[jeffkrol]

Auto bailout another success for Obama administration | Cynthia Tucker

The right-leaning Economist magazine has already offered Obama an apology for its earlier criticism of the auto bailout:Yet the doomsayers were wrong. Unlike, say, France’s President Nicolas Sarkozy, who used public funds to support Renault and Peugeot-Citroën on condition that they did not close factories in France, Mr Obama has been tough from the start. GM had to promise to slim down dramatically—cutting jobs, shuttering factories and shedding brands—to win its lifeline. The firm was forced to declare bankruptcy. Shareholders were wiped out. Top managers were swept aside. Unions did win some special favours: when Chrysler was divided among its creditors, for example, a union health fund did far better than secured bondholders whose claims should have been senior. Congress has put pressure on GM to build new models in America rather than Asia, and to keep open dealerships in certain electoral districts. But by and large Mr Obama has not used his stakes in GM and Chrysler for political ends. On the contrary, his goal has been to restore both firms to health and then get out as quickly as possible. GM is now profitable again and Chrysler, managed by Fiat, is making progress. Taxpayers might even turn a profit when GM is sold.

[Nesster]

Indeed...
http://www.nytimes.com/2010/11/11/business/11auto.html

DETROIT — A week before its initial public offering, General Motors reported its largest quarterly profit in 11 years on Wednesday, showing that the slimmed-down automaker no longer needed huge sales to generate significant earnings.

G.M. said it earned $2 billion in the third quarter, nearly equaling its profit for the first half of 2010. G.M. earned $4.2 billion from January through September.

The company said it expected to report a fourth-quarter profit, at least before accounting for interest and taxes, though “at a significantly lower run rate than each of the first three quarters,” and a full-year profit for the first time since 2004.

It is slim consolidation to those of us who all along saw Obama's approach as saving capitalism and the market economy, rather than the socializing bs the opposition slung at him. Too late for the elections, the lies and exaggerations took their toll.

[mikemike]

The merger of government with auto manufacturing has aligned their interest in destroying the environment with gas guzzling vehicles.

According to reports, the U.S. has pushed for Korea to ease fuel economy and environmental regulations, and put a cap on tariff refund on imported auto parts used in vehicles that are produced within Korean and subsequently exported.

From 2015, vehicles able to seat 10 or less people will be required to either meet the 17 kilometers per liter fuel economy standard or emit less than 140 grams of carbon dioxide per kilometer.

http://www.koreaherald.com/national/Detail.jsp?newsMLId=20101111000905

17 km/L is about 40 mpg, but testing methodologies varies widely from country to country.

Meanwhile the environmentally concerned democrats are pussyfooting with 35.5 mpg CAFE by 2016 standards here in America.

How would we feel if the Chinese president was trying to push us to relax the amount of lead and cadmium used in toys?

The american auto industry is still a dinosaur pushing trucks and SUVs and fighting the environment. The bankruptcy has allowed the unions to shift the burden of fulfilling their retiree care onto mexican and chinese labors because it was unsustainable to keep their plants open here and provide jobs for the next generation. I ride my bike as much as possible and plan on driving my car (chevy impala) into the ground, when its dead I will get a car that is made by a company that takes care of its people and invests in america. The restructuring plans and subsequent years since the auto bailout have made me skeptical whether that will be another Chevy, probably either a Ford or Toyota.

Every effing month is truck month at your dodge and gmc dealers! Thanks for needing so much oil out of the gulf of Mexico America.
Where are the fiats s-cars and the volt? Pentax will release a FF DSLR before one of these bailout babies releases a profitable fuel efficient car.

[Nesster]

Pentax will release a FF DSLR before one of these bailout babies releases a profitable fuel efficient car.

Should we put this in a time capsule

[mikemike]

Should we put this in a time capsule

I hope I am wrong, but I am not very optimistic about the fate of GM and Chrysler.

I am also very skeptical about the rosy numbers they released. 1 week doesn't give people a lot of time to see what kind of accounting tricks they are pulling before committing billions of dollars on an IPO.

[jeffkrol]

I hope I am wrong, but I am not very optimistic about the fate of GM and Chrysler.

I am also very skeptical about the rosy numbers they released. 1 week doesn't give people a lot of time to see what kind of accounting tricks they are pulling before committing billions of dollars on an IPO.

Shareholders get scammed!!! Say it's not so. LOL
Seems you and Ralph Nader are on the same (sort of) page.......

"As the U.S. reduces its share, so its capacity to influence such decisions diminishes," they said. "It invested precisely to preserve U.S. jobs and manufacturing capacity. It is now incumbent on the government to manage its investment to advance these objectives," the letter said.

For instance, the group urged the administration to "direct GM to increase dramatically its investments in electric cars and other transformational technologies."

http://www.reuters.com/article/idUSTRE6AA4T020101111
Left is right, up is down.........
Leaving anything to industry will take really expensive gas to otherwise they follow the "line of least resistance". I think you get my drift...
Industry does not "upgrade" till economically forced to.. that's Econ 101....... Study the collapse of the steel ind. in this country.......

