GM claims Americans are over bailout anger

[THawks]

I would be interested in something pre-bail out because that is at this point going to be a used vehicle that GM will not get any of my money from the purchase, but that is also the case with all other manufacturers. I am not in the market for another vehicle and don't plan to be in a long while, but if I were I would still want to go get a G37 vert if I had the cashflow to support the purchase. Aside from that a Delorean would be my second choice, no other car out there interests me at the moment. Though a motorcycle is higher on my priority than a new car...

[AZhitman]

What the hell are you on about? You asked why dealerships didn't get a bailout and the manufacturers did. I suggested that the massive difference in size might have had something to do with it, and you're coming back with this nonsense?

25% of dealerships were shuttered. "Massive" difference in size? Maybe, maybe not. But I still contend that the big difference was one group had political pull, the other did not.

If the government is going to run around throwing MY money at companies (big or small) when they take too deep a swig from the Fountain of Suck year after year, you can bet I'll take issue with it. Second-guessing a politically-motivated bailout is no different than the incessant bleating we hear from those who question foreign policy decisions, military actions, and economic manipulations.

I'm saying, "It's good that we bailed out GM and Chrysler because absent that we'd have massive unemployment and a devastated middle-third of the country."

You're certain of that?

You do realize that restructuring under bankruptcy doesn't mean they close up shop, right? Or does that scenario just fit more conveniently in your doom-and-gloom assessment? You're harboring the badly-mistaken notion that the alternative to the bailout would have been an immediate and complete discontinuation of domestic automobile manufacturing.

How is it that you ONLY count the mostly-Union workers as deserving of rescue? What about everyone else who took a hit?

Pay attention: Shareholders of both companies got wiped out. Creditors took major hits. Some have YET to be paid. Many workers and executives lost their jobs. Many dealers lost franchises. Those peoples' livelihoods were permanently torn away.

I lost a pile of money when GM got bailed out (stock in GM and several suppliers). This would NOT have been as precipitous a hit had they restructured. But, hey, as long as Joe Schmoe (remember him? the guy who makes $56K a year putting hubcaps on Cobalts) still has a job, to hell with the rest of us, right?

It was a political move. And plenty of people smarter than us predicted EXACTLY what we're seeing today: (example: http://www.voxeu.org/index.php?q=node/2574 )

By the way, for anyone still panicking about unemployment: According to government data released in early November, in the first nine months of 2011, about 17.3 million people left their jobs by choice. That's up 9% from last year, when just under 16 million people called it quits through September. And that rate appears to be increasing. In September alone, just over 2 million told their boss they were taking a hike - the most since November 2008 - an 11% increase from a year earlier.

Keep meddling, Big Government. All you can do is make things worse.

[IBCoupe]

25% of dealerships were shuttered. "Massive" difference in size? Maybe, maybe not. But I still contend that the big difference was one group had political pull, the other did not.

You can contend that all you like.

You do realize that restructuring under bankruptcy doesn't mean they close up shop, right? Or does that scenario just fit more conveniently in your doom-and-gloom assessment? You're harboring the badly-mistaken notion that the alternative to the bailout would have been an immediate and complete discontinuation of domestic automobile manufacturing.

Immediate discontinuation, no. But it would have meant two of the three economic centers in the upper midwest would have drastically cut back production, drastically cut back employment, and drastically cut back on wages to the people they decided to continue employing. This would have had ripple effects across the region. In my part of the country, there are three major employers: Electric Boat, Mohegan Sun, and Foxwoods. If any one of those takes a hit, the entirety of eastern Connecticut takes a hit. Fewer people shop. Fewer people eat out. Fewer people have money with which to keep the local economy moving. Now, when you consider the vastness of the network of suppliers and actually stop to consider how many people would be affected, your arguments seem so callous that, if I didn't know you any better, I'd think you were a terrible person for wishing that much ill on that many people.

How is it that you ONLY count the mostly-Union workers as deserving of rescue? What about everyone else who took a hit?

Pay attention: Shareholders of both companies got wiped out. Creditors took major hits. Some have YET to be paid. Many workers and executives lost their jobs. Many dealers lost franchises. Those peoples' livelihoods were permanently torn away.

I lost a pile of money when GM got bailed out (stock in GM and several suppliers). This would NOT have been as precipitous a hit had they restructured. But, hey, as long as Joe Schmoe (remember him? the guy who makes $56K a year putting hubcaps on Cobalts) still has a job, to hell with the rest of us, right?

Shareholders get no pity. Which Obama-Era Republican sold you the load of crap that you would have lost less money if they filed for bankruptcy before receiving a pile of cash from the government, rather than after?

