GM sinking

[shropshire 0]

Maybe we should follow the German incentive to buy new cars.... Instead on proping up the manufactures they are help buyers to scrap their old inefficient cars to buy new ones...

clicky

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[billvon 2,379]

>We are nowhere near a collapse. I'm no economist but even with a 10%
>unemployment rate that means that 90% of Americans are working right?

Actually it means that only 10% of the people who can get or want a job cannot. Only about 45% of americans work.

If just GM goes under, and that does not affect any other industry, we'll lose about a quarter million jobs. If it affects just the industries it has direct ties to (advertising, legal, parts suppliers, transport, dealerships etc) it will mean a loss of about three million jobs. That means that the failure of GM will rapidly increase unemployment by 2%. Just that one company failing will bring us to that 10% number you talked about.

Will that mean that we will all starve to death? No. But it will mean the recession will get much longer and much deeper. The people who lost their jobs will not be able to buy a house; home builders will go bankrupt. Those homebuilders will not be able to buy stuff; Sears and Best Buy will take a hit and may follow Circuit City into oblivion.

Meanwhile, there will still be a (reduced) demand for cars. Who will supply them? Overseas companies, with their government subsidies keeping them afloat.

Needless to say, the recession will someday end no matter what we do. It's how we want it to end is the big question.

>When I have to get in line for bread then I will worry.

You may never have to get in line for bread. But you may someday have to be OK with China taking over Japan because we dare not irritate the world's economic and military superpower - and you may someday have to send your kids (or grandkids) to India for college and to Taiwan to find work.

[loumeinhart 0]

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If you take WalMart out of the equasion retail sales are down 4.1%

Of course they are. Let me know when sales are down 70-80%

I don't deny the recession many people close to me are having trouble. I also have friends and family who are doing good and in fact getting better jobs.

I'm so sick of the bleak doom/gloom and the whining, bitching and the complaining. As far as I see it everyone has 2 options:

1. Compete
2. Go to the government for help

This is extremely off topic but again. Until people throw away their cellphones to pay for food, I don't buy this shit.

[loumeinhart 0]

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Who will supply them? Overseas companies

I can't but some will argue that the assets will be purchased, production will continue and a new company will prosper. I would certainly buy stock in a company that did so.

[billvon 2,379]

>some will argue that the assets will be purchased, production will continue and
>a new company will prosper.

I agree! And that company will likely be Toyota or Honda. Which isn't the end of the world - but again, leads to a different sort of economy than the one we have now, and results in a longer road to recovery.

[Capt.Slog 0]

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I see lines for Wii's, iphones, tv's, fastfood, and all I hear is $advertising$ on the radio from internet get-rich schemes to the local mattress factory.

Interresting....the numbers don't back you up though. Retail sales in february rose by 0.7%. Before you start cheering, that numer is positive because of WalMart's performance.

If you take WalMart out of the equasion retail sales are down 4.1%

(And WalMart did not say their sales were driven by Wiis, IPhones or TVs, but simpler stuff like groceries.)

What % of Walmart sales are "Made in the USA"? Maybe they're just keeping the Chinese economy going.

[DrewEckhardt 0]

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are we OK letting the US economy collapse

We are nowhere near a collapse. I'm no economist but even with a 10% unemployment rate that means that 90% of Americans are working right?

No on both counts.

Unemployment doesn't include underemployment where people who need full-time wages to pay their bills are only getting part-time work. It doesn't include under-employment where tradespeople and college graduates are working menial jobs for a fraction of what they need to support themselves once their savings run out. It doesn't include people who've become home-makers, retired early with a radical decrease in spending, or moved back in with their parents instead of continuing to look for work.

It's also an indirect and lagging measure of the real problems which come from fundamental balances that must be preserved.

Although individuals can't spend more than they make, a lot of the "economic growth" over the last couple of decades has come out of credit card and home equity spending, with the personal savings rate declining from over 8% to negative levels. Reversion to the savings rates needed to weather cyclical unemployment without foreclosure means we need to shed the jobs and production which were serving that unsustainable demand.

