You're dead right. Any bailout package is a big wet kiss to the unions and a way to keep the campaign donations flowing.

That's why there is no way in hell the democrats are going to allow GM to slip into bankruptcy. It'll take a filibuster to stop the bailout and I doubt there are enough stiff spines left in the senate for that.

Depending on the amount of outrage coming from the general public there is a slight chance of stopping it.

Hit the nail on the head. I just saw a headline a few hours ago that AIG is already asking Uncle Sugar for a new loan. They've already blown though the first 85 billion.

one of the big problems, among many, is GM, for some time, and possibly still had more White Collar workers than Toyota had employees. Think on that for a bit. I know GM has more brands world wide(Holden, Opal, Vauxhall not sold here under those names, Vauxhall has no original models though), but geez, Toyota sells nearly the same amount of cars worldwide. and has been closing on GM for years now.
When adjusted for profitability, Toyota is the largest in those terms (as GM bleeds $$$).

A Re-org is desperately needed at All the American companies, and the Unions shot and it's leadership rendered into bio-Fuels.
It would also help if the Big Three's headquarters state wasn't the most expensive place they do business. And who is on Prez-Elect Obama's economy team...the Idjit herself Jenny "The Canukistani Commie" Granholm.

Breakup as with AT&T. Deregulation as with the telecomm market.

Any argument that Chevy could do better without having to drag Buick around?

M

Mark --

GM can't be broken up. Where would you find a buyer for a dead brand walking like Buick? Or SAAB, or Pontiac, or Saturn, or GMC? GM can't even find a buyer for Hummer, one of their only distinctive brands.

Here are the facts:

GM needs to be pared down to Chevy and Caddy, the only two viable brands they have left.

GM needs to eliminate at least 50% of their dealers, but state franchise laws make doing so prohibitively expensive. (Axing just Olds a few years back cost over a billion dollars.)

GM needs to get out of the contracts and obligations it has been foolishly getting into with the UAW and others for 50 years now.

And finally, the only way for GM to accomplish any of these goals is to restructure under Chapter 11. Either that, or they'll be forced to liquidate under Chapter 7, no matter how much money Washington transfuses into its corpse.

Obama Change: Instead of bailing out Wall St., he'll bailout the autos. Bad move, taxpaying Americans. We are witnessing the ultimate bubble. Limitless spending by govt all to "prevent a depression", which in fact, is promoting it rather than preventing it.

Actually, Buick is a very strong brand in China, so I would not sell that brand at all. Maybe kill it in the US.

Buick is tanking here, but is *extremely* popular in China; Buick is actually GM's #3 nameplate worldwide (after Chevrolet and Opel). I talked some time ago about euthanizing four GM brands here in the US (Pontiac, GMC, Hummer, Saab) and killing Vauxhall in Britain. Saturn sells what are essentially rebadged Opels, but the nameplate is successful here in the US. Holden (GM's Australian subsidiary) is also relatively well-off.

I plan to write to my Congressional reps and tell them I think it's time to stop these bailouts, but I despair that it will do any good, and not only because I live in a state (NY) that's long since a goner. The world's gone mad, and it's going to take a loooong time to set things back aright, if it can be done at all, I'm afraid.

I am a former GM employee (oops, in offical GM-speak it is "employe") who watched the slow-motion self-destruction. In the 80's, Roger B. Smith did not comprehend how supieror quality caontrol systems produce better cars, but instead rewarded managers for replacing $100 fixtures with $300,000 robots. In the 90's, Inaki Lopez managed to turn their entire external supplier base against them by sending their critical drawings to their competitors. Now they sift through the rubble of what once was an economic powerhouse and try to realize why they awarded $10,000 to the employe who suggested that the company could save millions by standardizing to "employe" vs. "employee" because of the paper, ink, and time savings.
Hey, the truth sucks, and the truth is that this company has been run into the ground by moronic managers (NOT leaders), government interference, and sugardaddy union contracts.

Exactly which GM cars/trucks are still made in the US ?

Allowing GM to into bankruptcy is different than an air carrier. Once GM enters bankruptcy it essentially finished. No one will buy a car from them at that point. People still fly on a bankrupt airline.

