3/5/09

GM

Is it a shock to anyone that GM needs more money? This is one of many outrages as of late but this unlike alot of other financial situations was/is easy to see.

I am on record saying that back in 2008 that the government should not be bailing out the carmakers. Instead, they should have assisted in an orderly bankruptcy, this would have allowed them to wipeout billions of crushing debt but the unions that run Detroit and their politicians would not let it happen. It was also an election year and republicans were hoping for the blue collar vote.

Instead we gave them billions (GM got 13 billion) and now they are back for more (GM wants 30 billion), continuing with a failed business model at our expense. Incidentally, GM's market capitalization is just over 1 billion. Now the democrats, house, senate and President Obama could show everyone that they are indeed willing to look at the BIG picture and do something very politically unpopular but I am not holding my breath.

The only problem with bankruptcy is that we the taxpayers will be on the hook for the pension for every past and present employee through the Pension Guarantee Trust Fund and what about the employees healthcare bills? Argh!!!

Looks like we are screwed either way.

3 comments:

  1. Anonymous3/09/2009

    file bankruptcy...sounds easy. Why don't we all file bankruptcy and wipe out our debt. What could possible go wrong. You are an idiot. A better approach would be to cut cost and payoff bills. The car companies maybe sued for cutting cost. But that's why the car companies pay attorney's a retainer. But, I can almost guarantee no one will be walking off the assemble line.

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  2. Anonymous3/10/2009

    bankruptcy is the only answer, how many billions do they think the taxpayers are willing to spend?

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  3. Anonymous3/10/2009

    A one dollar spent on a domestic manufactured product turns over in the economy seven times. Its a 9th grade stuff!!! So, it should be a no-brainer that propping up a domestic manufacturer makes all the sense. The gov't's job one is the stewardship of the economy - a healthy economy equals healthy, safe country. So throwing money at the problem is a good investment--about 7x return. The alternative-- buying foreign, even assembled in the US--only shrinks the economy and drains its lifeblood, the working capital. A five to seven foreign auto buyers, for example, shrink the economy to the tune of one million dollars and the capital is drained for good, that is, it is sent to work in a foreign country. If you consider that 52% of us are buying foreign autos, add to that offshoring of over 90 per cent of US manufacturing in the last 28 years, then that, my friends, is the root cause of our problems. Everything else is simply simptoms. You learned that also in highschool, 10th grade biology - death by ten thousand mosquito bytes, parasites, and all that. But, when we are blinded by political ideologies, or let someone else do our thinking for ous, then the obvious is no longer obvious and we unbeknowingly work for our own demise.

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