And, so what if an entire region suffers! Not my neighborhood. f*** 'em for having decent jobs to begin with.

It was a political move. And plenty of people smarter than us predicted EXACTLY what we're seeing today: (example: http://www.voxeu.org/index.php?q=node/2574 )

What are we seeing now, Greg? CBO estimated it would cost us $40B to bailout the auto industry. We're still well below that.

By the way, for anyone still panicking about unemployment: According to government data released in early November, in the first nine months of 2011, about 17.3 million people left their jobs by choice. That's up 9% from last year, when just under 16 million people called it quits through September. And that rate appears to be increasing. In September alone, just over 2 million told their boss they were taking a hike - the most since November 2008 - an 11% increase from a year earlier.

Keep meddling, Big Government. All you can do is make things worse.

I don't see your point.

[AZhitman]

Now, when you consider the vastness of the network of suppliers and actually stop to consider how many people would be affected, your arguments seem so callous that, if I didn't know you any better, I'd think you were a terrible person for wishing that much ill on that many people.

"Wishing ill"? Good God. How about placing some damn blame where it's due - on the pinheads that ran that company into the ground? Yeah, I'm "wishing ill" on an entire region... It's so much easier to blame me than the union heads who hamstrung the company into mediocrity.

Shareholders get no pity.

Hmmm. If I didn't know YOU any better, I'd think you were a terrible person for wishing that much ill on that many people.

That was the entirety of some peoples' retirement nest egg. Projecting a little "class warfare", perhaps? Did the shareholders who got bilked in the S&L scandals get your sympathy? I'm sure you'll have some slick explanation for the difference...

I don't see your point.

My point is, jobs will come and go, as will employees. Whether by choice, or by economic forces, people find a way to take care of themselves. If you're so worried about GM factory / supplier employees losing jobs, you can't ignore the fact that people are voluntarily walking away from the work force in droves - There are jobs out there, but Joe Schmoe likes his cushy Union gig. It would suck if he actually had a job where he was encouraged to exceed expectations.

[Jesda]

I had no idea you cared so much about my region, Isaac. Come snuggle with me.

[AZhitman]

Jesda Claims Americans Are Still Not Over Bailout Anger.

[IBCoupe]

I had no idea you cared so much about my region, Isaac. Come snuggle with me.

Only if you wear plaid.

[IBCoupe]

"Wishing ill"? Good God. How about placing some damn blame where it's due - on the pinheads that ran that company into the ground? Yeah, I'm "wishing ill" on an entire region... It's so much easier to blame me than the union heads who hamstrung the company into mediocrity.

Who's blaming you, Greg? If there's one thing I'm not doing, I'm not placing blame for GM's demise. They were going down no matter what. I'm simply arguing that the government had legitimate reasons for not wanting to let it go down as hard as it was going to.

Shareholders get no pity.

Hmmm. If I didn't know YOU any better, I'd think you were a terrible person for wishing that much ill on that many people.

That was the entirety of some peoples' retirement nest egg. Projecting a little "class warfare", perhaps? Did the shareholders who got bilked in the S&L scandals get your sympathy? I'm sure you'll have some slick explanation for the difference...

...and the fact that GM was going under anyways means nothing to you, does it? Regardless of whether the government bailed it out, those nest eggs were gone. That's why I'm saying that the shareholders get no pity. Not because it doesn't suck for them, but because, in the context of this conversation, their pain is completely irrelevant. They were going to be hurt no matter what. Saying that they've been hurt is neither here nor there to the question of whether the bailout was proper.

I'm projecting class warfare? You've spent at least the last three posts attacking union employees in response to my arguments from economic effects. Who's declaring war, Greg? Calm the hell down, take a breath, and reexamine your arguments.

My point is, jobs will come and go, as will employees. Whether by choice, or by economic forces, people find a way to take care of themselves. If you're so worried about GM factory / supplier employees losing jobs, you can't ignore the fact that people are voluntarily walking away from the work force in droves - There are jobs out there, but Joe Schmoe likes his cushy Union gig. It would suck if he actually had a job where he was encouraged to exceed expectations.

I still don't get it. That people quit their jobs today means that we could have withstood the collapse of GM and Chrysler three years ago? You really think one has anything to do with the other? Jesus, Greg, come down off of your union-bashing for just a few minutes and think clearly about what you're arguing.

[AZhitman]

I'm simply arguing that the government had legitimate reasons for not wanting to let it go down as hard as it was going to.

And I'm arguing that it simply supports the "too big to fail" criticisms that have been rightfully leveled at this (AND the prior) Administration.

