GM no longer Government Motors
12-10-13 | 04:56 PM
#16
We may have lost $11B, but you have to consider what would have been lost had GM not been saved. More than $11B? $100B?
I don't know the answer to this. But just saying "negative eleven" is a biased presentation of the data.
I don't know the answer to this. But just saying "negative eleven" is a biased presentation of the data.
12-10-13 | 05:30 PM
#17
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What is so hard to read about simple picture?
You are completely misrepresenting the data.
Toyota took a loan, like they take loans even today despite $40 billon in cash they have stored. GM was bailed out because they could not pay their obligations anymore.
Very simple.
12-10-13 | 06:15 PM
#18
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That alone is a significant issue. But, as I see it, just as significant, if not MORE so, is the fact that, except for a couple of (IMO) mistakes like the Cadillac XTS and Buick Encore, most of GM's latest products are light-years ahead of their predecessors. The bailouts, of course, made some of those excellent new vehicles possible.
Last edited by mmarshall; 12-10-13 at 06:23 PM.
12-10-13 | 06:32 PM
#19
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You are completely misrepresenting the data.
Toyota took a loan, like they take loans even today despite $40 billon in cash they have stored.
GM was bailed out because they could not pay their obligations anymore.
12-10-13 | 09:06 PM
#20
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Anybody who is interested in GM should read Bob Lutz's book
The issues at GM were quite complex and they went under due to a number of factors. They were also over exposed due to their regional model and too much reliance on the US market. When recession hit and US market shifted GM found themselves with a lineup nobody wanted because people changed their needs pretty much overnight.
The issues at GM were quite complex and they went under due to a number of factors. They were also over exposed due to their regional model and too much reliance on the US market. When recession hit and US market shifted GM found themselves with a lineup nobody wanted because people changed their needs pretty much overnight.
12-11-13 | 06:07 AM
#21
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Your claim of bias is absurd. The Treasury lost 11 billion on GM. That's a fact. It's the difference between the money that the Treasury invested into GM and the money it ultimately got back.
Capitalism is incredibly simple pragmatically because the numbers tell the story. If I invest 49 billion dollars into a company and over the next three years I sell off my portion of the company and only get 38 billion dollars back, it means that somewhere along the line, the operations of the company managed to destroy 11 billion dollars of value. It's really that simple.
Now here's the kicker: No private business owner or manager would defend the destruction of 11 billion dollars by saying, "oh, well at least we hired a bunch of people for three years". It is only when government and politicians talk about it that people actually say things like that. It is nothing more than politicians engaging in their typical marketing doublespeak. It ignores the simplicity of capitalism and is at odds with even the simplest business sense.
12-11-13 | 07:42 AM
#22
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Treasury Deputy Assistant Secretary Tim Bowler said that the loss is offsetting the worse calamity that might have resulted from the loss of one million jobs. “Had we not acted to support the automotive industry, the cost to the country would have been substantial – in terms of lost jobs, lost tax revenue, reduced economic production, and other consequences. Our actions have enabled the industry to rebound,” Mr. Bowler said.
CEO of Berkshire Hathaway Warren Buffett praised the auto bailout saying,
“If you go back to March 6, or something like that, in 2009, I was on CNBC, and that was the day before the Dow hit a low, and I got asked about whether the government ought to move in and give help to the auto companies,” Buffett remembered. “And I’m glad to say I called that one right. It was huge, the way they came back. It’s amazing, all three of them. When you think of the ripple effect with the suppliers and everything else, it would have been a disaster if the government hadn’t come in. You’ve got to give credit to the industry for … making the most of it.”
CEO of Berkshire Hathaway Warren Buffett praised the auto bailout saying,
“If you go back to March 6, or something like that, in 2009, I was on CNBC, and that was the day before the Dow hit a low, and I got asked about whether the government ought to move in and give help to the auto companies,” Buffett remembered. “And I’m glad to say I called that one right. It was huge, the way they came back. It’s amazing, all three of them. When you think of the ripple effect with the suppliers and everything else, it would have been a disaster if the government hadn’t come in. You’ve got to give credit to the industry for … making the most of it.”
Dec 9 (Reuters) - The federal bailout of General Motors Co, Chrysler and parts suppliers in 2009 saved 1.5 million U.S. jobs and preserved $105.3 billion in personal and social insurance tax collections, according to a study released on Monday.
The Bush and Obama administrations loaned the auto industry, including GM and Chrysler, which is now controlled by Italy's Fiat, $80 billion to avoid the collapse of the industry that they felt would result in the loss of millions of U.S. jobs.
