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Let G.M. go bankrupt

blogs.law.harvard.edu

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Re: Let G.M. go bankrupt

#51

Post by gills »

Don't kid yourselves, and don't pity the pigs at the trough. Long ago GM's core business became lending (GMAC), and vehicles the conduit by which they ensnare borrowers. It doesn't matter if they're ugly and unreliable as long as people sop up the 'Buy American!' bullshit and keep borrowing.

They got sloppy with running the business while they were getting drunk over at the debt trough. Don't pity the executives and shareholders, they either knew what they were doing or lied to themselves - both feats worthy of losing their shirts in a bankruptcy restructuring.

They did this to themselves and deserve the consequences. The blog is right, bankruptcy stands the best chance of keeping the right number of people gainfully employed at a new debt-free GM.

Re: Let G.M. go bankrupt

#52

Post by sown »

Prrometheus wrote: post #44
sown wrote: post #32

Earlier quoted context omitted.

"That's what capitalism stands for." I think that is something we tell ourselves even though it is not really true. We live in some amalgamated economic system built on various rules of thumb, tradition and what ever else works to at least try to benefit real people and not perceptions. I guess the system also gets out of hand at times. ;)

It is ugly, though, to see the pigs begging for a place at the trough. What was sold as a bailout to sore up systemic instability in the financial sector has become an everybody-invited tax money giveaway free-for-all for the favored donors and supporters of Congressional election campaigns. The next time I complain about high taxes and someone says "STFU the government does so much for you like libraries and fire st…

I totally agree with your sentiment. The government, if it wanted to bail out the banks at all, should have attached some good strings to the money. Oh, well. :(

Re: Let G.M. go bankrupt

#53

Post by nihilocrat »

jeroen wrote: post #5
Dilpil wrote: post #3

Earlier quoted context omitted.

Not that I don't believe you, but some sources for that would be nice. I've suspected this was true, but I've never seen a real in depth analysis and explanation of it.

From 1996: http://query.nytimes.com/gst/fullpage.html?res=9507E1DE1239F... "The company estimates its hourly cost of labor at $43" 2005: http://www.npr.org/news/specials/gmvstoyota/ "Average Labor Cost per U.S. Hourly Worker $73.73" I can't find anything more recent.

From the NPR source:

"Average Hourly Salary for Non-Skilled, Assembly Line Worker: GM: $31.35/hour NOTE: Includes idle workers still on payroll and those on protected status."

Just clearing things up for people who don't understand that labor cost != wages.

Re: Let G.M. go bankrupt

#54

Post by hugh »

thwarted wrote: post #50
thomasmallen wrote: post #40

Earlier quoted context omitted.

A union is a cartel now? Are you shitting me? It's amazing how anti-labor people are nowadays.

http://www.google.com/search?q=define:cartel s/(firm|enterprise|organization)s?/people/g In as much as UAW, for example, couldn't be considered a "firm" or an "enterprise" already. In some sense, UAW is a contracting firm whose service is its members' work product.

The main difference between the UAW and a regular contracting firm is that if I decide to stop buying labour from a regular contracting firm, that firm can't and won't wind up blockading my factory entrance and trying to stop my new labourers getting in.

Whereas if GM tried firing all its union employees and hiring non-union labour instead... well, I'm sure you can guess what would happen.

If the UAW were a regular firm, it would be unobjectionable.

Re: Let G.M. go bankrupt

#55

Post by eru »

peakok wrote: post #22
mdasen wrote: post #2

I doubt this would happen. Of all the players involved, it's probably the UAW that has the most to loose in a Chapter 11 situation. What's killing GM (and the other American auto manufacturers) is the unreasonably high labor obligations they have accumulated back when the industry was an oligopoly. The question is, will a president who ran as union-friendly allow UAW workers to loose a ton? GM has a lot of people on…

This is an analysis you won't find outside of the U.S. Typically, the car industry is known for having strong union labors in a lot of other countries (especially in Europe), and while auto makers are always in trouble during recessions, no European one is nowhere near the critical condition of GM. The real problem is making cars that people want and selling them. I'll give you a clear example with the history of Fia…

Sources?

Re: Let G.M. go bankrupt

#56

Post by eru »

Prrometheus wrote: post #45
timr wrote: post #33

Earlier quoted context omitted.

I'm tired of reading posts by internet libertarians, blaming the GM employees for the sins of the company. GM's labor costs are high because of pension costs. They promised an entire generation of workers old-age benefits if they gave their life to the company, and now the company wants to eliminate that deal, because they simply didn't plan for it correctly (oh yeah...they also made crappy, fuel-inefficient products…

Nice anecdotes, but they also have rooms where workers they don't need and can't fire come in and sit for 8 hours everyday. The unions are a millstone around their neck. Airlines, car makers, government, schools. Four sectors that are unionized, four sectors that are grossly inefficient, four sectors that are kept alive by taxpayer money.

Any sources for the 'sitting rooms'?

Re: Let G.M. go bankrupt

#57

Post by eru »

mgb wrote: post #48
mdasen wrote: post #2

I doubt this would happen. Of all the players involved, it's probably the UAW that has the most to loose in a Chapter 11 situation. What's killing GM (and the other American auto manufacturers) is the unreasonably high labor obligations they have accumulated back when the industry was an oligopoly. The question is, will a president who ran as union-friendly allow UAW workers to loose a ton? GM has a lot of people on…

>is the unreasonably high labor obligations While Porche is insanely profitable because it exploits the slave labour wages and conditions for German autoworkers?

Porsche does not pay pensions directly.

Re: Let G.M. go bankrupt

#58

Post by benzim »

eru wrote: post #56
Prrometheus wrote: post #45

Earlier quoted context omitted.

Nice anecdotes, but they also have rooms where workers they don't need and can't fire come in and sit for 8 hours everyday. The unions are a millstone around their neck. Airlines, car makers, government, schools. Four sectors that are unionized, four sectors that are grossly inefficient, four sectors that are kept alive by taxpayer money.

Any sources for the 'sitting rooms'?

http://wsjclassroom.com/archive/06may/auto2_jobsbank.htm 15,000 workers are paid to do nothing.

Re: Let G.M. go bankrupt

#59

Post by bjelkeman-again »

eru wrote: post #55
peakok wrote: post #22

Earlier quoted context omitted.

This is an analysis you won't find outside of the U.S. Typically, the car industry is known for having strong union labors in a lot of other countries (especially in Europe), and while auto makers are always in trouble during recessions, no European one is nowhere near the critical condition of GM. The real problem is making cars that people want and selling them. I'll give you a clear example with the history of Fia…

Sources?

These two stories at the Economist may help:

http://www.economist.com/displaystory.cfm?story_id=11090197 http://www.economist.com/opinion/displaystory.cfm?story_id=1...

Re: Let G.M. go bankrupt

#60

Post by steveplace »

jbert wrote: post #10
Kilimanjaro wrote: post #6

Let * go bankrupt That's what capitalism stands for. Those who kept a well managed admin and saved for the worst should be rewarded, not those who failed.

> Those who kept a well managed admin and saved for the worst should be rewarded, not those who failed. There's an interesting issue there, though. Given: 1 - in general, higher risk => higher reward (if the risk comes off ok) 2 - fast growing competitors can dominate a market, wage a price war or buy slower-growing companies Isn't there a potential problem that companies which are sensibly prudent can be simply out-…

1 - in general, higher risk => higher reward (if the risk comes off ok)

That's why we look at risk-adjusted returns.

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