It's absolutely counterproductive to have a taxpayer-funded safety net for businesses.

It sets a dangerous precedent: That key executives can act recklessly without fear of consequences. Many of the "old guard" remains on GM's Board. And those in middle management who failed to "squeaky wheel" things when they should have, remain gainfully employed.

On a side note, I've read several articles in SUPPORT of your position (most notably, Paul Ingrassia's in-depth look at the lessons of the bailout), and they're compelling as well - don't think I'm pulling a Howie here and ignoring the other side of the coin.

By the way, nothing's changed:

Members of the United Auto Workers union conducted “informational” picketing on Friday outside General Motors Co.’s assembly plant in Orion Township, Mich., to protest the low wages paid by a subcontractor to employees at the factory.

The UAW says 278 employees of LINC Logistics who deliver parts to the assembly line are paid $9 per hour compared with GM entry-level hourly wages of about $16. Veteran workers earn about $28 per hour. The Orion plant makes the Chevrolet Sonic and Buick Verano subcompact cars.

The union has organized workers at LINC, but has been unable to reach a contract agreement. LINC workers voted unanimously in June to strike if UAW leaders call for a walkout—a step they reportedly are still considering. The union also is pressing GM to increase its payments to LINC to assist the supplier in boosting wages.

[AZhitman]

And, more news out of the GM camp:

General Motors Co. is quietly firing an unspecified number of salaried workers in an effort to streamline operations, The Detroit News says. The newspaper says the job cuts are mainly in engineering, product development and corporate operations.

GM says it will shed workers worldwide as it strives to reduce costs and widen profit margin. But the company says it also plans to add jobs in some unidentified job categories and make greater use of contract employees.

CEO Dan Akerson told the News earlier this year that GM employs 7,000 more salaried workers than other large carmakers. He says the company’s excessive staffing is “like the Communist Party in China.”

Hmmm.

Maybe if they'd done that EARLIER, there wouldn't have been such a NEED for a bailout.

So much for saving jobs in middle America!

[IBCoupe]

It sets a dangerous precedent: That key executives can act recklessly without fear of consequences. Many of the "old guard" remains on GM's Board. And those in middle management who failed to "squeaky wheel" things when they should have, remain gainfully employed.

This is the thing that bugs me. This is what I challenged Jesda on. Where's the moral hazard? Where are the people saying, "You know, I think I'm going to run the company into the ground again, because we'll just get bailed out?" Where are the people saying that at any company? The incentives to maximize short-term gains have always been there for executives. That's part of why people call for (and subsequently are ostracized for doing so) compensation reform. The bailout changed nothing in that regard, Greg. There's no "precedent" if it's not going to serve as a basis for future action.

The UAW says 278 employees of LINC Logistics who deliver parts to the assembly line are paid $9 per hour compared with GM entry-level hourly wages of about $16. Veteran workers earn about $28 per hour. The Orion plant makes the Chevrolet Sonic and Buick Verano subcompact cars.

$9.00/hr is less than $19,000/year on a 40-hour workweek. But, hey, go ahead and fight against those big bad unions trying to ensure that an entry-level worker should make $33,000/year. PISS ON THEM.

Maybe if they'd done that EARLIER, there wouldn't have been such a NEED for a bailout.

So much for saving jobs in middle America!

You don't really think that's a good argument, do you?

[Jesda]

I'd indulge this topic much further if it wasn't being dragged on to stroke your ego.

The core issue isn't even the bailout itself -- a court-managed bankruptcy would have taken place anyway, with GM likely taking on investors/partners (Ford? Chrysler? Nissan? Daimler? Magna? Toyota?) to make use of its worthwhile assets and pay off some of its debts. An organization of its size, under a standard bankruptcy with as many valuable assets as it has, would not have simply gone "poof" as some alarmists believe.

GM was only a couple years away from profitability. Wagoner and the board reached a compromise with the UAW that allowed the company to become profitable, even with all of its brands, by 2010. The plan was cut short by uncontrollable economic panic. Short-term protection was all that was necessary and would have taken place through a bankruptcy court.

The problem here is the way the government managed the bankruptcy in a way that favored unions (POLITICAL FAVORTISM) over bondholders. Not shareholders, bondholders. Bondholders are generally among the first in line to collect in a typical court-managed bankruptcy -- there is a PROCESS and an ORDER intended to protect the most vulnerable investors and creditors (YOUR GRANDMOTHER!).

The bailout, as it was managed, (and I strongly blame Bush for failing to lead and kicking the can to President Obama), was designed to put manufacturing labor, an ongoing leech on GM's profitability, in a favorable position. The only saving grace is that the UAW's bargaining powers were slightly hampered in the short term. Don't think for a second that they didn't want to strike again -- they explicitly made threats that would have affected production in MI, IN, IL, and OH which then would have affected nearby suppliers -- people in my region you insincerely claim to care for.

