The World is Watching Detroit

[Mikeg]

....If the GM story is your silver bullet, then maybe we are doing even better than I thought. They didn't eliminate the pensions......

I didn't say that they eliminated them, they froze them. This example is simply indicative of our tendency to defer making the hard and difficult decisions, which end up having to be made later on anyway and just delay the overall recovery. If GM had gone through a managed bankruptcy under a Federal Judge, that decision would have been made two and a half years ago and GM's bottom line would be even healthier. When is GM going to have to make a similar decision on the pensions for the remainder of their employees?

[Lowell]

I didn't say that they eliminated them, they froze them. This example is simply indicative of our tendency to defer making the hard and difficult decisions, which end up having to be made later on anyway and just delay the overall recovery. If GM had gone through a managed bankruptcy under a Federal Judge, that decision would have been made two and a half years ago and GM's bottom line would be even healthier. When is GM going to have to make a similar decision on the pensions for the remainder of their employees?

I keep hearing this coulda-shoulda-woulda argument lately. Weren't there two Republican candidates for President in Detroit yesterday saying just that? Both Mr. "Let Detroit Die" Romney and Mr. we-should-have-let-Detroit-die Santorum were touting that sour grape line. And that the on the day after GM announced is largest profits ever!

Both would have cast GM and Chrysler to the wolves and vagaries of bankruptcy that very possibly could have led to the complete liquidation of both and a resulting disaster for metro Detroit and Michigan. Instead they try to create a rosy illusion of what might have happened while ignoring the of the great success of what really happened staring them in the face.

We are clearly in better and improving times.

[TKshreve]

I keep hearing this coulda-shoulda-woulda argument lately. Weren't there two Republican candidates for President in Detroit yesterday saying just that? Both Mr. "Let Detroit Die" Romney and Mr. we-should-have-let-Detroit-die Santorum were touting that sour grape line. And that the on the day after GM announced is largest profits ever!

Both would have cast GM and Chrysler to the wolves and vagaries of bankruptcy that very possibly could have led to the complete liquidation of both and a resulting disaster for metro Detroit and Michigan. Instead they try to create a rosy illusion of what might have happened while ignoring the of the great success of what really happened staring them in the face.

We are clearly in better and improving times.

Lowell, Couldn't agree more. Why even bother coming to MI to campaign if that is what you have to say? Just skip the state. Trying to double-down on their past claims [[to Detroiters) is borderline insane. We are no-nonsense people here. I think just about everybody knows the potential extent of damage that was on the line.

Add to this, they have no facts to back up their prophetic claims that bankruptcy would have been [equal to or greater] than the actual outcome.

These guys will say anything......

[Mikeg]

.....the wolves and vagaries of bankruptcy....

a.k.a. "the rule of law"

[jbd441]

The article "Target at Post-Bailout GM: Earning $10 Billion a Year" [[page one, Feb. 6) indicates that now that General Motors Co. has gone through a quick bankruptcy restructuring which wiped out its debt, the company is enjoying the reward of making a handsome net profit and will be aiming at becoming even more profitable in the future. The article also notes that the company will pay no federal corporate taxes for years, as part of its bailout by the government.
What a sad picture. I find it offensive that the word "profit" is used to refer to GM's affairs. It is relatively easy to make a "profit" when debt and taxes are simply forgotten.

[antongast]

I find it offensive that the word "profit" is used to refer to GM's affairs. It is relatively easy to make a "profit" when debt and taxes are simply forgotten.

Are you equally offended by companies that dodge most or all of their federal tax burden using various types of accounting gimmicks?

[Hermod]

Are you equally offended by companies that dodge most or all of their federal tax burden using various types of accounting gimmicks?

And who would that be?

[antongast]

And who would that be?

You've never heard of corporate tax-dodging? Here's Facebook, GE, Google, and a whole section of Bloomberg's webpage dedicated to the phenomenon, all of which I found in about five seconds of searching the web.

[TKshreve]

Are you equally offended by companies that dodge most or all of their federal tax burden using various types of accounting gimmicks?

Bullseye! Why should the Big 3 be the whipping boy here? Their loans were chicken scraps compared to the exorbitant bailouts the fat cats on Wall Street took.

[maxx]

Romney is probably upset that he couldn't take some million dollar bites out of GM's dying carcass.

peachlaser: Conscious is the opposite of unconscious.

[mtm49269]

I was watching ABC National News last night and was pleased by three [[3!) pretty pleasant mentions of our area. First, needless to say, was the GM profit announcement and how it would pour $$s into our local economy. They actually interviewed workers on the line at the Lake Orion plant tht had previously closed and the interviewers and workers were VERY upbeat. [[Usually, when the nationals talk about the auto industry, they interview workers in IL, OH, WI, anyplace but metro Detroit.)

Second, they talked about the "Presidential" candidates campaigning in the area and talked about how both were ready to let Detroit die. But the bailouts and determination of labor AND management kept the big three going and growing.

Finally, a bit of humor: they aparently drove around the metro area and came upon the most bizarre speed limit sign they had ever seen. Don't remember the exact area but there are three schools in the neighborhood and the speed drops from 45 to 25 when students might be present. The schools start and stop at different times so the sign said something like 25mph 7:28-7:48, 8:02-8:22, 8:30-8:50 and similar for departures. One person aparently had to stop and get out of his car to make sure tht he was going the right speed at the right time.

[Detroit68]

I didn't say that they eliminated them, they froze them. This example is simply indicative of our tendency to defer making the hard and difficult decisions, which end up having to be made later on anyway and just delay the overall recovery. If GM had gone through a managed bankruptcy under a Federal Judge, that decision would have been made two and a half years ago and GM's bottom line would be even healthier. When is GM going to have to make a similar decision on the pensions for the remainder of their employees?

Huh? GM [[and Chrysler) did go through a managed bankruptcy. Haven't you heard Mitt Romney taking credit for suggesting the idea to Obama? How else did they come out of bankruptcy within 2 months of entering? And I'm not sure how much "healthier" their "bottom line" could be. Bankruptcy allowed GM to liquidate its non-performing assets and come out with virtually no debt. Their profit margins are bigger than they ever been due to the reduce debt service and reduced post-retirement [[i.e., legacy) costs.

As mentioned by another poster, GM is doing what most companies have done long ago - replace their pension plan with a 401[[k) plan [[also gave salaried employees an extra week's vacation). This move only affects employees hired before 2001.

[Mikeg]

Huh? GM [[and Chrysler) did go through a managed bankruptcy.....

I wrote that GM should have gone through a managed bankruptcy under a Federal Judge. Instead, it was "managed" by the Executive Branch of the US government through one of President Obama's big campaign contributors, Steve Rattner. Big difference!

What I wrote in my 10:04 AM post is not very different from what Rattner is now admitting.

After his [Dec. 2011] speech to the Detroit Economic Club, Rattner told reporters that in hindsight, he wished the auto task force had stressed more concessions from workers or creditors.

"If we had more time, we might have asked all the stakeholders to sacrifice a little bit more," Rattner told reporters. "We didn't ask any active worker to cut his or her pay. We didn't ask them to sacrifice any of their pension and we maybe could have asked them to do a little bit more."