim asked what should have been done or something along the lines of that. I can understand stabilizing the financial markets as much as it pains me to hand money over to greedy and corrupt bankers but I certainly wouldn't have rushed the original TARP bill through as Bush, Obama, McCain, and many more of those fools did and I certainly would have set some serious restrictions and oversight (yes I said oversight) on how the money was distributed, spent, and allocated. I would have far more respect for the tax payers money than any of the idiots in DC. After that, no one is too big to fail. Why is an auto workers job more valuable than my wifes job with a major clothing retailer? Why was the big 3 bailed out as electronics giant Circuit City liquidated? UNION JOBS! That's why. It sickens me. I've worked for a union and never again will I do so.
Tom, you raise an interesting question regarding Bush and the Bin Laden's and I would love to know the truth behind that and many many other so called conspiracy theories that have significant evidence to support them. Obama is tainted in many of his own but the sad thing is we probably won't ever know the truth. In regards to 9/11 I do think it is quite alarming the pentagon, a building that supposedly has more surveillance cameras than any other place on earth hasn't produced a single video showing an airplane hitting the building.
In regards to health care let me ask you this. You're retired military, how do you like the government ran health care you're provided?
In regards to the class action lawsuit. Unfortunately we'd be suing ourselves and that would be pretty counterproductive. The only power we have to is to remove those in power. We all need to unite to set term limits for congress. No one is corruption proof.
In response to socialism definition: One only has to look to Venezuela to see Socialism at work in 100% full force. The portion of the definition you pulled describes Obama to a T. He wants to punish the evil rich and redistribute their wealth far beyond the theft that already takes place. If you haven't watched Obama's commencement speech please do so. I started a rivalry on that topic: http://www.jealousbrother.com/rivalries/?rivalr... Obama versus Dolly Parton, who would of thought? Watch both when you can, carefully listening to their messages and then let me know which message rings true to you.
June 3rd, 2009 at 6:52 pm
Wow. Why did you wait until the end of your comment to say the most
important thing?
Tom Sawyer
7daybuzz.com
proud2parent.com
June 3rd, 2009 at 7:01 pm
I'm away from my computer so u can't type a long response on my
iPhone, but I want to talk briefly about government healthcare.
If I could have got the money that the military claimed our healthcare
costs I would have taken it in a heartbeat. Motrin, known as vitamin M
in the military, is given for everything from head to toe. I even had
a doctor admit that they over-prescribe it. I got in arguments with
doctors who outranked me on the issue. My thought was the military
will be done with me once I retire so I have to safegaurd my physical
well-being.
Also, military doctors are recruited after they are doctors. I think
some of them come in to avoid paying high malpractice insurance.
Especially if they like to travel, it is a win win situation for them.
America does NOT want government healthcare.
Tom Sawyer
7daybuzz.com
proud2parent.com
June 3rd, 2009 at 7:52 pm
Sadly enough, that is what I expected to hear. I have a very good friend in the Marines and he has told me a couple of stories that really got me upset. The one I'll mention is there (military/government) refusal to offer him any assistance for his PTSS after coming home from Iraq after his first tour. He had a real hard time and when he went in for help they basically told him to forget he had asked them for help. I'm so sick of our military not getting the support they are so deserving of. I won't ramble on. Have a great night.
June 4th, 2009 at 3:23 am
$50 Billion to Help General Motors, i think is not enough to help the company. It’s look like some thing that Fiat 4 years ago.
June 15th, 2009 at 9:14 am
No Surprise that GM had to sink like the Titanic.. Just the pain and hard work of 300 Million Taxpayers going down the drain.. Whose responsible for that?
June 18th, 2009 at 6:00 am
Gm is going bankrupt because of its own tactics. 300 Million people have hard worked for that bailout and where is their bailout? There are families going bankrupt whose going to save them?