As most Americans shift from working age to retirement, their assets are transferred from mutual funds and other investments to more secure bonds. In addition to setting/affirming a precedent that rewards corporate greed/mismanagement, short-term decision making, and greed on the part of union leadership, you set a second and more damaging precedent that frightens future investors. If you jerk bondholders around, you scare the public further from investing in domestic firms.


This topic has aged considerably and I see exactly where its going. I'll recommend credible, unbiased reading and you'll decline to look at it.

Just Google any opposing views and write letters to the editors until your fingers bleed from typing.

[IBCoupe]

An organization of its size, under a standard bankruptcy with as many valuable assets as it has, would not have simply gone "poof" as some alarmists believe.

And it wouldn't have been smooth sailing, especially given the economic climate at the time. This has been covered in your absence.

The problem here is the way the government managed the bankruptcy in a way that favored unions (POLITICAL FAVORTISM) over bondholders.

Good, now that we've established that it's not the moral hazard as you and Greg both suggested, let's talk about this, instead. Yes, there's a priority in favor of a large concentration of people paying into a single regional economy versus a diffuse collection of retirees and corporate investors. Why is this a problem? It is not the way a bankruptcy would have worked out for bondholders, true, but I'm not seeing the problem from a public policy standpoint. Somebody was going to get f*** royally. A preference for employees over investors does not strike me as inherently unreasonable, especially given the government's damage control priorities in what could turn into a greater unemployment crisis in the middle of an economic crisis.

Not shareholders, bondholders.

Keep in mind, it was Greg that complained about his stock. If there's clarification needed, you needn't get pissy and direct it at me. I'll respond to what's in front of me.

As most Americans shift from working age to retirement, their assets are transferred from mutual funds and other investments to more secure bonds. In addition to setting/affirming a precedent that rewards corporate greed/mismanagement, short-term decision making, and greed on the part of union leadership, you set a second and more damaging precedent that frightens future investors. If you jerk bondholders around, you scare the public further from investing in domestic firms.

Ah, so we are back to moral hazard. Who's making the decision to alter future behavior based on the auto bailout? Which executives? Which investors? Who's out there saying that there's a real chance that this will happen ever again to any particular bond-issuer? Moral hazard does not exist in huge, one-time, circumstance-reliant policies. That's not how it works. That's not how it has ever worked. In order for behavior to change, there needs to be some indication that it could realistically happen again. You need to believe that you'll be in a position someday to take advantage of the opportunity inherent in the hazard-creating event.

This topic has aged considerably and I see exactly where its going. I'll recommend credible, unbiased reading and you'll decline to look at it.

Aww, cute.

[Jesda]

Keep in mind, it was Greg that complained about his stock. If there's clarification needed, you needn't get pissy and direct it at me. I'll respond to what's in front of me.

I was ALSO correcting Greg. I don't completely agree with him either. Who would have thought that in America, there might be more than two ways to look at a given topic? Hah!

It seems to be more about "winning" with you rather than listening, discussing, and treating people like intellectual equals. It makes it impossible for anyone to gain or learn anything, which makes the whole discussion unproductive.

I love you bro, but I hope you get stuck in line at the post office behind someone with bad gas.

[IBCoupe]

I was ALSO correcting Greg. I don't completely agree with him either. Who would have thought that in America, there might be more than two ways to look at a given topic? Hah!

I didn't suppose you would. I never suggested that you couldn't be correcting Greg. It seemed that you were pretty hostile, and the entire post was directed at me, when all I'd said to you in this thread was, "Where's the moral hazard?"

It seems to be more about "winning" with you rather than listening, discussing, and treating people like intellectual equals. It makes it impossible for anyone to gain or learn anything, which makes the whole discussion unproductive.

Doesn't seem that way to me, at all. I treat people like intellectual equals by holding them to the same intellectual standards to which I hold myself. Sometimes that means calling a bad argument a bad argument and not giving it the time of day.

The discussion isn't likely to be productive, however, when the conversation goes as follows:

Greg: GM says Americans aren't angry about bailout anymore. GM's wrong!
Me: Car-buying trends kinda seem to back GM up on that.

...

Greg: The bailout was expensive!
Me: But it wasn't for nothing.
You: Bad precedent!
Me: How?
You: Bad precedent & political favoritism!

