Guess what? GM's restructuring worked

[Cypress]

No. The taxpayers are still on the hook for about 50 billion and are only expected to recover about 20 billion of that.



We were warned that dire consequences would occur without strong government action. Free market advocates warned, with historical reference, that it would create uncertainty in the market and further the drop in investment.

Unemployment hit the numbers you guys said they would without government action. General Motors went bankrupt as you guys warned it would without government action. The lack of investment is still stifling the economy and many industries (including growing ones) have noted that they have been hesitant to expand due to uncertainty.

You might be right.

If America's largest manufacturing entity collapsed, GM workers and suppliers might have easily found other, equally-well paying jobs; there would have been no ripple effects in the economy; and GM's huge retirees pool and GM's creditors would somehow have been protected from any negative fallout.

I don't dispute that your theory may be right. I just don't find it very plausible.

I personally think the government took the least onerous, and most prudent action. A modest loan that had basically no cost to the taxpayer. I think that loan has been paid off with interest, and the government quite possibly made money on it.

More broadly, I don't dispute that GM going belly up wouldn't have destroyed the nation. I'm sure other auto manufacturers would have ultimately captured GM's market share, including Ford, Toyota, and Honda. Which means, by neccessity, the foreign share of america's domestic manufacturing capacity would have gone up, perhaps substantially.


I understand that slavish adherence to macro-economic theory and perhaps even the Austrian school of economic thought, means that in the end the world wasn't going to end on the basis of GM's flame out.

I just think the government isn't always supposed to be a mindless robot, subservient to theoretical macro-economic theory, or to the musings of the Chicago boys school of economics. A GM flameout, in my opinion, had significant potential downsides to GM employees, to GM retirees, to GM suppliers, and to all the american companies who's business either relied on GM or was tangential to it. And I don't think it's Marxist philosophy for the government to take steps to protect or promote its manufacturing base. Every country on the planet does it; there's not a single country on the globe that I'm aware of that let's its manufacturing base perform in a theoretical world of CATO institute-style libertarianism, or perform in a magnificent opera guided by the invisible hands of the magical free market. Even Ronnie Raygun used the government to help america's software industry fight off japanese attempts to displace us as the world's foremost IT and software power. Personally, I found the attempts to help GM to be a tad more palatable than the bank bailouts. Banks and finance dudes don't actually produce any real wealth or anything tangible. They just move other people's money around on paper. I think its a pretty universal consensus outside of the Austrian School, that protection and promotion of a domestic manufacturing base is a credible and neccessary national function.

 

[Cancel 2016.2]

The law is 100% perfectly crystal clear. The tax cuts end on a date certain.

LMAO.... so it is perfectly clear where taxes are going? Perhaps you could share that crystal clear data with the idiots in DC who are arguing about which tax cuts to extend and which to increase.

The actual FACT of the matter is that there is a great uncertainty as to how they are going to raise the money to pay down all the debt they have been accumulating.

Again, the law is the law. There is nothing uncertain about it. There may be uncertainty created by people claiming to change the law, but that's not Obama's fault.

yeah... nothing is Obama's fault... glad to see you drank that kool aid.

 

[Sammy Jankis]

Of course, the consitutional way to save our domestic industries would be to use the governments traditional right to protect domestic industries with protecitonist trade policy. but of course, all you globalists are too brainwashed and stupid to see the obvious.

 

[Bonestorm]

LMAO.... so it is perfectly clear where taxes are going? Perhaps you could share that crystal clear data with the idiots in DC who are arguing about which tax cuts to extend and which to increase.

The actual FACT of the matter is that there is a great uncertainty as to how they are going to raise the money to pay down all the debt they have been accumulating.

You miss the point. If certainty were all that mattered, businesses wouldn't be pushing for changes to existing law. The law is 100% certain.

yeah... nothing is Obama's fault... glad to see you drank that kool aid.

I never said nothing was Obama's fault. I'm simply saying that there are actual real economic factors that explain the lack of business investment that have nothing to do with vague notions of "uncertainty."

 

[Timshel]

I gave it a shot, but I couldn't stomach it after the "government boogeyman" stuff. Seriously. "People are scared to say anything mean about the government because they think they'll be punished by the bureaucrats." What a load of shit.

Because government agents never act in a petty way? Are you serious?

