U.S. Government Denies GM's $10 Billion Request to Buy Chrysler

Wow, $1 billion a month!

Earlier this week I advocated that Uncle Sam fork over the $10 Billion to assist GM take over Chrysler for the sake of Jobs. But, for GM and Chrysler to be sitting on Billions of Cash in Reserves and have the nerve to ask for a loan is simply ludicrous!!

I can't wait for Chrysler and GM to go bankrupt. Maybe then people will finally realize that unions are rarely a good thing and that they were one of the leading forces in bringing down the american auto industry.

They need to file for bankruptcy re-organization to drop the unions...so let them already. Do not bail them out.

Give me $10 billion and I will buy BOTH Chrysler and GM within the next week, if their stock keeps dropping the way it has been!

"But, for GM and Chrysler to be sitting on Billions of Cash in Reserves and have the nerve to ask for a loan is simply ludicrous!!" - worldbfree4me

That's the capitalist way! You don't empty your basket of eggs when you can borrow my basket of eggs.

And don't bail out the union either and their pensions if GM goes bankrupt.

Sadly, due to federal law (and I'm sure extra insurance that the union thugs got instated), the government HAS to pick up the tab for all their pensions. The upside is that hopefully a lot of those retirees will be dropping off soon.

Hell yes they deserve to go bankrupt, they are the ones that caused themselves to be in this mess in the first place. I'm sick of the U.S. gov taking my tax dollars to bail out these companies that caused their own mess. It's like that old saying goes "you made your own bed, now lay in it."

i agree, let them die with their laziness and arrogance making cars.

Wow, can you imagine the collect-ability of classic GM/Dodge/Chrysler/Plymouth cars at that point?

That or even if you got one of the ZR-1 Corvettes before GM goes belly up.

GM has already demonstrated their lack of management abilities. What makes them think they could do any better with Chrylsler. Outsource management jobs because that is truely the weakest link in the chain. Union workers didn't do this to this company, terrible management did. It's like blaming the citizen's in this country for the terrible job our government has done.
Hey, I never lied us into a phony war in Iraq, Bush and his neocons with the support of red staters did. Let's hang the blame where it belongs.

@Brain: GM/Dodge/Chrysler/Plymouth cars between 10 and 25 years should be collectable because its such a miracle that they are even around!

I have no sympathy for the US automakers. They have been making crappy cars for years (with a few exceptions). I personally, will never own a US car again after my Pontiac Grand Am 2002. That car is nothing but a problem on wheels. You can't even lay all the blame on the US workers as Hondas are mostly made in the US and still maintain one of the best track records. Its simply piss-poor design.

I think its fairly obvious no one posting has taken an economics class. If Chrysler and GM go out of business or go bankrupt this would have a massive ripple effect to suppliers, dealerships, local and regional businesses that cater to the secondary needs. Some estimates are that up to 2 million people may lose their job if Chrysler and GM went belly up.

Actually Roland, I'm about to graduate with an Econ degree in a few weeks. Yes, I'm aware that there would be huge job losses, but in the long run it would be worth it. The alternative would be to have taxpayers foot the bill every few years to keep them afloat, which is worse for the economy. The government already gave the auto industry a bailout a couple decades ago and they STILL didn't learn how to run a successful company in a competitive market (oh, they were great when there was little competition 60-70 years ago).

Yes, Roland, same disaster happened when PANAM was dissolved.

Heeey, it might have been better to export the car jobs BEFORE the call centre jobs, but thats a market economy for you.

Besides that, China needs a lot of cleaners and maids, so sent your resume. Cleaners with a degree are preferred.

And lastly, if GM/Chrysler etc fail,wont their marketshare be absorbed, wont that attract new companies into US, eg Hyundai/Kia, Fiat/....? Potentially building new factories, latest equipment, non unionized workers.....actually, i dont see a downside.

"Hell yes they deserve to go bankrupt, they are the ones that caused themselves to be in this mess in the first place. I'm sick of the U.S. gov taking my tax dollars to bail out these companies that caused their own mess. It's like that old saying goes "you made your own bed, now lay in it.""

Exactly, you don't exactly see companies helping out people in need...although many of the people in this country in need (i.e. investment homeowners) get what they deserve as well. There is risk in everything and I'm tired of companies and individuals not being held accountable for poor risk management, laziness, and living outside their means!

Surprisingly, that picture of the Volt looks better than some of the other pictures of it I've seen.

good - was a horrible idea anyway. A struggling company buying a struggling company - so they can fail together? The government buyout idea was even worse; we're already in a sensitive time for our country's economy - the money could be better used elsewhere.