Most of my posts in response to either one of you have been primarily focused on staying on a particular topic. I'm not trying to win so much as I am trying to develop a coherent thought. You might not like it, but I'm making a specific argument, as I often do: "We got something for our money, and there was a sense, beyond political favoritism, to the government's policy." In addition, I've decided to challenge the assertion that this sets a "bad precedent." Every time I do, you guys act like the assertion and the challenge never happened. And that wouldn't bother me except that you continue to make it.

This isn't me trying to win, it's me being a stickler on the things you guys apparently don't like to talk about.

[Jesda]

You're even obnoxious about trying to prove you aren't obnoxious!

When you're ready to sit down and talk with rather than transparently 'above' your peers, let me know. You're damn near trolling.

[AZhitman]

$9.00/hr is less than $19,000/year on a 40-hour workweek. But, hey, go ahead and fight against those big bad unions trying to ensure that an entry-level worker should make $33,000/year. PISS ON THEM.

Yep. See? We *can* agree.

They DELIVER PARTS. They're no different than someone who DELIVERS PIZZA.

Yes. Piss on them, and the union, for holding the company hostage and getting the way of someone finding a more cost-effective way of getting a job done.

[AZhitman]

Greg: GM says Americans aren't angry about bailout anymore. GM's wrong!
Me: Car-buying trends kinda seem to back GM up on that.

<sigh>

One has very little to do with the other.

70% of Americans can say they'd "never buy a Toyota" (during the midst of the UA issue) and yet Toyota can have a banner year. C'mon.

Greg: The bailout was expensive!
Me: But it wasn't for nothing.

You don't know that. It may well have been a complete waste of money. A restructuring and bankruptcy may have worked out just fine.

Somebody was going to get f***ed royally. A preference for employees over investors does not strike me as inherently unreasonable

Sure. Don't penalize the unionized worker who does *just* enough to get by. Punish the elderly couple who had their nest egg in GM shares, or shares of a GM supplier. Their money spends the same, unless we're getting "regional" - in which case I'm done discussing things. If it were the Deep South, I'll wager you wouldn't have been so protective.

When robots replace autoworkers (and the stooges who deliver parts), you go ahead and try to bail them all out.

You'll need to bail out lots of workers, because the auto industry isn't the only one that's gonna be shedding humans at an exponential rate in the next decade. Hell, they're replacing actors and models with CGI, meter-readers and cable workers and linemen with wireless connectivity, plumbers with smart 'bots...

For someone who's so gung ho about natural selection, you guys sure do try to head it off at the pass a lot.

[AZhitman]

BTW, closing a plant (even if it DID come to that) doesnt mean thlse jobs are gone:

Since 1979, 60% of the 447 U.S. factories used by carmakers and their captive parts units have closed. Nearly half those 267 shuttered plants have been redeveloped or will be soon, says the Center for Automotive Research.

The Ann Arbor, Mich.-based group says that before 2000 few decommissioned auto plants were redeployed. Of the 128 plants now rejuvenated, more than 40% were purchased during the economic downturn in 2008-2010. CAR researchers say that may because of depressed real estate values and the number of facilities on the market.

Some of the sites are being reused for manufacturing, including making cars and parts, or as warehouses. Others have been redeveloped for education, offices, non-auto R&D centers, housing, golf courses, parks and even a casino and a museum.

[IBCoupe]

Yep. See? We *can* agree.

They DELIVER PARTS. They're no different than someone who DELIVERS PIZZA.

Yes. Piss on them, and the union, for holding the company hostage and getting the way of someone finding a more cost-effective way of getting a job done.

Ah, so the people primarily performing this job are high school kids part-time? Got some real data to back that up?

<sigh>

One has very little to do with the other.

70% of Americans can say they'd "never buy a Toyota" (during the midst of the UA issue) and yet Toyota can have a banner year. C'mon.

Kinda makes you wonder about the truth of that poll, though. When you subtract from that number folks who'd never buy a Toyota in the first place because they're dirty slant-eyes who are taking our jobs, what's the percentage of Americans who would buy a Toyota before and are now absolutely uninterested in ever doing so again? When you account for brand loyalty, what did GM actually lose in sales over the issue? "I'd never buy a GM anyways, but..."

You don't know that. It may well have been a complete waste of money. A restructuring and bankruptcy may have worked out just fine.

And that's a proper response. I was just illustrating for Jesda that it hasn't been piss and vinegar from me the whole time. Without a crystal ball, we can't know for sure if it was actually worth the money, because we can't know for sure what the alternate reality is. My point: we didn't spend the money for nothing.