Critics of the bailout at the time had argued the companies should be allowed to fail and the industry that resulted from the aftermath would be stronger. Treasury officials have repeatedly said the bailout was not an investment meant to turn a profit, but a move to save U.S. jobs.
The Center for Automotive Research (CAR) in Ann Arbor, Michigan, estimated in its study that the bailout saved a lot of jobs, even crediting for a rebound of the industry in 2010 after the initial fallout.
"Two consecutive executive administrations in Washington decided in late 2008 and early 2009 that the consequences of the potential losses and outcomes to the U.S. economy ... were worth avoiding through a federal intervention," Sean McAlinden, the center's chief economist, said in a statement.
"This peacetime intervention in the private sector by the U.S. government will be viewed as one of the most successful interventions in U.S. economic history," said McAlinden, who wrote the study along with Debra Maranger Menk.
The U.S. Treasury has said it will exit the last of its stake in GM by the end of the month, clearing the way for the U.S. automaker to operate without the nickname "Government Motors" that executives said had hurt sales some.
GM North American chief Mark Reuss said on Monday that some consumers may consider buying from the automaker immediately after the government has exited its stake, especially where the company sells trucks.
Reuss said a huge psychological barrier will be lifted when Treasury sells the rest of its remaining 2 percent stake this month.
"This has been a long, hard road with no repeat customers and the label of Government Motors," he told reporters at an event outside Detroit.
He acknowledged some critics will highlight the money lost in the bailout, but pointed to the jobs, plants, towns, suppliers and related service industry jobs saved by the bailout under the Troubled Asset Relief Program (TARP).
"How do you put numbers on that?" he said. "I feel good about that and I'm not sure it was the same with the other industries that were granted TARP funds."
CAR estimated that a complete shutdown of the industry that was bailed out in 2009 would have resulted in the loss of 2.63 million jobs and those losses would still have stood at more than 1.5 million in 2010. If only GM had been shut down, the job losses would have been almost 1.2 million in 2009, shrinking to 675,000 in 2010.
While U.S. Treasury's final loss on the bailout is estimated at $13.7 billion including $11.8 billion related to its investment in GM, it avoided the loss of $105.3 billion in unemployment benefit payments and the loss of personal and social insurance tax collections, according to CAR.
In the GM-only scenario, the lost tax collections would have totaled $39.4 billion, according to CAR.
CAR said the study did not take into account the benefits of preserving the pensions of almost 600,000 GM and Chrysler retirees as well as industry research and development jobs. It also did not account for the psychological impact the collapse of GM and Chrysler would have had on the U.S. industrial base.
The Bush and Obama administrations loaned the auto industry, including GM and Chrysler, which is now controlled by Italy's Fiat, $80 billion to avoid the collapse of the industry that they felt would result in the loss of millions of U.S. jobs.
Critics of the bailout at the time had argued the companies should be allowed to fail and the industry that resulted from the aftermath would be stronger. Treasury officials have repeatedly said the bailout was not an investment meant to turn a profit, but a move to save U.S. jobs.
The Center for Automotive Research (CAR) in Ann Arbor, Michigan, estimated in its study that the bailout saved a lot of jobs, even crediting for a rebound of the industry in 2010 after the initial fallout.
"Two consecutive executive administrations in Washington decided in late 2008 and early 2009 that the consequences of the potential losses and outcomes to the U.S. economy ... were worth avoiding through a federal intervention," Sean McAlinden, the center's chief economist, said in a statement.
"This peacetime intervention in the private sector by the U.S. government will be viewed as one of the most successful interventions in U.S. economic history," said McAlinden, who wrote the study along with Debra Maranger Menk.
The U.S. Treasury has said it will exit the last of its stake in GM by the end of the month, clearing the way for the U.S. automaker to operate without the nickname "Government Motors" that executives said had hurt sales some.
GM North American chief Mark Reuss said on Monday that some consumers may consider buying from the automaker immediately after the government has exited its stake, especially where the company sells trucks.
Reuss said a huge psychological barrier will be lifted when Treasury sells the rest of its remaining 2 percent stake this month.
"This has been a long, hard road with no repeat customers and the label of Government Motors," he told reporters at an event outside Detroit.
He acknowledged some critics will highlight the money lost in the bailout, but pointed to the jobs, plants, towns, suppliers and related service industry jobs saved by the bailout under the Troubled Asset Relief Program (TARP).
"How do you put numbers on that?" he said. "I feel good about that and I'm not sure it was the same with the other industries that were granted TARP funds."