Maybe I'm economically illiterate, but why don't the UAW and the allied auto parts and supply workers just buy GM and Ford? Seven billion dollars would buy the entire market cap of both companies, based on what today's stock market says the companies are worth. If there are 400,000 directly affected auto and allied supply workers, that comes to less than $18,000 per head. Let THEM borrow the money to keep their companies afloat, instead of me and my neighbors (and our children and grandchildren). After all, they are much more tied to the survival of these companies than the general taxpaying population.

I agree with Stephen. Chevrolet and Cadillac are GMs viable North American brands. Buick is popular in China and might have some value if sold to a Chinese firm. If Saturn was making money, I'd keep it since it's now just Opel, but buyers are voting no with their money. Sad that GM is in it's current state because their latest cars show significant improvement. GM needs chapter 11 to prune back the brands and cut loose dealers.

There's a very simple answer to your question: GM's studies have shown that no one will buy a new car from a bankrupt automaker.

Buying a new car is not like buying an airline ticket. We presume that the FAA is enforcing safety standards even on bankrupt airlines (whether this is warranted is a question for another time), and as long as we can get on the plane, it's extremely likely we will get the travel we paid for.

Contrast that with buying a new car, which is the start of a multi-year relationship. You need your warranty honored, and you need the assurance that spare parts will be available. And, whoever buys it from you must have similar assurances, or else the value will tank. There is plenty of historical evidence that this is exactly what happens, as we have had other brands go bankrupt in recent history (AMC) or become unavailable in the US (Renault, among others).

So, GM is doing everything humanly possible to avoid bankruptcy, even though from a pure business-school point of view it seems overdone.

Don't want unions? Get the laws changed to make it easier to get rid of them or route around them. Don't blame GM, they didn't make the laws.

If they're going to nationalize the auto industry, let's get them to confiscate ( er..nationalize ) Toyota USA from the Japanese, and let that organization re-organize what's left of GM, and extend it's labor arrangements onto the GM workforce. They can then re-tool all the plants to build Toyota's, and other cars that people generally want to buy.

I think the biggest problem with GM going bankrupt is that people would be reluctant to buy GM vehicles if they feel there is a good chance that the company won't be around to honor the warranty or to sell them replacement parts.

An airline ticket is a one-time thing - as long as the airline is solvent when I take the flight, it doesn't matter if it goes out of business the next week. Buying a vehicle is a commitment for years, and includes factors like warranty support and resale value, so solvency is more critical.

If GM goes Chapter 11, the UAW loses BIG. The powers that be in the state of Michigan fear a loss of tax revenue as well as a voter backlash when workers are handed an agreement offering 80% of their previous pay package...or nothing. The loss of "national prestige" that would accompany the reorganization of GM/Ford would be substantial and - of course - those members of Congress that have shoveled dollars into Detroit for decades will lose BIG when their efforts come to naught. THAT particular loss of prestige cannot be allowed to happen. Congress doesn't make mistakes, you see. Sadly, the only way the U.S. auto industry survives "as is" is with socialized medicine, which while it may save Detroit, will kill the rest of the U.S. economy by making us, defacto, a socialist country.

And on that topic: Do we really want the same people we have to deal with at the DMV, making our health-care decisions for us? The thought staggers the mind.

Why should we use our taxes to pay some autoworker $150,000 / year? It takes me 5 years to earn what they do in 1 year. Why should poor people support the rich?

Let GM and Ford go bankrupt. Sell the equipment for scrap. Tear down the plants. Plow up the parking lots and grow water cress for the Presidential State Dinners.

"ASK YAHOO" says:
"According to the Indianapolis Star:
Base wages average about $28 an hour. GM officials say the average reaches $39.68 an hour, including base pay, cost-of-living adjustments, night-shift premiums, overtime, holiday and vacation pay. Health-care, pension and other benefits average another $33.58 an hour"

39.68 + 33.58 = 73.26/hour . $152,380.80 for 52 weeks 40 hours each.

It seems to me that the Feds should look to killing Chrysler and hope that Ford & GM can pick up their business. While I have little love for GM cars (but will look at Volt), Ford is putting out some really good stuff. The 2009 Escape Hybrid is excellent and the 2010 Ford Focus/Fusion Hybrid (due Q1 2009) is even better, operating on battery up to 45 mph.

Considering that Obama is not about to kill off millions of union jobs, a much better plan is DIE CHRYSLER DIE than thinking GM is going away.