And if "uncertainty" were the main point of the piece, you'd think they'd get talk about it at least once in the first five minutes. Instead, it was a lament about very concrete and certain things that the businesses didn't like, taxes.

They did.

No one disputes that there is uncertainty in the market. What is being debated is the cause of the uncertainty. I'm pointing to same fairly basic economic factors that have a direct impact on economic growth in a consumer drive economy, unemployment and consumer confidence, and you just keep asserting that government is the problem. I think I have the better of the argument.

You keep pointing out things that are not affecting the businesses mentioned. They have a market for their goods. There are no concerns about that, yet you kept claiming that was the whole of the problem. It is not.

People know quite well what the effects are likely to be. Businesses project these sorts of things all the time. If they cannot figure out what the likely effects will be they ought not be CEOs.

And the "concern about what may come" is a really convenient dodge, and you can buy it if you want, but don't expect everyone else to buy it, particularly when there are real, concrete economic explanations.

LOL, yes everyone knows exactly what the future will bring. You cannot be serious.

The businesses have an educated guess at what will happen. If they knew what was going to happen, they would be making buckets of money and there would be no recession. But the CBO is not 100% accurate in the best of times and neither are the businesses. With so many unknowns including an active government that could radically alter conditions in a short period, businesses are understandably hesitant.

The Dems will lose seats due to the uncertainty and the economy will then likely see some real recovery. It will not be due to the great policies of the GOP. The market will right itself once it is confident the playing field will not be radically changed overnight.

 

[Cancel 2016.2]

You miss the point. If certainty were all that mattered, businesses wouldn't be pushing for changes to existing law. The law is 100% certain.

No, it is you who is missing the point. Everyone knows for certain what will happen if nothing is done. THAT is not what is causing the uncertainty. The uncertainty comes from the FACT that everyone knows SOMETHING needs to be done about the out of control spending. Again, that means either the idiots in DC have to cut spending back to budget neutrality or they have to raise taxes.

Given the Dems current control, expectations are that they will raise taxes to fund their out of control spending. The question is... HOW will they raise taxes.

Will it be more arbitrary 'hey lets tax medical devices' decisions? Corporate tax increases? More increases in individual tax rates?

You can sit and chirp about 'the law is the law' all you want. It doesn't change the fact that the concern is on how/where the idiots in DC will raise taxes and the cost of doing business.

I never said nothing was Obama's fault. I'm simply saying that there are actual real economic factors that explain the lack of business investment that have nothing to do with vague notions of "uncertainty."

Yes, you can point to economic factors, but if the stimulus was working as Obama and many of you continue to claim, then the corporations would be investing the cash reserves based on expectations of future growth.

But that is not what is happening. If companies just looked at PAST data and relied on that for future decisions, then we would NEVER move forward after taking a step back. There has to be a catalyst for companies to start hiring again.

The policies of spend spend spend and figure out how to tax the crap out of people/corporations to pay for the spending is what is causing the uncertainty. It is why companies are sitting on cash. They want that cash because they do not currently see a friendly business environment. Instead they see a hostile government whose only interest is bailing out the public sector jobs at the expense of the private sector.

 

[Timshel]

You miss the point. If certainty were all that mattered, businesses wouldn't be pushing for changes to existing law. The law is 100% certain.

I never said nothing was Obama's fault. I'm simply saying that there are actual real economic factors that explain the lack of business investment that have nothing to do with vague notions of "uncertainty."

Such as? Again, the companies interviewed are GROWING. Many areas of the economy are. There is no business reason for them not to expand which could lead to a recovery building around them. They are not due to uncertainty on fundamental market condition that are influenced by government action.

This is the same thing that happened when FDR went mucking around. Business investment was negative throughout most of the 30s which extended and led to the lowest trenches of the depression.

Even Rubin is talking about how more government action would create uncertainty.

http://www.bloomberg.com/news/2010-...mulus-isn-t-the-answer-rubin-o-neill-say.html

Obama has had his fun and has done enough so that he can claim that he was the savior. Now it is time for him to get out of the way. If he does that the economy will right itself and I am sure, 10-20 years from now, the economic illiterate left will demand that he be added to Mt Rushmore. If not then the truth about FDR will be revealed through the repetition of his mistakes and the havoc they caused.