Sure. Don't penalize the unionized worker who does *just* enough to get by. Punish the elderly couple who had their nest egg in GM shares, or shares of a GM supplier. Their money spends the same, unless we're getting "regional" - in which case I'm done discussing things. If it were the Deep South, I'll wager you wouldn't have been so protective.

Why wouldn't I have been so protective? If Honda, Nissan, and Toyota all decided they were closing shop and pulling out of the South, I probably would have been favor in State intervention to try and keep them there, too. No need to be a d!ck, Greg. As much as you apparently hate union workers (because why else rant about them every chance you get?), this isn't about punishment. It's about a major hit to a regional economic engine in a national economic crisis, and how best to mitigate the damage.

Politics is for grown-ups. Petty grudges should not come into play. Set aside your irrational hate for people who work in a union, and try to write sensibly.

For someone who's so gung ho about natural selection, you guys sure do try to head it off at the pass a lot.

wtf

Since 1979,

Do you realize that you're working on a 32 year timetable?

[IBCoupe]

You're even obnoxious about trying to prove you aren't obnoxious!

When you're ready to sit down and talk with rather than transparently 'above' your peers, let me know. You're damn near trolling.

Wonderful! When you're ready to respond to the actual arguments I make (and have repeatedly made) to you, don't. Just continue to pick out the parts of my posts having nothing to do with the substantial conversation that you protest to care so much about, so that you may feel like you're superior in some regard to me. That seems to be working well for you.

Don't worry about trying to show where the moral hazard in the GM bailout was. It's only your central claim. Instead, go ahead and focus on an inference you've draw from a side comment to make fun of me. Go for it, bucko.

[Jesda]

You invested tremendous time and energy into your legal education. I know it's hard to fully utilize it in this economy. I'm sure its frustrating to not have an outlet for your talent. I empathize. I get it.

But you can drop the self-righteous attitude. It's a distraction technique used to frustrate rather than communicate.

When you come back to earth, I'll be around. I won't engage with someone who's in it for sport rather than knowledge.

Take it to cable news. Don't pull this nonsense with your friends.

[IBCoupe]

Great job!

[IBCoupe]

Jesda, you insult me repeatedly in the thread, claim you want to talk about the issue instead of having a competition, and when I respond, you opt to insult me some more rather than talk about the issue with me. Who are you kidding?

[Jesda]

Great job!

Count backwards from potato until you fall asleep.

[Jesda]

Who are you kidding?

I've called you on it before. I'm calling you on it again. It's an old, tired act.

Now, bear in mind, other than politely calling you obnoxious, I didn't insult you. I criticized your communication methods. To insult you would be to say, "You're slow and daft." [That would also be completely untrue.]

You and I likely agree more than we disagree, with only technicalities separating our positions. It's impossible to get to the heart of an issue when you present opinionated declarations as statements of indisputable fact. It takes the enjoyment out of what could otherwise be interesting, informative, and mutually beneficial.

[IBCoupe]

Calling me on what? Do you or do you not want to talk about the issue? If you do, do so. If you don't, don't claim you do. Don't pretend to have an interest in a constructive conversation if you have none. I'm going to work now, please don't respond if all you're going to do is insult me some more.

[Jesda]

Calling me on what? Do you or do you not want to talk about the issue? If you do, do so. If you don't, don't claim you do. Don't pretend to have an interest in a constructive conversation if you have none. I'm going to work now, please don't respond if all you're going to do is insult me some more.

I can't believe someone as thick-skinned as you is reacting this poorly to a simple request to tone down the pompousness.

I genuinely thought we were friends. I respect your depth of knowledge and analytical talent, but your attitude comes across as snide and insincere.

And it isn't just this thread. It's almost every discussion we engage in. All that's left to do is roll my eyes, massage your ego, and let you go.

You really don't see it? Oh well.

[Jesda]

Being boldly declarative doesn't do anything to advance your position. It's a silly and combative debate technique.

And now that we've gotten that bit of nastiness out of the way, we can proceed.

Ah, so we are back to moral hazard. Who's making the decision to alter future behavior based on the auto bailout? Which executives? Which investors? Who's out there saying that there's a real chance that this will happen ever again to any particular bond-issuer? Moral hazard does not exist in huge, one-time, circumstance-reliant policies. That's not how it works. That's not how it has ever worked. In order for behavior to change, there needs to be some indication that it could realistically happen again. You need to believe that you'll be in a position someday to take advantage of the opportunity inherent in the hazard-creating event.

Big business, like all history, has a tendency [for better and worse] to repeat itself, and these patterns of behavior affect investor activity, stakeholders, and the choices of regulators. Fundamental change and improvement in the present has to be demonstrated to prevent repetitions of past errors.