If GM declares bankruptcy, it could cause a wave of knock-on collapses in their suppliers.

If I have a client who owes me a bunch of money for goods delivered, and they declare bankruptcy, I basically have to assume I may get as little as $0, and I may not get it for a year or more.

If that client is responsible for a large chunk of my business, and suddenly they go from paying me 100% in 30 days to 75% in 180, I might well have to lay a lot of people off or else run out of cash just like GM. In better times you can go to a bank or factor to lend you money against the receivables, but if the account is in C-11 the factoring fees might be insane.

This is all abstract, I have no idea how many suppliers GM could stiff badly (they need some to stay in production), or how much those suppliers have already built in an assumption that GM will go bust, but it does seem to me like there is a real systemic risk possibility.

Another thing to consider is that foreign car companies IIRC use a much higher percentage of foreign-sourced parts in their US-assembled cars. While there are plenty of Mexican parts in your Ford or Chevy, a US-built Honda has a lot more Japanese parts. So even if 100% of GMs manufacturing jobs got picked up by Toyota et. al., the overall US industrial base could take a stiff beating.

On the other side, I recall there were some similar systemic fears with the airlines bankruptcies forcing cascading writedowns due to all the leased aircraft flying around. Apparently the system figured out a way to avoid this. However, the system overall was not in a general crisis mode like this, and I suspect the "tail" of businesses effectively supported by the airlines was smaller, though that's purely gut instinct.

None of which is to say GM should be bailed out as-is, only that the cost of a chapter 11 could be a lot higher than it was for the airlines.

Uh, people seem reluctant to buy GM cars, whether the company is bankrupt or not...

I'm a Jeep fan, but I already said to my favorite mechanic, an active member of the local Jeep club, that, should GM and Chrysler merge, I won't be looking to buy any new Jeeps. I sure don't want a Jeep built the way that GM builds cars, with $350 headlamp replacements, etc.

A body shop guy standing there laughed, and said, "Yeah, we make bets in the shop about whether GM can manage to design something stupider than X in the next model. And they do."

I trust GM's design philosophies about as far as I can throw their cars.

Pelosi, Reid and Obama will never allow the UAW to go down under Chapter 11. Never. GM & F won't burn as much cash in Q4 and Q1 as it did in Q3, i.e., they'll make it to inauguration should Paulson not act in the next 60 days.

The other argument for bailout is the 2 million + jobs that are within the value network of US automakers: Think suppliers, health care and several service industry sectors.

Plus, Der Spiegel just reported that German automakers will participate in the German gov't bank rescue plan, adding further public relations ammunition to GM & F's case.

The elephant in the chapter 11 room is the UAW. They are the only folks who can save the big three and they don't need a bankruptcy court to do it.

They should get labor cost back in line, get rid of their bizarre labor rules ( smoking on the production line? name for me one other building where you can smoke) and lobby congress to get rid of the cafe standards .

Penny wise, pound foolish. Where did the typical benefits arise? From Henry Ford and the auto industry. Time and time again, the sentiment of to heck with the union workers, and their contracts, and expensive benefits. Let GM go the way of UAL, Pittsburgh Steel, and others? How short sighted! As the spouse of one of those 'high paid, benefit laden' UAl employees, who saw her 20+years of UAL benfits, including her pension either disappear and/or get cut in half, where do you think she would have to go to sustain herself in her old age? Yes. The government. (She won't, but others in her shoes may not be so fortunate). As the son of a former GM employee, I can assure you that he is not living on Easy Street with his 'high pension and other benefits'. What happened to honor in this country? A person works for a company for 20-30 years, under pretext of a contract for a pension and a gold watch, then 'oops, sorry'. Do you know why this happens? The govenment doesnt require the companies to fund their pensions. And do you know who picks up the aforementioned pensions? The government. You and I. I would rather pay now, make ALL companies with pension fully fund them each year, and forego the responsibility that enventually comes.

..Does anyone here...ANYONE ! think that public ownership of GM will cause their management to make better business decisions ? Better cars ?
..I didn't think so ; neither do I. The Dims aren't going to ask the UAW to make significant concessions on anything, certainly not wages or benefits. And the Dims can't afford to let GM workers to lose anything. That's what this election was all about, keeping the party going until the next election.
..GM gets a bailout. So does every other constituant group until the national credit is all gone and the Bureau of Engraving and Printing burns down.
..Then the music stops and we see that the room is devoid of chairs. We're all 'out'.