 

[Damocles]

The law is 100% perfectly crystal clear. The tax cuts end on a date certain.

Yet there was this promise... and both large and small business are hoarding their money because they do not believe that promise will be kept. This is "economic uncertainty" at its worst.

Again, the law is the law. There is nothing uncertain about it. There may be uncertainty created by people claiming to change the law, but that's not Obama's fault.

That's flat inane to say there is "nothing uncertain about it"... the law is so bad they expect it to be "fixed", there is no certainty at all about it. And yes, the crappiness of the law that led to the nearly 70% opposition to it at this time is the fault of the people who wrote and pressed the law against all opposition. This creates political uncertainty which precedes still more economic uncertainty.

I don't know what the first part refers to but there is no energy bill or energy tax. If they want solar panels, now is a good time to buy them with tax credits and all.

Yet they talk about cap and tax schemes, how they shouldn't "promote them now" etc. this is again political uncertainty which precedes economic uncertainty. They do not know if they will be punished for success if they hire people and get their business working.., they hold their money to be safe.

This is really silly. Basically, any time the government does anything businesses are crippled with "uncertainty" and it's all the government's fault. It's hilarious.

Just ignore the fairly basic economic factors and blame government.

No, only during economic stagnation or recession does every action of the government cause uncertainty. During flush times such 'uncertainty' contains less teeth.

 

[Timshel]

This is really silly. Basically, any time the government does anything businesses are crippled with "uncertainty" and it's all the government's fault. It's hilarious.

Just ignore the fairly basic economic factors and blame government.

It does create uncertainty during good times. It's just usually less painful (i.e., not crippling). It could be depending on how dramatic the change is.

 

[Cancel 2018. 3]

Weirdest spin of the day. It didn't work, but it did, if Bush gets credit.

Obama's bailout was tied to restructuring. Oops - nice try, though. Even for a hopeless Bush apologist.

what? this post makes zero sense.

 

[Onceler]

what? this post makes zero sense.

Good; your post, as well as the many negative reactions on this thread to GM actually doing well, have made zero sense to me, as well.

 

[Timshel]

Good; your post, as well as the many negative reactions on this thread to GM actually doing well, have made zero sense to me, as well.

There is no negative reaction to GM doing well. It's not even all that newsworthy. They dumped all there dead weight and started fresh with just the productive assets and taxpayer money in the bank. The fact that they turned a profit is not a surprise. A failure to do so would have been a huge shock.

The negative reaction is to the idea that it proves that it was worth it or the right choice. It does not.

 

[Onceler]

There is no negative reaction to GM doing well. It's not even all that newsworthy. They dumped all there dead weight and started fresh with just the productive assets and taxpayer money in the bank. The fact that they turned a profit is not a surprise. A failure to do so would have been a huge shock.

The negative reaction is to the idea that it proves that it was worth it or the right choice. It does not.

Maybe on your part; you don't speak for everyone who responded on this thread in that regard.

As for "not being all that newsworthy" - wrong. GM turning around their fortunes is a pretty big deal.

 

[Timshel]

You might be right.

If America's largest manufacturing entity collapsed, GM workers and suppliers might have easily found other, equally-well paying jobs; there would have been no ripple effects in the economy; and GM's huge retirees pool and GM's creditors would somehow have been protected from any negative fallout.


I don't dispute that your theory may be right. I just don't find it very plausible.

Straw man.

First off, It did collapse in to bankruptcy. That's what would have happened without the bailout. I will concede that without the bailout the bankruptcy may have lead to GM shedding MORE jobs and ending with less than the 55K it now employs. They would not have ended with zero though.

Also, I am not arguing that there would be no transitional pains. There would be. 30 billion+ could easily alleviate them.

The retirees, in the worst case, would be protected by the PBGC. And again you are pretending that bankruptcy could not have protected them without the money.

There was negative fallout.

I personally think the government took the least onerous, and most prudent action. A modest loan that had basically no cost to the taxpayer. I think that loan has been paid off with interest, and the government quite possibly made money on it.

That is nonsense.

http://articles.sfgate.com/2010-04-27/business/20870864_1_gm-loans-general-motors-chairman

The money in the escrow account was part of the government's equity investment in GM and "was going to be available for future problems with GM," Neil Barofsky, head of the inspector general's office, told Congress last week.

