And so it begins-GM CEO resigns

[Troy]

Whether it makes good business sense (to you) or not - they were still contracts. Contracts have to be agreed on - and upheld - by both parties and are legally binding. It's not so easy to nullify them - which is why you haven't seen Congress or the President follow through with their threats. For the record, I'm a contract employee and when I do work for a salary I usually have a bonus plan in place as well. I accept a position based on the promised wages and would be very, very ticked if someone who didn't participate in the negotiations decided to alter my agreement.

Troy

If it were that simple I might agree with you. But unfortunately, had the govt not stepped in many of these companies would have gone tits up. Their contracts would therefore no longer be valid and they would have lost their job and received no bonus etc. So while I agree with our basic premise, I just will not buy into it for this argument. The govt felt it was necessary to prop them up to avoid complete collapse... Maybe they should have let them fail. But where would we all be now? 

All though on the plus side it looks like we are getting some good out of the ClusterF**k.
http://www.fool.com/investing/general/2009/02/27/voting-not-just-for-november-anymore.aspx

Bryan

They (the government) knew a long time ago what they were getting into. It should have been stipulated from the beginning that concessions would have to be made - not after. Just like they're doing with the  auto companies and the UAW. That would have given any impacted employees time to make arrangements. Yes, having the company shut down and being out of work would certainly be a bigger impact but there's insurance to cover that sort of catastrophe. Nothing (that I know of) covers losing a big chunk out of a paycheck while still keeping the job. I understand the concept but think the execution was a complete fiasco.

Troy

[General_01]

I think it is just hilarious that the government is outraged that these companies used bailout money to pay bonuses and renovate offices. They are bailing out companies who are in the position they are in because of poor decisions. They hand them money with little or no stipulations and expected them to do the "right thing" with the money. If they did the "right thing" with their money, they wouldn't be in the position they are in. Why did the government think they would do the "right thing" with our money?

By "right thing" I mean do what the government thought they should do with the money. This may or may not have literally been the "right thing" to do.

[Mike DC]

                     
It's so easy to monday-morning-QB this thing, though.  The time to fix this is not now and it wasn't really even last fall. 



Let me ask all you guys this:

It's several years ago.  The financial & lending & housing morgage industries are going like gangbusters.  These areas are one of the few things in the whole American economy that really seem to be making money, and it's squarely attributable to its lack of govt regulation.

Now, how many of you would have been receptive to listening to someone arguing that this needed to be STOPPED?  The person would be arguing that this industries are making those profits unsafely with a growing bubble, and that these industries needs to be govt-regulated away from being able to do half of what's going on. 



I can't imagine there being much support for that idea in America at the time.  People get called things like "socialist" and "big govt" and "anti-free-market" for raising such alarms whenever it involves stopping some industry's gravy train.  But in retrospect it's clearly the best way we could have avoided this current mess. 

     

[Troy]

I think the people who think corporations are evil will always be up for more regulation/taxes on business. I'm almost never in favor of it - although I think entities like the FCC, EPA, and SEC are important. Maybe we could have had Congress looking into that instead of steroids in baseball? Seems like it may have been a better course of action.

Troy

[Mike DC]

I think the people who think corporations are evil will always be up for more regulation/taxes on business. I'm almost never in favor of it - although I think entities like the FCC, EPA, and SEC are important. Maybe we could have had Congress looking into that instead of steroids in baseball? Seems like it may have been a better course of action.

Yeah that's definitely true.  Replacing a baseball hearing with a financial industry hearing would have prevented a lot of heartache, wouldn't it?  Those baseball hearings were a joke. 



But as for govt regs, IMHO the issue right here is a critical one. 


I just see the US population having a tendency to lump all "big govt problems" together under one mental category way too often.   We don't like getting speeding tickets & backyard building code fines at the domestic level, so therefore we let the multi-billion-dollar industries off the hook with tax breaks and underregulation that ultimately bites us in the ass.  Many of those in power understand this principle very well and they exploit it.  They're selling the idea that the govt is restricting the big players in the same proportion that it's restricting the private citizens & smaller industries. 



Look at the oil industry - you can find literally hundreds of billions of dollars (per year) of direct & indirect subsidies for them within the govt's sphere of operation.  And yet much of the public has been sold the idea that the govt is single handedly stripping their profits away in the US and holding gas prices high.  (Ha!  Gas has been calculated to be something like $10 or $12 a gallon if true market principles were in play in the USA.) 

What's the point here?  Well, the point is that if gas goes up and then big oil starts lobbying for some new subsidy/tax break/looser regs, the public might think they deserve it & wanna to give it to them.  This is how we get screwed.  This is how we find ourselves, decades later, looking at an unholy mess of paperwork making it obscenely easy for the industry to screw the public while the price of what they were offering stayed higher than ever. 
 

