GM's Chief pushing for higher gas taxes.

The alternative was not to let them "die," The alternative was to let them declare bankruptcy and reorganize in the traditional manner. But if the Feds had done this, then UAW would not have been protested. Instead, the creditors and stockholders would have been protected. It seems to me that the goal of the bailout was to protect the UAW, not the stockholders. Essentially the US goverment nationalized GM and Chrysler, gave a part to the UAW, and are slowly selling off the rest to new owners. The original stockholders and creditors were left with nothing. I can't see how this was fair (or in the case of GM less than nothing).

Ed

I am still trying to figure out why some people think having a centralized government of unlimited power, unrestrained by any laws and permitted to do anything deemed "necessary" at any given time, is a "good thing."

There are existing laws on the books for dealing with companies failing and going bankrupt. The administrative branch of government had no authority to rewrite them on the fly for this specific case. Instead of letting the law takes its course the assets of General Motors were stolen from its owners, who were left with the worthless empty shell of a company, and given to a "new GM" owned by the unions and the federal government. These are banana-republic tactics.

One of the fundamental tenets of government in the U.S. is that we are supposed to be a nation of laws rather than men. That is, government action is supposed to be constrained to the written law rather than being directed by the whims of politicians or the public. (BTW, this is not a democracy. The Constitution guarantees us a specific form of government and "democracy" is not it.) I see abrogation of this principle as extremely dangerous, much more so than companies of any size going through the established bankruptcy process.

In the wake of this fiasco I personally would not buy a new General Motors (or Chrysler) car for any reason.

The only good argument that can be made is that the GM and Chrysler factories are very obsolete and that the best thing to do with them is to shut them down, and to open up new factories with new management and new equipment.

I'll buy that argument although I don't think letting GM and Chrysler collapse is the only way to promote that.

There are a lot of small manufacturers in this country who rely on getting parts made by companies that also make parts for GM and Chrysler, and even some who rely on manufacturing surplus from them. If you shut down GM, you shut down GM's suppliers, but you also wind up shutting down folks who use GM's suppliers as well.

The guys who make O-rings for GM air conditioning systems also make microphone shock mounts. The guys who make tooling for GM body stampings also make tooling for music stand makers.

--scott

But they didn't.

cf. the LAST time they bailed Chrysler out, in the seventies.

Yes, this is true. But I don't see any laws being broken.

Fiasco? It looks like the government may actually be making a profit off of GM, depending on the Fiat deal. It's not a bad investment; I bought some myself.

--scott

Where is the provision in the law for the "special bankruptcy" in which GM's assets were taken from its owners by the federal government and redistributed?

Those were loan guarantees. That should not have been done (once again, no lawful authority existed for it), but since Chrysler did not default at that time it did not cost taxpayers anything.

Once again, where do you find the lawful authority for what was done?

Yes, fiasco. Ask any of GM's former stockholders. Not to mention that last I read, the government now expects to lose about $14 billion on the deal (that they'll admit to).

Why would "GM's chief" want higher gas taxes?? So the Volt will sell better?

If we were taxed more on gasoline so that we would commit to development of true alternative fuels, so be it...but I rather suspect that is NOT what would happen.

They would just piss away the extra revenue as they have done in the past.

Basically because they're know-nothings about finance. Most are union-haters. Most all are guided by purely partisan politics. Wacko libertarians comprise a good percentage. Probably many got burned by bad GM cars.

They have no idea what it would have done to the economy. Even now they have no idea that the UAW stake is all in a retiree pension/health care trust fund, and that bankruptcy would have dumped those costs onto the taxpayer via the PBGC and Medicaid. Or that last year GM labor cost was down to $58.15 an hour vs $56.15 for non-union Toyota, Or that starting GM union wage is now $15 an hour. Or that Ford took a direct $6 billion Government loan and it has government guarantees for much of its $23 billion debt. Or that Ford debt didn't stop CEO Mulaly from scoring a +$50 million bonus this year. Most aren't batting an eye at the Fed printing and providing $billions in interest-free greenbacks for the big Wall Street investment firms and banks. They also don't bat an eye at the Fed keeping interest rates at nothing for Joe-blow saver in order to keep the Wall Street equity market pumped up. But man, talk UAW and their panties get all wadded up. Funniest part is they think they paid taxes on the bailouts. My taxes didn't go up, did yours? If the bailouts cost anything to the taxpayer, which is highly doubtful and most likely the reverse, it just got added to the debt along with all the other spending that isn't being collected in taxes. But that's another issue.