Although homes can't cost more than people can spend and long term inflation adjusted prices have remained fairly stable, things have doubled lately with new development to feed the demand. A start towards the reversion to the mean means we've shut down the construction industry which ballooned to cash in on that.

Goods and services get priced where supply meets demand. Where UAW workers at GM average $28/hour, Chinese workers get $150/month. Where the average software engineering salary in America is $80K/year it's only $10K in China and $7500 in India. The new supply of competent (Tsinghua and IIT graduates are good) workers in low-cost areas (Where "middle class" means having a third of your income left after taking care of basic needs like housing and food, $3K is enough to qualify in developing countries) has radically limited domestic job growth. Startups which would hire a staff of 20 people make do with 10 domestic engineers and 20 overseas (they're cheap). Wages and the number of people employed here will have to decrease until our salaries and costs of living are more in line with theirs.

The economy has crashed because of these things; it's just going to take years to reach bottom with unemployment (whether or not it's reported as such) chasing all the way.

There's also the stock market loosing half it's value, with older workers deferring retirement instead of making room for the bumper crop of people born around 1990 and retired people coming out of retirement because yields on safe investments are down. Lots of companies would rather hire a youthful 60-something person with 30 years of experience, no mortgage to pay, no family to raise, and no 401K to fund than some one with less experience and more expenses.

[Pendejo 0]

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are we OK letting the US economy collapse

We are nowhere near a collapse. I'm no economist but even with a 10% unemployment rate that means that 90% of Americans are working right?

I don't see bread lines..

I see lines for Wii's, iphones, tv's, fastfood, and all I hear is $advertising$ on the radio from internet get-rich schemes to the local mattress factory.

When I have to get in line for bread then I will worry :)

I agree with you. Its interesting that back in Nov. and Dec. in 1982 you didnt hear the media talking about it being a "depression era" type crash (guess that wasnt the flavor of the month for them back then). For those who don't want to look, thats when unemployment peaked at 10.8%.

Things are certainly not good right now, but a lot of it is perception more than reality in my opinion.

Pendejo

He who swoops the ditch and does not get out buys the BEER!!

[DrewEckhardt 0]

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I agree with you. Its interesting that back in Nov. and Dec. in 1982 you didnt hear the media talking about it being a "depression era" type crash (guess that wasnt the flavor of the month for them back then). For those who don't want to look, thats when unemployment peaked at 10.8%.

In 1982 people had been saving 10% of their income to cusion the blow. Since then we've actually gone negative and people have less to fall back on.

[happythoughts 0]

How about they hire a couple of VPs from Honda ?

Honda

Quote

Release Date: Feb 26, 2009
Consumer Reports’ Automaker Report Cards: Honda Leads Again, Mercedes-Benz Improves, Chrysler Lags
YONKERS, NY — For the third consecutive year, Honda has earned class leader status for building the best all-around vehicles for American drivers

Quote

Chrysler disappointed the most — it had the lowest overall test score and none of its vehicles are Recommended.

They could call the new strategy... "making stuff that
people will buy"

[loumeinhart 0]

Great post.

I knew that the unemployment rate as a percentage is much more complex but not to that degree.

You said it's an

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indirect and lagging measure of the real problems which come from fundamental balances that must be preserved.

I want to understand the second part of that, do you mean the fundamental balances caused the real problems and they should be preserved?

[DrewEckhardt 0]

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Great post.

I knew that the unemployment rate as a percentage is much more complex but not to that degree.

You said it's an

Quote

indirect and lagging measure of the real problems which come from fundamental balances that must be preserved.

I want to understand the second part of that, do you mean the fundamental balances caused the real problems and they should be preserved?

There are fundamental balances that need to be preserved for things to work. Currently we have imbalances which can't continue to exist. Those are the root cause of our current economic problems which aren't going to get (permanantly) better until they're fixed.

People can't spend more than they earn without running out of money. When lower cost labor is an option companies can't employ over-priced employees without loosing market share to companies that do allowing them to sell goods at a lower price.

Unemployment, the foreclosure crisis, and the slide in stock prices are all just symptoms of the real problems which are going to take some time to catch-up.