[General_01]

I think the people who think corporations are evil will always be up for more regulation/taxes on business. I'm almost never in favor of it - although I think entities like the FCC, EPA, and SEC are important. Maybe we could have had Congress looking into that instead of steroids in baseball? Seems like it may have been a better course of action.

Yeah that's definitely true.  Replacing a baseball hearing with a financial industry hearing would have prevented a lot of heartache, wouldn't it?  Those baseball hearings were a joke. 



But as for govt regs, IMHO the issue right here is a critical one. 


I just see the US population having a tendency to lump all "big govt problems" together under one mental category way too often.   We don't like getting speeding tickets & backyard building code fines at the domestic level, so therefore we let the multi-billion-dollar industries off the hook with tax breaks and underregulation that ultimately bites us in the ass.  Many of those in power understand this principle very well and they exploit it.  They're selling the idea that the govt is restricting the big players in the same proportion that it's restricting the private citizens & smaller industries. 



Look at the oil industry - you can find literally hundreds of billions of dollars (per year) of direct & indirect subsidies for them within the govt's sphere of operation.  And yet much of the public has been sold the idea that the govt is single handedly stripping their profits away in the US and holding gas prices high.  (Ha!  Gas has been calculated to be something like $10 or $12 a gallon if true market principles were in play in the USA.) 

What's the point here?  Well, the point is that if gas goes up and then big oil starts lobbying for some new subsidy/tax break/looser regs, the public might think they deserve it & wanna to give it to them.  This is how we get screwed.  This is how we find ourselves, decades later, looking at an unholy mess of paperwork making it obscenely easy for the industry to screw the public while the price of what they were offering stayed higher than ever. 
 

To be honest, I don't think I ever heard anyone saying that the oil companies needed a break when gas was up to $4 a gallon. Most people I talked to thought the oil companies were inflating the gas prices unnecessarily just to line their pockets. Lo and Behold, when the numbers came out the oil companies were reporting record profits for the quarter.

I think you misjudge the public. The oil companies may get our elected officials, who prove time and time again how out of touch they are with the American people, to beleive they are being over-regulated. The American public I talk to know they are just greedy executives trying to line their pockets.

As far as gas going to $10 a gallon. I doubt that will happen until the government wants to start pushing alternative fuel vehicles. The oil companies found that even though their profits rose, fuel consumption fell. They don't want people finding out they can get by with less fuel. That would be detrimental in the long run for them.

[Mike DC]

         

I agree with you somewhat, but I'm referring to the issues that get raised whenever drilling or something like that comes up. 


There's such a strong feeling that the evil govt wants our gas more expensive, and they'd let the oil industry drill in Alaska if that wasn't true.  But the truth is that the govt both taxes and subsidizes oil heavily at the same time.  It's been true for decades through multiple presidents & parties writing the rules.   And the net bottom line after the smoke clears is that the govt is rendering gas much cheaper than the market forces naturally would. 


---------------------------------------------------------


I was just using oil/gas as an example of the govt regulation/taxation issue and how the public percieves it. 

The more general point I was making is that people get over-governed & over-taxed at the small levels, and they think it's representative of what's happening at the higher industry levels too.  Sometimes the opposite is true, and the industries/political parties are using people's frustrations against them to get their own regulations relaxed even farther.     

   

[JB400]

Just an update:

The U.S. government no longer has controlling shares in GM.  They sold almost all of them at a loss of $11 billion 

http://www.forbes.com/sites/joannmuller/2013/12/09/taxpayers-dont-have-government-motors-to-kick-around-any-more/?partner=yahootix

At least GM can do what it wants to now.  I wonder how much longer the Volt will continue on?

[odcics2]

But what would have been the loss if GM (and Chrysler) collapsed?    Numbers suggest 125 billion. 

[stripedelete]

That's spit in the ocean.  We are pumping 80 billion into the economy every month. 

[Ghoste]

Wait until the true costs of Obamacare start to roll in. 

[chargerboy69]

And if someone believes we only lost 11 billion on GM and we broke even on Chrysler, I have a bridge in Brooklyn I would like to sell them.

[JB400]

The press can say what they want, but I doubt the gov. bailouts had little to do with the auto recovery.  Considering the bailouts were to keep the companies from going bankrupt, that plan failed.  I have more reason to believe that the turn around was due more to the fact that they did go bankrupt, and had to completely restructure.

But what would have been the loss if GM (and Chrysler) collapsed?    Numbers suggest 125 billion. 

I doubt that GM and Chrysler would have just collapsed. 

[stripedelete]

The press can say what they want, but I doubt the gov. bailouts had little to do with the auto recovery.  Considering the bailouts were to keep the companies from going bankrupt, that plan failed.  I have more reason to believe that the turn around was due more to the fact that they did go bankrupt, and had to completely restructure.