CAR estimated that a complete shutdown of the industry that was bailed out in 2009 would have resulted in the loss of 2.63 million jobs and those losses would still have stood at more than 1.5 million in 2010. If only GM had been shut down, the job losses would have been almost 1.2 million in 2009, shrinking to 675,000 in 2010.
While U.S. Treasury's final loss on the bailout is estimated at $13.7 billion including $11.8 billion related to its investment in GM, it avoided the loss of $105.3 billion in unemployment benefit payments and the loss of personal and social insurance tax collections, according to CAR.
In the GM-only scenario, the lost tax collections would have totaled $39.4 billion, according to CAR.
CAR said the study did not take into account the benefits of preserving the pensions of almost 600,000 GM and Chrysler retirees as well as industry research and development jobs. It also did not account for the psychological impact the collapse of GM and Chrysler would have had on the U.S. industrial base.
Last edited by bagwell; 12-11-13 at 07:46 AM.
12-11-13 | 09:56 AM
#23
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Originally Posted by gengar
What exactly would have been lost had GM not been "saved"?
12-11-13 | 03:56 PM
#24
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This is an outrageously absurd assumption - one that makes absolutely no sense to anyone with any knowledge of economics or business or even just how the world works.Again, it's nothing more than political marketing doublespeak. Of course, we'd expect nothing less from big corporate lobbying groups.
The reality is that when capital is lost to "create" jobs, it is not a net positive for society because wealth has been destroyed to create those jobs. As I mentioned above, no one in the private sector would ever imagine saying such a thing as 'it is OK that we lost money because we hired people'. It is only politicians and political groups that speak that way. A successful company that creates products that actually increase customer value (and thus wealth for society) not only creates jobs, but doesn't lose capital while doing it.
Had the new vehicles that have come out been that nice, taxpayers wouldn't have lost 11 billion on GM.
12-11-13 | 07:37 PM
#26
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Capitalism is incredibly simple pragmatically because the numbers tell the story. If I invest 49 billion dollars into a company and over the next three years I sell off my portion of the company and only get 38 billion dollars back, it means that somewhere along the line, the operations of the company managed to destroy 11 billion dollars of value. It's really that simple.
.
I agree 11 billion lost is bad, it could be far worse and in the grand scheme of things, 11 billion is NOTHING to the 15 trillion of debt
And lets not act like the private sector does not have tax loopholes and credits for losses. Write-offs and losses are the norm in a companies accounting.
12-11-13 | 11:04 PM
#27
Racer
Joined: Feb 2006
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From: AZ
GM is now and will always be Government Motors. They would have been bankrupt without the bailout. Now Ford must compete with the new models that the government bought for GM. By far, the best long range solution for all of us was to let the incompetent companies die and let the market reward the successful ones. Now we have rewarded failure and in effect punished success. How about the government writing a check for 11 billion to Ford for their R&D and new factories. It may be a small amount to the government, but it is not small to a well run company.
Steve
Steve
12-12-13 | 09:39 AM
#28
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Originally Posted by gengar
Had the new vehicles that have come out been that nice, taxpayers wouldn't have lost 11 billion on GM.
That wasn't the main issue, though. You specifically asked what would have been lost, had GM NOT been saved with the bailout. One look in the showrooms today gives the answer. In addition to that, of course, are quite a few jobs, although, of course, some jobs were lost with the loss of the four former divisions.
Also, don't forget that it was not ONLY taxpayer money that funded it. Money was put up from several different sources, including the union itself...the UAW. Same with Chrysler...although, of course, unlike GM, a substantial part of it from Fiat, a foreign company.
12-12-13 | 09:42 AM
#29
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12-12-13 | 04:30 PM
#30
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Not nice enough to keep GM from destroying 11 billion dollars of taxpayer money.
Again, absurd assumptions. You act as if had GM had gone bankrupt, GM would have simply vanished, all of GM's production lines would have sat unutilized, all of GM's workers would have sat around unemployed, all of GM's ideas would have gone 'poof', and all the people who have bought GM's cars over the last few years wouldn't have bought cars. That's not how business works. That's not how our economy works. And that's not how the world works.
When we're talking about the 11 billion that the taxpayers lost, we're talking about TARP money from the Treasury. There's nothing else in there but taxpayer money.
That wasn't the main issue, though. You specifically asked what would have been lost, had GM NOT been saved with the bailout. One look in the showrooms today gives the answer. In addition to that, of course, are quite a few jobs, although, of course, some jobs were lost with the loss of the four former divisions.
When we're talking about the 11 billion that the taxpayers lost, we're talking about TARP money from the Treasury. There's nothing else in there but taxpayer money.