It's going to take a while for companies to scale back employment to the levels needed to serve sustainable demand and for the housing and stock markets reach where they "should" be based on the fundamentals.

The trick is getting there sooner with less pain and overshoot.

[Gawain 0]

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The trick is getting there sooner with less pain and overshoot.

Pain is mandatory. Misery is optional.

GM has all the cards, even though many of them are not in their favor. In order for GM to survive, even as a fraction of what it once was, it must do the following, in my non-professional assessment:

1. Declare bankruptcy.
2. Dissolve the labor agreement.
3. Dissolve the jobs-bank.
4. Decide if it will remain with a unionized manufacturing labor force (whole other process).
4a. Renegotiate new labor agreement from a clean slate.
4b. or Hire on manufacturing workers on a case-by-case basis, following Honda or Toyota's model.
5. Sell Saab.
6. Sell Daewoo.
7. Sell the rights to Oldsmobile.
8. Spin off Pontiac, and give Holden control of that unit for US market presence.
9. Spin off Saturn, and give either Opel or Vauxhall control of that unit for US market presence.
10. Shut down the Hummer brand.
11. Spin off AM General for military and commercial apps for the HMMWV.
12. Sell Buick.
13. Restructure debt, offer long term stock to settle bonds if needed.
14. Stop building 18 versions of the same vehicle and claim they're different.
15. Fire Bob Lutz.

These directives could be accomplished in less than a year. I read how an analyst noted that sales would "fall off a cliff" if bankruptcy entered the picture...well guess what GM....you're already off the cliff.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[SkyDekker 1,119]

Great post, couldn't agree with you more.

[Capt.Slog 0]

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How about they hire a couple of VPs from Honda ?

In 2006 Toyota's top 37 executives earned a combined $21.6 million in salary and bonuses, according to filings with the Securities and Exchange Commission. U.K. firm Manifest Information Services, which analyzes proxy information, estimates Toyota's top executive, Hiroshi Okuda, earned $903,000 in 2006.

At Honda, the top 21 earned $11.1 million, combined in 2006, in salary and bonuses, SEC filings show.

Ford's CEO, Alan Mulally, got $27.8 million in salary and bonus in his first few months on the job, including an $18.5 million signing bonus.

GM's CEO made $15.7 million in 2007, a year when GM LOST $39BILLION


Anyone notice a pattern there?

[shropshire 0]

Try not let the facts get in the way

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[chuckakers 369]

Quote

GM Says It Has 'Substantial Doubt' It Will Survive
http://www.foxnews.com/story/0,2933,505130,00.html

GM has received $13.4 billion in federal loans as it tries to survive the worst auto sales climate in 27 years. It is seeking a total of $30 billion from the U.S. government. During the past three years it has piled up $82 billion in losses, including $30.9 billion in 2008.

I've said it before...stop giving these companies money. You might as well take it to the curb and burn it.

B'bye.

Chuck Akers
D-10855
Houston, TX

[Remster 24]

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Quote

How about they hire a couple of VPs from Honda ?

In 2006 Toyota's top 37 executives earned a combined $21.6 million in salary and bonuses, according to filings with the Securities and Exchange Commission. U.K. firm Manifest Information Services, which analyzes proxy information, estimates Toyota's top executive, Hiroshi Okuda, earned $903,000 in 2006.

At Honda, the top 21 earned $11.1 million, combined in 2006, in salary and bonuses, SEC filings show.

Ford's CEO, Alan Mulally, got $27.8 million in salary and bonus in his first few months on the job, including an $18.5 million signing bonus.

GM's CEO made $15.7 million in 2007, a year when GM LOST $39BILLION


Anyone notice a pattern there?

Thats because the cost of living in Tokyo is much lower than in Detroit.










Oh... wait.... Never mind.

Remster

[happythoughts 0]

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How about they hire a couple of VPs from Honda ?

In 2006 Toyota's top 37 executives earned a combined $21.6 million in salary and bonuses, according to filings with the Securities and Exchange Commission. U.K. firm Manifest Information Services, which analyzes proxy information, estimates Toyota's top executive, Hiroshi Okuda, earned $903,000 in 2006.

