Should the government have GM fail and go bankrupt?

[Deleted]

do i need to remind you that the 'failing company' consists of people with families to feed? if they were not that great at buisiness do they deserve to starve?
that's kinda hard punishment isn't it? especially when your goverment is spending trillions in weapons that will never be used...

[Heathy]

meh the whole idea that things are built to last forever is just idiotic in the first place, how ppl let things get into the situation its in well, all you can do is sit back and laugh.

[Nish77]

Some things tend to get outdated and replaced by new technology but banks don't, really. You may end up looking for a new job if the internet takes over and you work for the post office. You might need a new job if you work for a landline phone company and everyone buys cell phones. You might need a new job if you work at a rib shack and someone opens up on the other side of town with better tasting ribs.... But if our auto industry tanked our economy would be much worse off than it is now... the same with the banks... We just don't like the idea of helping out people when they do wrong.

This is assuming they actually did wrong. Honestly it could be just the economy... but most people hold bankers responsible for some things and people don't like the idea of CEOs doing for themselves so much. Either way, assuming our economy wouldn't be much much worse off (it would) why would we let our car companies fail and let toyota and honda take over in our country even more? It's like if GM/Ford crashed and in the months of them making no cars people bought Hondas and stuck with them. You won't get a very fast brand new car company start up that competes with current manufacturers. Not in that time frame anyways. Not like it takes for someone to open a chicken shack. And during times of bad economy, we could end up losing out to different countries and not get that business back for a long time or at all.

[oblivionx]

It's so confusing to ask "should the government have GM fail and go bankrupt" because when the government stepped in GM did file for bankruptcy.

All the government did was throw billions at it by buying stock and preventing it from engaging in true negotiations with the UAW.

If the government did nothing, it's very unlikely GM would have went under. But predicting things that may have occurred isn't something that is possible, so what your left with is a narrative stating Obama saved GM. Tax payers are still out 20+ billion...

[Nish77]

I'm not an economist or a business guy but a friend tells me that if GM went bankrupt stock would not be worth the paper it's printed on meaning it becomes completely worthless. As in, you have no stock. Tons of bills go to the government and are written off. By doing this they seemed to have held the company afloat and have gotten paid back for what they gave to them. If the average small business or citizen claims bankruptcy it goes to the govt anyways which becomes a tax payers debt. I just am not sure what would happen during that time of the economy and how they'd handle the bankruptcy and who would work with it and how it'd turn out.

The cars being produced, the market share, the worker that ended up losing their job and house... It would be worse (especially during a time of such bad economy).

Regardless, the plant I worked at closed down and took the opportunity to move to Mexico. The guy running it wanted it there anyways so he got what he wanted. Also, I don't want to hear about the unions screwing over the auto industry. It's been an argument for like decades. The people that run it will make as much as they can. It's all profit driven. If they make money they can pay their workers an average wage with benefits. I have a friend who's a school teacher and a conservative. She's a teacher in a middle school. She says teachers need unions but car workers don't because they don't work as hard. That's incorrect. Marge Schott the racist slimeball would have paid baseball players 20k a year and given the rest to herself in the form of jets and vacation homes in different countries. If the company is making a lot of money the worker can make an average wage. Our union negotiated and we took a half wage pay cut. HALF. Imagine your single mother being a schoolteacher making 40k a year and all of a sudden making 20k. People who were making an average wage with houses kids and possibly wives were making less than new hires were making 15 years before. Inflation is massive! Even with that wage cut the guy still closed down the plant and moved to Mexico. What he doesn't absolutely need to make here he won't.

In the meantime, the problem with U.S. auto manufacturers is they are purely profit driven. Toyota came up with a different business model and spent more money on their car and took less in profits. People who bought a Toyota were more apt to buy another one and so they ended up getting a larger market share and made more money. Unfortunately the people in the auto business here use the pure profit model of making as much as you can now by spending the least amount. Remember, the auto industry is responsible for 3.5 percent of the GDP. Imagine if they had gone Toyota's route and put more money into better parts and machines that built things with higher tolerances 25 years ago.... If we built cars that were good enough that road and track put them above all imports quality-wise, we'd be selling cars all over the place and people in this country would have their jobs and get paid well. But those guys at the top want to make as much as they can now because they won't be around forever and when they retire as long as they have a big bank account, they got what they wanted.

[oblivionx]

I'm not an economist or a business guy and a space alien came down and told me if GM went bankrupt stock would have been worth it's weight in gold studded with diamonds.

[Nish77]

Well, my point was that the thing I did not know at the time (and I'm a fairly educated guy)... is that the stock does not become worth little... you completely lose your stock. I did not know that if I had GM stock and they went bankrupt that I would no longer have any stock whatsoever. That was news to me and I'm sure there are some people out there who do not know that.

