My current job deals with management/turnaround consulting, which is exactly that GM is going thought right now. My day to day task involves dealing with nothing but bankruptcies and trying to help management get their companies back on track. While I am not as experienced as my superiors, I have seen absolutely nothing in Detroit 3's actions that indicate willingness to change. They are still very stubborn, complacent and not-forward thinking...the industry and economy as a whole is simply passing them by and they are not evolving with it.

Problem with Chapter 11 is that you still need to obtain some sort of credit or financing to function while you restructure. However, given the unfortunate market conditions companies such as Circuit City, Linen's & Things and Mervin's are being forced to liquidate because they cannot get enough financing to continue their operations and they are MUCH smaller companies than GM. And let's not forget all the legal fees involved.

Even if Detroit 3 were to go into Chapter 11, it would still be a probable scenario they would need financing from the government for their operations...so we are back to square one of the tax payer getting shafted.

Yes, my opinion about Chapter 7 is very harsh...but at the same time analysts estimate GM would need more than $50 billion in funds at this point if any help was to be given and its a safe assumption this number would grown in a bankruptcy. [I am not working 60+ hours a week, so my money can be wasted on this.]

Did you even bother reading my reply and article regarding this study? They used outdated data, extremely wide scope of relationship ties and the whole thing was pretty much commissioned and paid for by the automotive industry. They included automotive jobs in that study that have little or no ties to Detroit 3. Yes, the study brings up a good point, but it is not no where accurate portrayal of current conditions.

Yes, GM's situation is a very tough case. I sympathize with all the employees and people who are innocent bystanders of this situation, but its time to move on...Detroit 3 made their bed, now they need to sleep in it. The transitional costs are too great and the benefit, if any, is very unclear.

 

I am also amazed that no one has spoken out in favor of giving money to people affected by this situation. Whether it be Chapter 11 or government bail out/loan...Ton of people will lose their jobs and/or be negatively affected. How about relief for them? Instead municipalities everywhere are cutting educational support and budgets, which means people out of a job have no recourse to retool themselves for the changing times. Has anyone thought about that? How about a bailout for those people?

 

I don't think we need to go Chapter 7, that's complete death to US automakers. Chapter 11 is completely feasible, and forces restructuring.

 

People fly with companies that have filed chapter 11. There are 5000 airplanes in the air everyday! Carrying pretty much hundreds of thousands or people, every day.

If GM went chapter 11, but came out lean and healthy, I'd buy from them. It's stupid to assume so if it's never happened before. Just cause something as never happened before doesn't mean we should avoid the situation by giving into these *******s who run these poor companies. There is nothing, NOTHING, that says giving $25 billion will save the auto industry, it's just a lifeline to help them stay afloat in 2009. They'd keep the money for themselves, and still lay off workers and shut down plants, and then WE have to pick up the tab on that $25 billion.

Instead the big 3 need to file Chapter 11, restructure, get help doing it from the US govt, and this will also allow them to break their union contracts and renegotiate (and trust me those ****ers will give in for once if it means keeping their jobs).

 

I disagree, cause It's not about giving them financial support, I'm for that, but I want to see mandated changes, and Chapter 11 gives them that. As long as they file and there is now external oversight, then I don't mind giving them $25billion. I want to see that money get put to us, and I don't want to give it to companies as they stand now, they MUST show they are changing their ways and that means better management, fighting Unions, and making better, more fuel efficient cars.

 

I sincerely hope it does not get to that point myself...however, based on pure analysis of current facts (some of which I already stated) it is not out of realm of possibilities whether people like it or not.

The situation is not easy; people and business will be hurt no matter what course of action transpires. I am starting to look into volunteer opportunities to help people transition careers and/or find new jobs or whatever else I can contribute to. At the same time, I do not want to ever go through such a situation again.

 

No one cares about us. The thought it is that if you bail out the big companies, then there is no need to bail out the work force cause we will still have jobs... tell that to the 10 million people who have lost their jobs so far this year. We get $600 check (well some of you did, I got less than that) and that's our bail out. we might get a another, smaller, check but seriously, that $700 billion going straight to tax payers would've been smart. Some would buy stuff, some would invest it. Somehow it would all make it back into the economy somehow.

Instead we intust it with those idiots Ben and Paul. Who don't even know what to do with it. We inject billions week after week into the credit market and nothing happens. We CANNOT make banks trade to each other, so we should just give relief to the people who need it.

I completely agree.

 

It was more along the lines of how much financial support are they going to require to help them transition to become a better company. Usually you get financing from creditors and financial institutions who see a point of investing into a company's future. So there is a clear return on investment for both parties. I am also being cautious since you loose some separation in the system because now bankruptcy protection AND financing are coming from the same source...The court potentially looses its independence to be an objective thinker because now they have a vested interest [no matter how direct/indirect] in how well the company does.

