Comments on: Let GM Fail

By: car loan modification

car loan modification — Fri, 06 Feb 2009 03:46:05 +0000

Debt is a prison. Although my credit card debt is manageable and I’m paying very little interest, I feel like I’m in chains because of it. Recently, I’ve been losing sleep, thinking of it when I wake up in the night.

By: GM Worker

GM Worker — Tue, 18 Nov 2008 17:21:10 +0000

GM will fail no matter what in the long run, because their buissness model will not hold it.

By: scootdawg

scootdawg — Fri, 14 Nov 2008 11:39:09 +0000

Unfortunately, President-Elect Obama is a pro-union advocate. He will not make any changes that will allow GM to cast off the chains of the unions. Also, and I may be mistaken, but I believe GM is held back by Michigan union laws, right? Isn't mostly a State legislative issue? So, I'm not sure how much the president could affect GM, in that regard.

GM should sit down with the union leads and explain that some jobs at a lower rate is going to be better than no jobs. Show the books, have the execs take big pay cuts (yeah, right! ) and be open about the situation. I don't think that would happen but it needs to.

By: mattmaroon

mattmaroon — Fri, 14 Nov 2008 02:17:39 +0000

Maybe instead of seeking another funding round for my startup I'll just try to get $1m in TARP funds too. My golden parachute consists of a cheap printer and a box of Draftmix t-shirts, so I'm willing to part with it.

By: cchjd

cchjd — Fri, 14 Nov 2008 02:15:04 +0000

Btw, that also goes for boutique banks and insurance companies. Let them file or have some healthy private investors pick their bones or buy them whole.

By: cchjd

cchjd — Fri, 14 Nov 2008 02:13:06 +0000

The speculation is that Obama is calling for a bailout publicly during his Pres-elect grace period for PR to the base that helped elect him, but is hoping Bush doesn't move on this at all and that GM files before he takes the oath on Jan 20th. That'd be politically shrewd and economically the correct play. Of course, that's just politico-type speculation.

Definitely agree with your general assessment of letting them fail. The original $700B bailout was to help move credit markets (though the gov should've also guaranteed x-amount in loans from foreign investors), but this is a whole other animal. Saving antiquated businesses via the gov is about as asinine as econ policy can get.

By: mattmaroon

mattmaroon — Thu, 13 Nov 2008 22:36:43 +0000

You're right, actually it might increase the losses since their pension expenditures remain the same.

By: Shalmanese

Shalmanese — Thu, 13 Nov 2008 22:31:50 +0000

Even absent unions, increasing prices wouldn't necessarily decrease losses if the percentage drop in demand is greater than the percentage rise in prices.

By: mattmaroon

mattmaroon — Thu, 13 Nov 2008 22:26:39 +0000

Right, but if they increased the price of vehicles (and therefore the market would buy less so they cut production capacity) they could turn that number into a positive. The answer, of course, is that the union won't let them cut that many jobs.

By: Shalmanese

Shalmanese — Thu, 13 Nov 2008 22:23:45 +0000

"GM loses $2,331 per vehicle while Toyota makes $1,488.

That last one fascinates me the most. Why doesn’t GM just make fewer vehicles and sell them for more? “Sure we lose money with every sale, but we make it up in volume” is supposed to be a joke, not the business model of a multi-billion dollar industry. "

That's net loss, not marginal loss. Looks like they arrived at the figure by just dividing annual profits by vehicle sales. It's not like GM loses an extra $2K for every vehicle they sell.