But what would have been the loss if GM (and Chrysler) collapsed?    Numbers suggest 125 billion. 

I doubt that GM and Chrysler would have just collapsed. 

They did collapse.  We just circumvented capitalism and gave them a foe bankruptcy process and pretended that it's okay to change the rules.  (also remember W. injected them with cash as well)

Now if you're saying there would still be someone building Silverado's, Rams, Jeeps and Suburbans, and Caravans, yes, you are spot on. 

[chargerboy69]

They did collapse.  We just circumvented capitalism and gave them a foe bankruptcy process and pretended that it's okay to change the rules.  (also remember W. injected them with cash as well)

Now if you're saying there would still be someone building Silverado's, Rams, Jeeps and Suburbans, and Caravans, yes, you are spot on. 

Wise man right here. 

[472 R/T SE]

Interest alone should have been at least 11 billion.   

[Ghoste]

I just hope they keep plugging away now.

[odcics2]

http://www.autonews.com/article/20131209/OEM/131209870/study-gm-chrysler-bailouts-generated-8-to-1-savings#

http://www.thedetroitbureau.com/2013/12/gm-bailout-saved-1-2-mil-jobs-according-to-new-report/#more-68545

[Old Moparz]

http://www.autonews.com/article/20131209/OEM/131209870/study-gm-chrysler-bailouts-generated-8-to-1-savings#

http://www.thedetroitbureau.com/2013/12/gm-bailout-saved-1-2-mil-jobs-according-to-new-report/#more-68545

Some folks absolutely love the idea of letting them all fail, it's survival of the fittest.   

Which is great, because we can then add 1.2 million more people to the fast food & retail industry to rotate the minimum wage earners in 3 hour shifts, 2 days a week or let them move to China, India or some other country that pays $2 a day.

Some just can't see the proverbial forest for the trees.

[odcics2]

Talking heads on the TV NEVER mention that the US manufacturing base is gone for a lot of different items:

Clothes, shoes, electronics, dollar store widgets, most everything you can buy at Walmart... You get the picture.

The strong middle class that drives this country has taken a hit over the last 50 years.   

[chargerboy69]

http://www.autonews.com/article/20131209/OEM/131209870/study-gm-chrysler-bailouts-generated-8-to-1-savings#

http://www.thedetroitbureau.com/2013/12/gm-bailout-saved-1-2-mil-jobs-according-to-new-report/#more-68545

Some folks absolutely love the idea of letting them all fail, it's survival of the fittest.   

Which is great, because we can then add 1.2 million more people to the fast food & retail industry to rotate the minimum wage earners in 3 hour shifts, 2 days a week or let them move to China, India or some other country that pays $2 a day.

Some just can't see the proverbial forest for the trees.

Its better than letting the government pick winners and losers. . . let them sink or swim on their own.

You seem to think the only two choices were fail or bailouts funded by me.  Do you remember Roger Penske wanting to save Saturn and if I remember correctly Pontiac, but the government stepped in and said no. There would have been 10 Roger Penskes stepping in to save these company's.  Would there have been layoffs. . probably, and most likely should have been.  But these business people would have changed things up, streamlined them, to make them profitable again.  What have they learned now. . . nothing.  All they know is if they make the stupid decisions again I will be there to pay their f-ing bill.

I learned when I was a kid my decisions have consequences.  If I make to many stupid business decisions I lose my dealership.  I do not expect the government to be there handing me or anyone else a check to keep making the same stupid mistakes.

[Tilar]

Should have let them fall on their face. They could have gone through reconstruction and they would right now be better than they've been in 20 years.

[Old Moparz]

It's not as simple as sink or swim, & this isn't child rearing 101 where a kids learn consequences of bad decisions. Consequences for those in charge of these failed companies should be instant dismissal & no golden parachute to retire with. Maybe even jail time for some. Are you really of the belief that two large companies, as well every smaller company that supplies them, going under would be good for the US & the economy?

You funded it? Not really, it was a loan, not a grant. Was all of it paid back? I don't doubt that it wasn't, but it sure was cheap compared to having funded the total price of unemployment for 1.2 to 2.6 million people. Would you be more content funding unemployment, that once paid out is gone? Something tells me you wouldn't.

Pontiac was phased out, not bankrupt, & GM did it to get the loan. Penske couldn't get another company to go in with him on Saturn so it was dissolved. They were able to sell Hummer, but Saturn & Pontiac is not the same thing as GM & Chrysler going away.

[odcics2]

Should have let them fall on their face. They could have gone through reconstruction and they would right now be better than they've been in 20 years.

They did.  They are.   

[Indygenerallee]

I will drive a Ford over a damn GM any day!!! (I do as a matter of fact!!!  )