The repayment is "good news" because it means "they don't need it, but we should caution that it's not necessarily being generated out of earnings but out of other TARP funds," Barofsky said.

The repayment leaves the government with about $50 million invested in GM, which it hopes to recover, at least partially, when the company sells stock in an initial public offering. "We expect an IPO this fall," Reilly said. GM's stock does not trade publicly today.

The Treasury has not said how much it expects to make or lose on GM. But a report issued by the White House last week said, "Overall, the investments made by the prior and current administration in GM, Chrysler and GMAC will likely result in some loss, but the U.S. Treasury anticipates it to be much lower than forecast last year."

Costs up to $34 billion
The Congressional Budget Office estimates that investments in GM, Chrysler and their financing arms will cost the Treasury $34 billion. The Office of Management and Budget puts the cost at $31 billion.

 

[Cancel 2018. 3]

Good; your post, as well as the many negative reactions on this thread to GM actually doing well, have made zero sense to me, as well.

i knew you couldn't explain your dumbass post....

my post made perfect sense, hence why you tried to respond to it with what you thought was a refutation, but in reality, it was goobly gock

 

[Onceler]

i knew you couldn't explain your dumbass post....

my post made perfect sense, hence why you tried to respond to it with what you thought was a refutation, but in reality, it was goobly gock

Your post only made sense if I switched to a mindset of, "Okay - the person writing this is a massive Bush apologist."

You basically wrote that we can't make any judgments yet on the success of the bailout, but that we could, if Bush got credit.

First, the topic of this thread is very good news. Is there a chance that GM might still fail? Very doubtful. Regardless, I stand by the idea that the restructuring worked, just to get it to this point of profitability again.

Second, in your rush to trip over yourself to give Bush credit, you forgot that it was the bailout in '09 - Obama's - that had the stipulations on restructuring. You know - the ones you said were him "taking over industry" and turning America into a socialist country.

I thought corporations didn't really profit in socialist countries?

 

[Cancel 2018. 3]

QUOTE=Onceler;692536]Your post only made sense if I switched to a mindset of, "Okay - the person writing this is a massive Bush apologist."

You basically wrote that we can't make any judgments yet on the success of the bailout, but that we could, if Bush got credit.

see, this your big problem, you LIE about what people say...

i never ever said "if we could" bush gets the credit...i don't care who did the bailouts, it is way to early to claim success....you are a moron for doing so and instead of admitting the sound logic of that, you dishonestly portray what i said

First, the topic of this thread is very good news. Is there a chance that GM might still fail? Very doubtful. Regardless, I stand by the idea that the restructuring worked, just to get it to this point of profitability again.

its been one year....you just jizzed yourself because you love obama and want to give him credit for anything that "might" be good...you didn't mention bush at all, but gave obama all the credit...that is dishonest

Second, in your rush to trip over yourself to give Bush credit, you forgot that it was the bailout in '09 - Obama's - that had the stipulations on restructuring. You know - the ones you said were him "taking over industry" and turning America into a socialist country.

so you're saying it was not the bush bailout that worked....but ONLY obama's restructuring...good lord, you're a hack...its too bad pointing out FACTS that bush gave the bailout is somehow "tripping" over myself....i know you hate facts, but that is pathetic onceler

I thought corporations didn't really profit in socialist countries?

thats the stupidest i've ever heard....

 

[Onceler]

LOL

Read the article. It was the restructuring that turned GM around.

Too funny....

 

[Timshel]

Maybe on your part; you don't speak for everyone who responded on this thread in that regard.

As for "not being all that newsworthy" - wrong. GM turning around their fortunes is a pretty big deal.

It's not surprising that they turned a profit. I guess, it is somewhat newsworthy that they did after so long. But, after the restructuring it would have been nearly impossible for them to not turn a profit.

I expect they will get in trouble again. I think the whole thing has definitely harmed their goodwill and many consumers will avoid them out of resentment. But in the short term, a failure to turn a profit would have been far more shocking.

 

[Cancel 2018. 3]

LOL

Read the article. It was the restructuring that turned GM around.

Too funny....

1. that is not true at all...the article never said that

2. i laugh at you for saying bush's BILLIONS did nothing to help them turn around...that is just plain stupid and shows you're being a partisan tool on this issue