[oblivionx]

GM still held quite a bit of value if the government didn't step in and they didn't need hand holding to enter bankruptcy.

The government only really bailed out the UAW, by preventing GM from entering no holds barred negotiations with them.

[Nish77]

I'm not too sure, honestly, what you mean by no holds barred negotiations when we took a half wage pay cut and the company still went to Mexico. I'm getting the impression that GM employees took basically the same thing as we were both UAW and we basically worked a lot off of what GM's negotiations did. The guy at our plant that supplied parts to GM, Chrystler, Toyota, Mazda and others basically said he'd close the doors and the union said the best they could do was a half wage pay cut and we had to pay more for our benefits.

The unions did negotiate a severance and secured pensions for people who had worked for decades but they still closed the place down and moved to Mexico.

I'm sure similar things happened with GM (some plants sending more business out of the country). One thing is for sure without the unions (and maybe even with them) that business will never come back here.

[Healing Rain]

The government should only help fund homeless shelters and should never bail anyone out.

[Deleted]

On one hand I can understand bailing them out because it involves too much to let it fail BUT on the other hand I don't think governments should just fix the problem when the management of a company fails. This is Capitalism we're talking about, not Communism where the government bends over backwards so ppl have jobs at any costs.

What do we do when CEOs just say "Let's do this, if it fails the government will bails us out, there is too much at stake to just let us sink"

[Nish77]

The thing is the auto CEOs are doing basically the same thing they always have been doing... the economy just got bad. Someone might say they could have done better but our system allows for a lot of people to do a lot of what they want to make money. Worse IMO is the idea that some bankers had to know the bottom would fall out of the mortgage industry and the securities they sold would be worthless if the economy took a dive. Some people in government will cater to the people who want to make profits at the edge of what they can make where when things get bad then they're in trouble.

What happened was the government kept the auto businesses afloat and (Obama) put some regulations on how they need to deal with the issues.

Comparing bankruptcy and bailouts to Communism is like comparing the bully at school to Hitler. This country has no plans of gathering and keeping private businesses.

---------- Post added 2012-09-08 at 09:56 PM ----------

The government should only help fund homeless shelters and should never bail anyone out.

I've been in fairly rough situations in my life and I can guarantee and understand that you may think that you have the ability to pick yourself up and put yourself in a good situation but I am absolutely certain that you could be put in a situation that you could not get out of without some of the help that the government and that people have put in place to help people out of bad situations. You would not know it until you were in that situation... and when you were, you would not be saying 'that's how the ball bounces'.

[Deleted]

yea just let them go under, then you can have more people on welfare to sneer at.
Obviously Gm is massive company that employs thousands of people, not only that but its business keeps other companies in business, its another cog in the machine, A battleship is a huge vehicle, but if you neglect one cog an allow it to break, the whole think comes to a hault

[IIamaKing]

Well I know If I did a poor job with my finances and was on the path to bankruptcy there would be no Government hand out for me. So no I do not think my tax dollars should go to bail out any one.

[Nish77]

Put it this way... You can see first hand what's happened in Detroit. All union talk and bailouts aside. What has happened is that since the plants have closed (and many have closed) and since they moved out of the country (several have and you can't and probably won't move there to work) the restaurants, the video stores, the places for entertainment like put put and movie theater type places have closed down. Many of the corner stores and gas stations have closed down. There are blocks and blocks of houses in cities that people have literally walked away from because their 60-80k home became worth LITERALLY 8000 dollars! YOU CAN BUY A 60k HOME FOR 8000 DOLLARS. But you don't want to. You know why? Because nobody is living there and because there are no jobs crime is rampant. Average middle aged people have bumped kids out of McDonalds jobs. The younger kids have no jobs and are stripping these houses bare and nobody is there to see it because they don't live there. The poor people that still live there are now living in an extraordinarily bad area and in an extraordinarily bad situation and most likely with no job because they all left. You might think you could easily pick yourself up and move because you have been given the knowledge through education (a lot of it from friends and family) to do for yourself. Or you might have fallback help from parents. But some of these people are screwed really really badly.

Just a thought and a small but decent sized example of what happens when such a large industry closes and/or leaves.

yea just let them go under, then you can have more people on welfare to sneer at.
Obviously Gm is massive company that employs thousands of people, not only that but its business keeps other companies in business, its another cog in the machine, A battleship is a huge vehicle, but if you neglect one cog an allow it to break, the whole think comes to a hault

[chadwix]

It was a union kickback for their donations to the obama campaign during the election. They give money, vote democrat and get it back. Same with teachers unions. GE ring a bell?

There is no reason we should be bailing them out, let them fail or adjust to the current market. The car plants in the south (non union) didnt need a bailout, apparently you cant pay someone $75 an hour for work that is worth $37 an hour, even if it makes you feel good.