Why do you think the unions and the Democrats keep up their incestuous relationship? Votes for hand-outs, and hands-off. One hand washes the other (I did have another metaphor I could have used, but you get the picture)

The auto industry is fine in the USA. Toyota, Honda, Subaru, BMW, VW and Hyundai all build cars here. The non union automakers in right to work states are fine. Let the craphole known as Michigan go down the tubes. I want to see the UAW go the way of the dinosaurs, they earned it.

Letting GM, Ford, and Chrysler go under would be a heck of a lot less painful if the Governments (State and Fed) had not put so many barriers to entry for new auto makers. Due to the Barriers the only new Auto Plants are from the Foreign brands, not start up US Companies.

From the military perspective, one might be reminded that GM plants make parts and vehicles for the US military. There may be some concern there for the future of supplying manufactured parts.

Then again, it would be a great opportunity for some smaller manufacturers to retool, create jobs and expand the economy.

Thoughts?

ACtually if GM goes into Chapter 11 there will be an additional 2.5Million jobs lost within 12 months. And there will be somewhere around 50-100 MAJOR suppliers to also declare bankruptcy. It will make the 800,000 jobs lost this year and the financial picture look like good times. If Delphi can not currently get debtor in financing deals under Ch11 why do you think GM could? Your 401(k) would take 5-7 years to get back to even.

Automakers, like Wall Street investment firms and banks, (or any other business) MUST be allowed to fail when they continually make enough bad decisions. (Especially when those decisions lead to losing countless billions of dollars.)

Real conservatives know that there is no business that's "too big to fail". BTW, Why aren't there trials for the Wachovia, Lehman Brothers, and other execs that committed serious securities fraud and left us holding the bag? Why are both of our now-liberal parties sweeping this under the rug.

Oh, and all the Dems who've cried bitterly for years about "corporate welfare" - where are you now that we're talking real corporate welfare, and the dependency and entitlement mentality that comes with all welfare?

Finally, can anyone really doubt that even a weasel like McCain might have won had he taken a strong stand against the bailout? The crap sandwich is only the first appetizer course to the crap feast we're going to be eating for the rest of our lives...

Let GM and Ford go bankrupt. Sell the equipment for scrap. Tear down the plants. Plow up the parking lots and grow water cress for the Presidential State Dinners.

One out of 13 US workers is employed directly or indirectly by the domestic car companies. The Big 2.8 are also huge purchasers of computers, software, as well as the various components and commodities that go into making a modern car. GM has the largest installed base of personal computers of just about any company in the world. The Tech Center in Warren has supercomputers that many countries' governments don't have.

If GM/Ford/Chrysler go belly up it'll will hurt Dell, Cisco, Microsoft, Autocad, electronics manufacturers - just about every sector of what remains of the US manufacturing base will take a hit.

Are you ready for 15% unemployment?

People worry about discontinued models, such as the Matador, Studebaker, Renault, Capri, Fiat, and OLDSMOBILE. If the vehicle are not orphanded and abandoned, Chapter 11 should have no effect. Put some cash on the hood, and people will continue to buy the product.

IF it is a good product abd competitively priced.

To guarantee sales, provide indepent extended warantee service.

To argue otherwise is facetious.

Bloodbath now or double bloodbath later, your choice. But, of course, the D side will vote for 'compassion'. Mumble mumble mumble to avoid censorship...

tom

> Saturn

Can't agree on that one. I can't name a single person with any experience of Saturns who has anything bad to say about them. The Saturn name has value.

And I'd be less sure about Buick, too. I don't know all that many Buick owners, but I can't say I've ever heard many complaints. They need a good ad campaign to call attention to that if it's as I suspect.

I agree about just letting the big 3 just go! They together have caused this problem along with the unions.When will they stop the greed and realize that some wage is better than none? They will get only what they deserve. Let's face it ,if other companies, be they foreign or not, can provide a living for their employees,why can't the big 3. Anyway we all will need cars eventually. More unemployment will occur initially but maybe in the end it will not be as bad as it seems at first. More cars will be sold by the remaining manufacturers and they will at least hire some portion of the displaced current American auto manufacturers' workers.