[reeftool]

I'm happy to see GM doing better. While I questioned the bailouts, the thought of seeing most to the US auto industry disappear is unsettling also. I think some sort of govt. backed plan would have taken place no matter who won the presidential election. The Republicans would have put all the emphasis "national security" as total bankruptcy would have put the builders of much of our military equipment in the hands of foreign ownership. Will they continue on into the future? Nobody knows at this point. Could GM survive only building military vehicles and government fleet vehicles? The answer to that is in the hands of the North American consumers. My last new car was an 08 Honda. I don't feel guilty in purchasing it.

[mikemike]

Opp's guess some were wrong.... GM

I'm curious about the title, Jeff, did you realize that you were wrong about president Obama because he has put the interests of GM ahead of the environment and the American people and behaved like a ruthless corporate capitalist offshoring jobs and allowing them to lobby here for weaker environmental regulations while going abroad and personally lobbying for weaker environmental regulations? Or are you trying to say that republicans were wrong about Obama being a socialist because he did this stuff?

[jeffkrol]

I'm curious about the title, Jeff, did you realize that you were wrong about president Obama because he has put the interests of GM ahead of the environment and the American people and behaved like a ruthless corporate capitalist offshoring jobs and allowing them to lobby here for weaker environmental regulations while going abroad and personally lobbying for weaker environmental regulations? Or are you trying to say that republicans were wrong about Obama being a socialist because he did this stuff?

Ohhhh.. lotsa of stuff but you believe the correct thing was to devastate ten of thousands of workers and pensioner (who at the very least would have een put on the gov. "dole" due to contractual obligations by the fed) so the industry becomes less competitive AND MORE off shore????
GM be damned, I was worried more about "the small people" here...
Bailing out GM in the way it was done and the reasons for doing it were sound giving the "human" environment... leave the social engineering for later.....
See I can compromise.......
Social "state" and free enterprise CAN co-exist.. proven all over the world.......... and IS our history.

[mikemike]

who at the very least would have een put on the gov. "dole" due to contractual obligations by the fed

Taxpayers could have saved at least $19B if they rolled the dice with GM's pension falling onto the PBGC instead of bailing out the company.

Pensioners and Employees
If GM went belly-up, retirees, workers, and taxpayers could all take a hit. Right now, its $90 billion pension fund is fully funded on an accounting basis. But the government-backed Pension Benefit Guaranty Corp., which acts as a safety net for corporate pension plans, says GM is underfunded by $31 billion.

How that would play out in a GM bankruptcy would be complicated. The PBGC could be on the hook for billions in pensions. The agency also could force the Detroit giant to keep funding its own pension plan even in bankruptcy -- though the company could make the case that it should pay less. Still, GM's 450,000 retirees would get hit: They may end up with smaller pension payouts, and their medical benefits, as well as the health-care plans of existing workers, would most likely be whittled back.

What If GM Did Go Bankrupt...

so the industry becomes less competitive AND MORE off shore

If they have modern factories and good workers, I think that those would have been bought up at a steep discount by either surviving companies or private equity, leaving investors in the "Old GM" holding the bag.

One thing that I would have liked to see them do instead of just bailing them out wholesale would be to take GM and Chrysler, combined all of their IP into one company that the government retained control of and held an auction for the licenses to all of the brands open to anyone willing to buy a factory. Then they could license the patents and designs for the cleanest vehicles and technologies very cheaply and made the dirtiest ones very expensive.

"human" environment

If only the "human" environment weren't dependent on the natural environment their products destroy.

I like the energy policy that the democrats talk about but they have exhibited time and again that a clean environment is a very low priority compared to satisfying entrenched unions in high pollution legacy industries.

[Phil1]

I like the energy policy that the democrats talk about but they have exhibited time and again that a clean environment is a very low priority compared to satisfying entrenched unions in high pollution legacy industries.

Bingo! With the taxpayers doing the underwriting for the union pension funds. What a joke that is.

[jeffkrol]

Bingo! With the taxpayers doing the underwriting for the union pension funds. What a joke that is.

Pensioners and Employees
If GM went belly-up, retirees, workers, and taxpayers could all take a hit. Right now, its $90 billion pension fund is fully funded on an accounting basis. But the government-backed Pension Benefit Guaranty Corp., which acts as a safety net for corporate pension plans, says GM is underfunded by $31 billion.

How that would play out in a GM bankruptcy would be complicated. The PBGC could be on the hook for billions in pensions. The agency also could force the Detroit giant to keep funding its own pension plan even in bankruptcy -- though the company could make the case that it should pay less. Still, GM's 450,000 retirees would get hit: They may end up with smaller pension payouts, and their medical benefits, as well as the health-care plans of existing workers, would most likely be whittled back.

Sorry, either way.............
EXCEPT on a social (and morally weak level) I have yet to see ANY downside to what the fed did (OK wee may lose a few billion BUT that is yet to be seen,)...........maybe you can show me how it would have been BETTER for the country if it did go Boom......

But in a normal environment, there would have been financing to get them through bankruptcy; everyone would have lost some money, but the companies would have survived.

But this was also a hundred-year storm, so it tested everybody. In this environment, there was no financing. If we had not provided capital, those companies would have shut their doors and liquidated and you would've had a million people out of work for no really good reason, just because the capital markets stopped functioning. So nobody got bailed out here. Everybody took pain in the auto sector. Shareholders were wiped out. Lenders got about 30 cents on the dollar. The UAW made significant concessions for both current workers and retirees.

http://voices.washingtonpost.com/ezra-klein/2010/10/rattner_draft.html