...I do think we ever had a case where the government would need to provide such a huge loan to help a company restructure and the money still would come from tax payers. If they pay me back that money with interest than I have no problem giving them a loan. But somehow I see the auto makers being back in Washington lobbying for reduction in repayment amounts or forgiveness of the loans...

...and where do we draw the line? $25 billion? $50 billion? $100 billion? In most turnarounds it is much easier to see the cost/benefit of granting company financing, knowing that they will be efficient and productive organization again. However, when concessions/funding costs exceed potential return on investment, than when the plug is pulled and company is liquidated. However, Detroit is so laden with problems it is simply a logistical and legal nightmare and mine field. I highly doubt the government will liquadate them as soon as it stops making logical business sense...

I completely agree...I do not WANT them to fail and they MUST change their ways, but they are making it very very very difficult to not think such way. If worst case scenario has to happen in order for long term balance to be restored...I will chose long term future.

 

FYI - 25 billion equates to a whopping total of around $83 for every man, woman, and child living in the united states.

so in summary, there's your bailout. did you cash that check? i bet you did. you've already drank the kool-aid and taken the red pill.


even the 700 billion works out to a whole $2,333 per person.




*figures based on approx population of 301,000,000 from july 2007 cia estimates.

 

Fine, but the national debt is shooting past $10,700,000,000,000 (10 trillion 700 Billion) as we speak-
using RussB's census figures, that is about $35,429 and change amortized over every man woman and child.

Whereas our per capita GNP is supposedly a bit over 45,000- it only puts us about a third from the bottom in terms of the national debt to GDP figures around the world.

 

Ummmm so you are saying that every new born infant, middle school kid, junior high teenager, lower wage, unemployed and retired individual are going to pay their equal share of this bail out?

I need to find that damn Fortune article that details the plan on the bail out and which income segments are actually going to be stuck with it...

 

WTF are you talking about?

First, I deposited whatever I did get. second, $2300 goes a long way for a lot of folks. A month's mortgage, 4-6 months of car payments, 7-9 months of groceries... You make it seem like it's insignificant. $600 (or less) is insignificant (at least in stimulating the economy...).

$2300 is much more like it. I think if you gave people $2300 they'd spend much of it, they'd use it to pay bills, get groceries. It gives relief, real relief in many ways to many people. Albeit temp, but better than giving it to Henry and Ben, who don't know what the **** to do with it.

 

you're so naive that it's comical. if you gave your average joe schmoe $2300 bones, he'd get a flat screen tv, blue-ray player, and maybe spend the rest on other bs.

btw - $2300 IS insignificant. call me pompous, call me a arrogant *****, call me whatever. in the grand scheme of things, and with the crap that people spend money on, $2300 is really nothing.


you missed my point. Gagan was asking where's our bailout. we gots our bailout earlier this year, and it didn't do a single thing for the economy. so, ok. every man, woman, child, middle school kid, junior high teenager, low wage earner, and unemployed person got money. everyone but the "wealthy.

so the government wants to spend 25bill on the auto industry. that helps 3 million workers. it helps the towns and cities they live in. it helps the industries that supply the auto industry. all at a cost of a whopping $83. I'd rather that my $83 of that money go to the big 3, because it has a much higher probability of actually helping someone than if it went into my pocket (it's probably be used to buy **** and alcohol).

 

Oh okay, I am with you know, I misread which direction you were directing the statistic.

I still have my doubts. If I knew the $25 billion had some guarantee to directly help the workers than I would have less problem with it. The thing is, that money would be given directly to the management [far removed from those workers and their communities] that put the company there in the first place. There is nothing preventing them from taking huge bonuses for their "efforts", still firing half the company, still taking private jets everywhere and not making that big of a difference in the end for the workers. It would all be a trickle down effect wherein the workers would not see immediate benefits, if those benefits were to reach them at all

...and I have yet to read about any potential limitations or conditions that, in my opinion, need to be placed on that money. As of right now, it is made to be seen as "we are asking for $25 billion to do as we please" situation.

 

How people spend it is up to them that's freedom. They can buy something, they can save it, they can pay down debt... it's up to them. It's their money once they cash the check. The money goes somewhere... At least we get something... more than we'd get in any tax break.

If they pay down debt it helps them. If they buy a TV it helps the TV manufacturer and the retail store they bought it from. If they save it it helps put money into the banking system. It's all goes somewhere. If they it in a safe in their closet, then it's just there... but still their choice.

$25 billion only helps them for 1 year. That's it... what then? They have made no steps to change their ways. They were also bailed out, helped in the 70s, during the last large gas crisis (this recent one is not as bad, still hurt a lot of people though, esp truckers). They made some small cars for a while, and then oil inventories grew hugely... prices plummeted... Back to big cars! Whooo hooo!

So, how do we MAKE THEM create good cars again, efficient cars... Small cars, quality cars. Not SUVS, no DUB Edition Chargers and Laredo Trucks.