Totenglocke:

Ultimately the gov wont let them fail, not now at least. I'm not an economics major but I bet I could give your professor a lessor or two about how thing work in the real world and I'm probably worth a lot more too.

The bailout package was unnessassary as most leading economist suggested unfortunately our government doesn't hire smart people, they hire good ole boys. That's the only way Greenspan and that new chuckle head to the level of incompetence they are today. Failure is not an option for these giants, it would mean an economic and national security nightmare.

I'm not fond of there poor management but now is just not the time to let them fall off just yet.

It would hurt the economy for a few years, yes. But that's a hell of a lot better than dragging all that dead weight along as a burden to tax payers for decades more. And how the crap is it related to "national security"?!

Also, Greenspan is actually a very smart person -- he was praised by pretty much everyone up until the government needed a scapegoat. Are you aware that decent part of the house mortgage crisis is because the government pressured banks into giving mortgages to high risk people (that normally wouldn't get loans since they probably wouldn't be able to pay them back) since the government thought "everyone should be able to own a home, no matter what"? Yes you rarely hear that mentioned because it's so much easier to blame the "evil capitalists" for everything. Were there some greedy mortgage brokers? Yes. Were there some CEO's that made bad / dumb decisions? Yes. But most of the blame lies on the government, people who bought houses they couldn't afford, and people who wanted to make a quick buck buying an expensive house and then turning around and selling it a few months later for a profit.

My only complaint about GM and Chrysler going under is that we'll loose the only 2 companies pushing full electric/range extended electric now. I do agree they shouldn't be bailed out, but it just means I'll have to wait that much longer to quit buying $400 a month in gas.

fawk Gm and fawk their chitty cars. Fawk theire chitty business tactics and fawk theire corporate leader. Fawk theire mothers and theire mothers mothers! Its about fawking time those ash holes found out what happens when you fawk with our money. Fawk theire unions and fawk unions in general. fawk theire buy out tactics and fawk theire capitalistic point of view. I hope GM falls to its knees and has to reorganize from the ground up. Maybe they can get it right the second time. Bust most of all.. FAWK the American point of view. Lazy bunch of fawking idiots. Hey how does this sound? Lets just sit back and wait for everything to get better on its own.. Its no wounder the rest of the world is laughing at us. We can't even control our our government!!!!!! Fawk your lack of decision making and fawk your unbelief!! Maybe if Americans got smarter and took theire own lives into there own hands this kinda shit wouldn't happen.. Bunch of fat lazy sloppy FAWKS!!

"but it just means I'll have to wait that much longer to quit buying $400 a month in gas."

Do you drive a Hummer or have a 2 hour each way commute to work? That's a crap load to be spending on gas, even when gas was $4 a gallon, that's still 100 gallons a month.

Having unions has little to do with GM and other American auto makers dieing. The big reason why they are dieing is due to the fact they can't make a good quality car! Look at BMW, Porsche, and Toyota. See them asking for 10 Billion!

Unions are the biggest single problem GM and Chrysler have. When union greed is adding $2500 to the cost of every car you make to pay for health care and pensions of old retired assembly line workers you have to go cheap somewhere else to make up the difference. Hence the cheap interiors, delayed redesigns, etc.

Having said that government bailouts add to the problem (although they do spread it out for a longer period of time)

I love how these conversations blame the unions and pensions. These companies dump more money on their top 5% of the payroll than they do on the rest of their employees. Those guys aren't part of the union and they've obviously not done much to improve the company. At least the bottom end of their pay scale builds the products they are trying to sell.

The companies are terribly managed and have been for years. The business practice of reducing quality to improve profits is finally catching up. They've put themselves in the position of competing at a price point with much better built and better engineered vehicles.

Yet it must be the autoworkers fault since they received a pension at one point in time. It was a part of their contract and was a very common practice. Sadly companies have decided that it isn't important that you reward a lifetime of service. That money could be much better used to increase executive bonuses.

Said it before, will say it again.

GM Labor Costs
$31.25/h for non-skilled labor worker, includes idle pay
Average Hourly Pay: $73.73
77 Plants in North America, all Unionized
White collar: 36,000
Production: 106,000
Retirees: 460,000
Health Care Cost per Vehicle: $1,525

Compared to Toyota
$27/h for non-skilled labor worker, includes end year bonus
Average Hourly Pay: $48
12 Plants in North America, 3 Unionized
White collar: 17,000
Production: 21,000
Retirees: 1,600
Health Care Cost per Vehicle: $201

For the millionth time, unions clearly don't hurt GM. How well off would your company be if you pay more for retirees in a year then people currently working for your company? And the reason GM has to foot all this money, unions.