Your declaration is, quite simply, that the future is unpredictable. And of course it is, but much of what happens tomorrow borrows its guidance from yesterday.

Is General Motors more responsibly and efficiently managed? Are intelligent long-term choices emphasized over short-term gains and accompanying performance bonuses?
Are union leaders more willing to compromise, rather than boast and make threats to inflate their own importance?
Will investors show concern over the actions of regulators? [Absolutely!] Despite GM's satisfactory sales performance (though car sales are falling again due to the age of the Malibu and Impala and the thinning of Cadillac), the company's share price has remained stagnant. An entire generation of bondholders has been spurned. The enthusiasm is lacking and several years will be required to heal the social and economic "wounds" caused by how the bailout was managed.

As for the UAW:
Bonuses were recently awarded to blue-collar workers for exceeding quality standards. The men and women at GM's manufacturing facilities do an impressive job and earned several well-deserved JD Power awards, especially Hamtramck where the Volt, Lucerne, and my Cadillac were/are built. The issue I have isn't with the guy holding the tools, installing the door panels, or building mechanical components. The primary issue I have is with union leadership who manipulate vulnerable opportunities to "rally the troops" and needlessly incite management, all at the expense of production costs and corporate stability.

By favoring hourly employees over bondholders, retirees and soon-to-be-retirees lost what would otherwise in a standard bankruptcy be very safe investments. I favored bankruptcy protection and reorganization years ago (we've talked about GM quite extensively here in the past) as a way of protecting those who need to be protected while gaining much-needed leverage over the UAW, suppliers, and secondary creditors.

Under Wagoner's leadership (you have to give the guy some credit), GM reached important compromises on healthcare and retirement benefits and was on track to return to profitability by 2010. Circumstances beyond GM's control prevented that plan from being executed (though you could argue GM did it to themselves with what happened at GMAC), and standard bankruptcy procedures would have kept much of that on track. The way THIS bailout was handled took away much of the leverage GM and Chrysler would have gained over the UAW in a typical bankruptcy (but not all).

What this all means for our generation is that older workers will hang on to their jobs longer, making it more difficult for us to replace them.

It's happened before in past recessions. Every year that people our age are unable to find employment, our portfolios continue to go unfunded, costing us tens (in some cases hundreds) of thousands of dollars in lost retirement income by the time we reach our 60s.

I'm very surprised by where you stand on the influence of moral hazards, especially after the subprime nightmare.

Paralysis is very real as evidenced by New GM's underperforming stock.

You ARE right on several points, one being that all investors were going to suffer a bit anyway. What you have to understand (I know *you* understand, but I'll explain it for the benefit of anyone reading) is that existing bankruptcy procedures are designed to protect the most critical holders of debt. Shares are typically terminated, yes, but unsecured creditors, especially bondholders, are right behind asset holders and anyone with collateral.

Now, in the case of GM, bondholders eventually received shares, currently worth around 15% of the face value of their old bonds. Its far less than what they would have received by being paid through the sale of GM's still-worthwhile global assets. Foreign partners should have been encouraged, as was the case with Chrysler, to continue operations. It wouldn't be politically expedient, but it would be to America's benefit.

So, the bondholders who made claims are left twiddling their thumbs, hoping for a recovery in price. And near-retirees who have invested in GM may put off retirement if they can, making it difficult for young college graduates to replace them. [This is especially true among public school teachers.]

What perhaps annoys me more than the Obama administration's handling of the bailout was the way Bush used TARP loans to blindly throw billions of dollars at GM without any kind of clear reorganization plan. The company should have been pushed into bankruptcy protection early on.
"Throwing money at the problem until it hopefully goes away" is usually characterized as a liberal fault -- bad policies have a way of transcending ideology.

We probably wouldn't be having this discussion at all if responsibility was taken years ago. Such is the case with lame ducks.

[IBCoupe]

I'm not being thin-skinned. I will abide insults in the same way that I throw them: usually lightheartedly and always accompanying something of substance. I don't insult just to insult, and I won't abide them coming my way. You want to poke fun at me while you're arguing? Fine. You did that, and I took your comments seriously. It doesn't bother me. What pisses me off is when you abandon all discussion in favor of poking at me. Let me make that clear: that's my line. I don't mind heated debate and I don't mind personal jabs. I mind them when you throw the jabs without the excuse of the heated debate. Then you're just being a jerk.

Big business, like all history, has a tendency [for better and worse] to repeat itself, and these patterns of behavior affect investor activity, stakeholders, and the choices of regulators. Fundamental change and improvement in the present has to be demonstrated to prevent repetitions of past errors.

