General Motors is BANKRUPT!

[mjs]

I already looked. The Malibu Hybrid gets the same mpg as the Cobalt and at that price, I could have a similar equipped Cobalt and a $10,000 upgrade to my kitchen or family room.

[Mikeg]

Interesting take by Robert Reich on what he thinks President Obama's main goal is for investing taxpayer money in the GM bailout and bankruptcy:

......it seems doubtful that taxpayers will even be repaid our $60bn. But getting repaid cannot be the main goal of the bail-out. Presumably, the reason is to serve some larger public purpose. But the goal is not obvious.

It cannot be to preserve GM jobs, because the US Treasury has signalled GM must slim to get the cash. It plans to shut half-a-dozen factories and sack at least 20,000 more workers. It has already culled its dealership network. The purpose cannot be to create a new, lean, debt-free company that might one day turn a profit. That is what the private sector is supposed to achieve on its own and what a reorganisation under bankruptcy would do. Nor is the purpose of the bail-out to create a new generation of fuel-efficient cars. Congress has already given carmakers money to do this. Besides, the Treasury has said it has no interest in being an active investor or telling the industry what cars to make.

The only practical purpose I can imagine for the bail-out is to slow the decline of GM to create enough time for its workers, suppliers, dealers and communities to adjust to its eventual demise. Yet if this is the goal, surely there are better ways to allocate $60bn than to buy GM? The funds would be better spent helping the Midwest diversify away from cars. Cash could be used to retrain car workers, giving them extended unemployment insurance as they retrain.

But US politicians dare not talk openly about industrial adjustment because the public does not want to hear about it. A strong constituency wants to preserve jobs and communities as they are, regardless of the public cost. Another equally powerful group wants to let markets work their will, regardless of the short-term social costs. Polls show most Americans are against bailing out GM, but if their own jobs were at stake I am sure they would have a different view.

So the Obama administration is, in effect, paying $60bn to buy off both constituencies. It is telling the first group that jobs and communities dependent on GM will be better preserved because of the bail-out, and the second that taxpayers and creditors will be rewarded by it. But it is not telling anyone the complete truth: GM will disappear, eventually. . . .

Read his full opinion piece in the Financial Times [[registration required).

[turkeycall]

Quote: "I also feel pretty disgusted being told to buy a car from two companies largely owned by the government and the UAW. "


I cannot speak to the issue of Chrysler ownership. However, the UAW is not an owner of General Motors. The VEBA, a negotiated health care trust fund for the General Motors hourly retirees, has a stake in General Motors. It is really not much different than a pension fund having shares of a company - any company - in its portfolio. That should - but probably won't - clear up any misunderstanding about UAW ownership of General Motors.


As far as government ownership, it's your tax dollars at work. YOU own a portion of General Motors. Now, contact your Representitive or Senator if you have a problem with that.

[Det_ard]

Quote: "I also feel pretty disgusted being told to buy a car from two companies largely owned by the government and the UAW. "


I cannot speak to the issue of Chrysler ownership. However, the UAW is not an owner of General Motors. The VEBA, a negotiated health care trust fund for the General Motors hourly retirees, has a stake in General Motors. It is really not much different than a pension fund having shares of a company - any company - in its portfolio. That should - but probably won't - clear up any misunderstanding about UAW ownership of General Motors.


As far as government ownership, it's your tax dollars at work. YOU own a portion of General Motors. Now, contact your Representitive or Senator if you have a problem with that.

I understand the technicalities of GM's new ownership. On a practical level it's clear however that the government and the union will have a very large voice in GM's future decision-making. Why was GM forced to commit to another small car plant in the US without first establishing that it's needed? If Opel is capacitized for 200,000 units at a plant in Germany and their market only needs 150,000, GM can't make another 50,000 in Germany and ship them to the US to sell. Due to UAW and government meddling GM must build a small car plant in the US and run it at whatever paltry utilization the market dictates instead of using the excess [[free) capacity in Germany.

The company is already being run to benefit the UAW and further Obama's political agenda.