"At least the bottom end of their pay scale builds the products they are trying to sell."

Uhm, a lot of it is built by machines -- but they still have to keep union workers on the payroll (even though they're not needed) due to union regulations. Yes, GM and Chrysler wouldn't bein AS BAD of a position if the board would cut pay for executives, but it still doesn't change the couple thousand tacked on to each car due to paying for retirement plans(thus preventing them from pricing below the competition for similar models). Then there's the fact that they pay roughly 50% more per hour than the competition, again, due to unions bloating pay for people who don't have any special skills.

Pharmacists, which take 6 years or more to get a degree, only make around $50/ hr -- are you telling me that you think someone who barely made it through high school and has no useful skills should be getting paid 50% more than a highly trained and highly educated person who's doing something much more necessary (preparing medicine for people)?

Finally, a glimer of hope that there is somebody with half a brain at the helm of that decision.

The nads GM has to even ASK!

I believe Cadillac makes the presidental limo. Maybe that suction is the reason GM was so brazen to ask for a handout.

Ok if GM had funded the pension funds they have promised their workers for decades it wouldn't be any issue. The management took the pension money and gave it to themselves as bonuses. It's just a smaller version of what our elected representatives have done to the Social Security money we have paid in. They handed it out as tax breaks to the wealthy. Now they are saying, look we're broke we can't pay you back the money you paid in, it's gone.
We have some apologist on this board that would seem to want to excuse the GM management from their decades long commitment to their retirement system. Hey we got a simple formula: we pay all the money to ourselves and then say we're broke and walk away from our obligations.

The Big 3 AND the union are both to blame for their lack of foresight. While the Big 3 were making barrels of money, the unions could afford to ask for an equal share of that money. Including pensions. Afterall, while car sales are skyrocketing, do you honestly believe that the workers shouldn't be paid their equal share?

The problem is that things went too far. The foresight of what could happen wasn't considered. These companies became huge objects that are no longer limber enough to make sweeping changes overnight.

On the other end of the stick, the Japanese started later in the game. They were able to grow with the demand for their cars. They were able to sit back, with less at stake, and monitor what the American companies were doing wrong, and modify their business to compensate. Their entire society is built up with the idea of honor in your work and yourself, and due to that, the Japanese work ethic drove their industry to the top of the food chain.

I can't believe someone compared BMW to the Big 3. The difference is that the Big 3 cater to everyone between the lower class to the upper class. BMW caters to the top of the middle class, to the upper class. They specialize in the highest of the quality. Forget to mention that their initial quality ranks lower than Ford, Mercury, Lincoln and Mazda?

Pensions were how things used to be done. Now we have 401ks. I think the Big 3 have realized their mistakes, but now that they have, the problem becomes how do you overhaul an entire company. You can't get rid of these pensions that are sucking the life out of the company. You can't easily layoff as many workers as are needed. The more workers you layoff, the less brand loyalty you get, and therefore the less sales that you get.

The Big 3 didn't have the foresight and now they're suffering for it. However, know this, if any of these companies go out of business... you're going to see a ripple across the entire auto sector.... but you would be naive to think it's going to stop at the auto-sector.

Luckily, Bankruptcy doesn't always mean a company goes under ;)

"You can't easily layoff as many workers as are needed. The more workers you layoff, the less brand loyalty you get, and therefore the less sales that you get."

The problem is, due to the unions (big surprise!) they can't lay off the people they need to lay off. Instead they can only lay off engineers, marketing people, etc. They're not allowed to fire any of the factory workers, regardless of how unnecessary they may be.

upL8N8:

"The Big 3 AND the union are both to blame for their lack of foresight. While the Big 3 were making barrels of money, the unions could afford to ask for an equal share of that money. Including pensions. Afterall, while car sales are skyrocketing, do you honestly believe that the workers shouldn't be paid their equal share?"

Hey Karl Marx,
The workers' "fair share" = the going rate for comparable work at other companies/industries, not $50+/hour. Here's how capitalism works: you take your crappy wage from your crappy job because you never received higher education and you buy shares of the company you work for like everyone else if you think they're making "barrels of money". You don't blackmail them with threats of walkouts until they're forced to pay you unsustainable wages. Profits belong to the owners of the companies - ie. the shareholders, many of whom belong to pension plans, for taking a risk in the future of the companies not to bitter workers with misplaced concepts of entitlement.

It's good to have you back cobaltssmat.