At Honda, the top 21 earned $11.1 million, combined in 2006, in salary and bonuses, SEC filings show.

Ford's CEO, Alan Mulally, got $27.8 million in salary and bonus in his first few months on the job, including an $18.5 million signing bonus.

GM's CEO made $15.7 million in 2007, a year when GM LOST $39BILLION


Anyone notice a pattern there?

If someone offered you a brand new car, except that it not only
failed to run, but caused damage to all around it... wouldn't it
be worth more money to get a good one?

I'd say that GM would pay double that to a CEO if they could
find one that would help them break even. Another $15 mil
would be just a drop in the very leaky bucket.

[billvon 2,379]

>If someone offered you a brand new car, except that it not only failed to run, but
>caused damage to all around it... wouldn't it be worth more money to get a good one?

If someone offered you a brand new car, and it failed to run, you might well decide to spend more one that runs well.

However, if someone offered you a car that ran just great, but caused damage to the road it was operating on, and made people near it sick (pollution etc) then you might well take it - because someone else would pay for the problems your car causes.

Which is one of the problems of such hidden costs.

(I think you meant the first, rather than the second, clause.)

[billvon 2,379]

I thought this was apropos:

[happythoughts 0]

Quote

>If someone offered you a brand new car, except that it not only failed to run, but
>caused damage to all around it... wouldn't it be worth more money to get a good one?

If someone offered you a brand new car, and it failed to run, you might well decide to spend more one that runs well.

However, if someone offered you a car that ran just great, but caused damage to the road it was operating on, and made people near it sick (pollution etc) then you might well take it - because someone else would pay for the problems your car causes.

Which is one of the problems of such hidden costs.

(I think you meant the first, rather than the second, clause.)

I like simple analogies with simple conclusions.

The people who manage GM are boneheads.

[jerryzflies 0]

Quote

Quote

Quote

How about they hire a couple of VPs from Honda ?

In 2006 Toyota's top 37 executives earned a combined $21.6 million in salary and bonuses, according to filings with the Securities and Exchange Commission. U.K. firm Manifest Information Services, which analyzes proxy information, estimates Toyota's top executive, Hiroshi Okuda, earned $903,000 in 2006.

At Honda, the top 21 earned $11.1 million, combined in 2006, in salary and bonuses, SEC filings show.

Ford's CEO, Alan Mulally, got $27.8 million in salary and bonus in his first few months on the job, including an $18.5 million signing bonus.

GM's CEO made $15.7 million in 2007, a year when GM LOST $39BILLION


Anyone notice a pattern there?

If someone offered you a brand new car, except that it not only
failed to run, but caused damage to all around it... wouldn't it
be worth more money to get a good one?

I'd say that GM would pay double that to a CEO if they could
find one that would help them break even. Another $15 mil
would be just a drop in the very leaky bucket.

Or a total waste of stockholder money. If Honda and Toyota can do very well without paying exorbitant salaries to their execs, why can't US corporations?

If you can't fix it with a hammer, the problem's electrical.

[Capt.Slog 0]

Quote

Quote

Quote

How about they hire a couple of VPs from Honda ?

In 2006 Toyota's top 37 executives earned a combined $21.6 million in salary and bonuses, according to filings with the Securities and Exchange Commission. U.K. firm Manifest Information Services, which analyzes proxy information, estimates Toyota's top executive, Hiroshi Okuda, earned $903,000 in 2006.

At Honda, the top 21 earned $11.1 million, combined in 2006, in salary and bonuses, SEC filings show.

Ford's CEO, Alan Mulally, got $27.8 million in salary and bonus in his first few months on the job, including an $18.5 million signing bonus.

GM's CEO made $15.7 million in 2007, a year when GM LOST $39BILLION


Anyone notice a pattern there?

Thats because the cost of living in Tokyo is much lower than in Detroit.



Oh... wait.... Never mind.

[Gawain 0]

Quote

Or a total waste of stockholder money. If Honda and Toyota can do very well without paying exorbitant salaries to their execs, why can't US corporations?

There are tangible social differences in culture.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!