--Vic

This is the interesting part: a company that focused on their

*shareholders* more than their *customers* wound up driving the customers away in droves, got into serious trouble, and wound up royally screwing the shareholders in the end!

Now they are back on their feet, and they're playing to the *shareholders* again!

How frigging *stupid* can you be?!?!?!

Toyota, Nissan and Honda play to the *customers* and their shareholders didn't have to take a bath, even with all of Toyota's woes.

And a lot of where their power base comes from. If they had let the unions hang, the unions might have turned their backs on them.

Jeeze, Ed, did you come up with this, or was this a discussion you'd heard somewhere in the media? Interesting slant on things, and probably, the truth.

That's what it's looking like...

The so called "security threat" is the result of the US federal government's meddling in the affairs of other people which it has no business meddling in. Bombing people's homes and businesses after proping up brutal dictators for decades tends to piss people off.

The US federal government set up the status quo. If you don't like it, asking for more federal meddling is like well... the idea that overspending can be solved with more spending. You want Saudi oil to be expensive? Get rid of the US federal government for the Saudis and they wouldn't remain in power for very long. The oil there would become very expensive very quickly due to the political instability.

And yet I'm the kook for suggesting the two winged single party system be done away from?

Trade is not a problem. Meddling is. The US federal government needs to stop meddling. That's it. We the people who live under its rule need the federal government to stop meddling, not tax us further.

Stop listening to them and start watching their actions.

This is always what happens when companies do this. We live in an age where shareholders aren't in it for the long term, so they care only about short-term profits. When companies attempt to focus on keeping their stock profitable in the short term, rather than focussing on making a good product so that they keep a customer base, they screw themselves, their customers, and ultimately their investors.

And sadly, far too many American businesses are doing this. GM is by no means unique.

Agreed. And they are doing some pretty boneheaded things. At the time of the collapse, they had finally developed some decent new products, including (for the first time) a Cadillac that didn't drive like a wallowing pig. Of course, they laid off the teams that developed these things when the fall came.

Sure, but they're also not trying to get Americans to invest in them either. They have shareholders who are interested in more than the past six months' numbers.

--scott

I guess I'm just an old timer...at 50....

True. It bit GE in the @$$, too...

Seriously, why was the bailout such a bad thing? Thanks, Ben

In my opinion it was a bad thing becasue it interfered with what should have happened. Without the bailout, GM most likely would have declared bankruptcy. The courts would have reorganized GM to best protect the creditors and stockholders. Likely the current UAW contracts would have been voided. During the reorganization, deadwood could have been trimmed. Creditiors would have gotten something, as would stockholders. By nationalizing GM the way the governemet did, they esentially took the good parts of the company (along with most of the bad management) and gave a chunk to the UAW, and kept a chunk for the government. Creditors and stockholders were left only with the worthless, or less than worthless assests that were pared away from the old GM (see Motors Liquidation Company). The net is, the US government conficated GM from its owners (the "stockholders"), kept part of it and gave the rest to the UAW. To make matter worse, they left much of the managent that ran the company into the ground in place. I can't see how this is consistent with a "free market economy." It is very much how the British government handled the collaspe of the UK auto industry. Take a look at how well that worked out...

Ed

Because it cost a lot of our money, and it didnt work.

It is worse than just theft and not working, it is outright harmful.

The assets of the bailed out companies remain in the hands of the same incompetent, corrupt, overly risk taking or whatever people ran the companies into being bankrupt in the first place. Without a bailout these assets are sold to the highest bidder. These are often competent _SMALLER_ companies that are sound and looking to expand. Another customer for these assets are people looking to start companies and could really use some cost effective equipment, buildings, etc. Job creating companies are cut off in the favor of job sheding companies. The long term is sacrificed for immediate.

Worse is that sends two loud and clear messages:

1) If you can get government to cover your loses you can take huge risks. Huge risks pay off big so companies who can get government to backstop their loses take more risks than they otherwise would have. 2) People looking to start new businesses do not have anyone in government protecting their interests. They see that the system is not fair and weighted against them. Their risk increases. They may decide that the risk/reward ratio is too adverse for their tastes and not start the business.

Noting is going to improve until government gets out of the way and at least restores some image of fairness. That's what happened finally after WW2. The regulation and intereferences stablized and people could again plot a course by determining risk.

Bailouts are part of stopping the past interferences, excesses, and so on from correcting. No correction means no recovery.