[Wells]

Well I know If I did a poor job with my finances and was on the path to bankruptcy there would be no Government hand out for me. So no I do not think my tax dollars should go to bail out any one.

Well you going under doesn't exactly have the same effect.

[Nish77]

The government handout would be that when you declared bankruptcy, you would keep your home and many other things instead of having everything taken from you. In this case many kept their jobs and the business is doing somewhat 'ok' now after apparently repaying those handouts. The difference is as the corporation gets bigger, many many people who are not directly responsible are affected. It's both people and the economy.

Well I know If I did a poor job with my finances and was on the path to bankruptcy there would be no Government hand out for me. So no I do not think my tax dollars should go to bail out any one.

---------- Post added 2012-09-08 at 10:15 PM ----------

Why do you say union kickback to Obama when the bailout was planned, started and was in full force under Bush?

It was a union kickback for their donations to the obama campaign during the election. They give money, vote democrat and get it back. Same with teachers unions. GE ring a bell?

There is no reason we should be bailing them out, let them fail or adjust to the current market. The car plants in the south (non union) didnt need a bailout, apparently you cant pay someone $75 an hour for work that is worth $37 an hour, even if it makes you feel good.

[oplawlz]

The bailout should have come with a conversion to non union as part of the reconstruction. Also, with an understanding that the stupid Volt be priced under 30k.

[Nish77]

Non union work could and would in some cases be back breaking work with no energy to make your situation better and as the auto industry goes could mean firing every winter when the sales are down (when people usually get unemployed) and them not coming back or be out on their own looking for a job all of a sudden with kids and a house.

Why don't we take a middle school teacher's pay and divide it by months and when the summer hits tell them to hit the road. And when the spring comes around, maybe we'll hire them back or maybe we'll hire someone younger back and pay them less because they're new with less benefits. No, the teachers have a union so things like that do not happen and people are not discriminated against (and a whole lot of other things) and so do the auto manufacturers. Without unions, they could easily make auto jobs seasonal for a large portion of their employees.

I 'really' do not think that the way auto manufacturers work in this country with their profit driven models that they would put all of their excess profits in a bank. Some, but not all. People work for money to spend on other things. They're already investing like crazy where they see fit to invest (generally other countries atm). If they could pay the workers less that just means some CEOs, stockholders, and some high up in corporate would get wealthy, it does not necessarily mean more than a little bit of stability.

I went to a union meeting and met the plant manager and was shown a video by the UAW which showed how Japan changed their business model to one of buyer retention. It showed how they took drastic cuts not in their employee pay but in how much profit per car they made. They took these cuts to put the few thousand extra into better cars. This resulted in people buying more Japanese cars because they gained a reputation for lasting forever (which a lot of them do of course). This meant if you bought 2 Japanese cars instead of a Ford and a Japanese car or a Ford and a Chevy, the Japanese made out. And they did make out.. people kept buying them.

The business model for the American car industry was (at least at the time I saw that over 8 years ago) pure profit maximization. Spend the least to get the most. That's honestly how most businesses work. Of course people will pay more for a Cadillac if they want the Cadillac but then again there's always a Lexus.

The whole point of that movie was not to say the U.S. auto industry sucks... it was to try and get people educated to how things were going and hope that people would begin to demand that the U.S. auto industries change their business practices.... but will they ever? The U.S. auto worker is a good worker but they can only do so much with what they're given. It's not the workers, it's the machines and technology to make things with higher tolerances. It's the supplies and parts that are made with slightly more money to be better parts.. designed by the engineers and assembled by the workers but paid for by the company and made by expensive machines.

---------- Post added 2012-09-08 at 10:40 PM ----------

The bailout should have come with a conversion to non union as part of the reconstruction. Also, with an understanding that the stupid Volt be priced under 30k.

Do you realize Honda has like 15 cars that are either hybrid, fully electric, natural gas, or hydrogen powered? Who do you think people will think has it right when the gas prices get so high that they feel compelled to buy a car that gets massive miles per gallon. A lot of people in my family bought foreign cars. My father worked for GM. A lot bought domestic cars and many bought both a lot of domestic and a few foreign over their lifetimes. When I was in college I had asked my father to help me buy a car. I decided on a Honda Civic in 1999 that was a new 1998 model. It was an HF model which mean high fuel economy. IT GOT 46 MILES PER GALLON ON THE HIGHWAY. IT IS STILL RUNNING AND LOOKS BRAND NEW. HYBRID CARS NOW DON'T GET THAT KIND OF MILAGE!!!

To be fair, since I worked in the factory, if I could finish my degree (three classes from a biochem degree) I would buy a truck to support the U.S. auto industry. But come on... make something that gets good mileage and lasts please...