Your declaration is, quite simply, that the future is unpredictable. And of course it is, but much of what happens tomorrow borrows its guidance from yesterday.

It's more than being able to predict the future. You have to be sure that you can predict the future as it pertains to you. I can envision a market crash of some degree sometime in the next two decades. That seems like a reasonable expectation. I can't envision that the stock my 401(k) is tied up in (General Dynamics) will be harmed by any particular crash or scandal. The problem with analyzing the GM/Chrysler bailout from a moral hazard standpoint is not that you have to be able to predict that there will be another bailout someday, but that there'll be another bailout that affects your bottom line. There'll be more bailouts in our future at some point, I'm sure. There'll be another nationalization like that of the steel industry in the Korean Conflict. Don't know who, or when, or why it'll be, but I'm certain it'll happen to somebody, someday, for some reason.

Is General Motors more responsibly and efficiently managed? Are intelligent long-term choices emphasized over short-term gains and accompanying performance bonuses?
Are union leaders more willing to compromise, rather than boast and make threats to inflate their own importance?
Will investors show concern over the actions of regulators? [Absolutely!] Despite GM's satisfactory sales performance (though car sales are falling again due to the age of the Malibu and Impala and the thinning of Cadillac), the company's share price has remained stagnant. An entire generation of bondholders has been spurned. The enthusiasm is lacking and several years will be required to heal the social and economic "wounds" caused by how the bailout was managed.

Which isn't that important from a national government standpoint. Sucks for the new GM and it might become a long-term problem, but it smooths over a rough patch that the economy couldn't necessarily stand.

Under Wagoner's leadership (you have to give the guy some credit), GM reached important compromises on healthcare and retirement benefits and was on track to return to profitability by 2010. Circumstances beyond GM's control prevented that plan from being executed (though you could argue GM did it to themselves with what happened at GMAC), and standard bankruptcy procedures would have kept much of that on track. The way THIS bailout was handled took away much of the leverage GM and Chrysler would have gained over the UAW in a typical bankruptcy (but not all).

What this all means for our generation is that older workers will hang on to their jobs longer, making it more difficult for us to replace them.

It's happened before in past recessions. Every year that people our age are unable to find employment, our portfolios continue to go unfunded, costing us tens (in some cases hundreds) of thousands of dollars in lost retirement income by the time we reach our 60s.

The alternative would have, at best, been massive waves of early retirement, bringing on all the problems that come with the baby boomer generation. And that's the optimistic outcome. The government wouldn't want that to happen, as unlikely as it was. What's more likely is that GM would go through layoffs, and it would follow seniority trends, meaning that old people hold onto the jobs anyways. Most collective bargaining agreements contain a seniority layoff provision - last in, first out. It's how unions avoid collusion between employees and employers and the ills of favoritism. The problem you're pointing out was, in all reality, unavoidable. At least as it pertains to GM's retirees.

For the rest of us, are there really that many people that invested in GM bonds?

I'm very surprised by where you stand on the influence of moral hazards, especially after the subprime nightmare.

Paralysis is very real as evidenced by New GM's underperforming stock.

That's a short term problem, and it's only in GM. That's what I mean when I say it's not a moral hazard. Beyond the particular circumstances of this incident, there will be no great incentivization. Timid investment in a company that just emerged from bankruptcy is sort of expected, no?

Now, in the case of GM, bondholders eventually received shares, currently worth around 15% of the face value of their old bonds. Its far less than what they would have received by being paid through the sale of GM's still-worthwhile global assets. Foreign partners should have been encouraged, as was the case with Chrysler, to continue operations. It wouldn't be politically expedient, but it would be to America's benefit.

That's possible. How far less? I don't need a precise prediction, but when you say "far less," inquiring minds and all that. What's the neighborhood you were thinking of? GM received, what, $40B from the U.S. government?

So, the bondholders who made claims are left twiddling their thumbs, hoping for a recovery in price. And near-retirees who have invested in GM may put off retirement if they can, making it difficult for young college graduates to replace them. [This is especially true among public school teachers.]

What perhaps annoys me more than the Obama administration's handling of the bailout was the way Bush used TARP loans to blindly throw billions of dollars at GM without any kind of clear reorganization plan. The company should have been pushed into bankruptcy protection early on.
"Throwing money at the problem until it hopefully goes away" is usually characterized as a liberal fault -- bad policies have a way of transcending ideology.

We probably wouldn't be having this discussion at all if responsibility was taken years ago. Such is the case with lame ducks.

The government should have had more strings attached to all uses of the TARP fund. But that it wasn't done as best as it could be doesn't mean it shouldn't have been done at all. You haven't said this explicitly, but it's come up in this thread.