GM Spirals the Drain (Part 2)

[Asher]

Originally posted by Vanguard


Yes, it's a stupid argument. But it was a stupid argument when he made it and you didn't have any trouble with it then. What's your problem now?

It made sense when he used it. When you used it, it showed me you don't know what's going on here.

[Arrian]

Ya think Vanguard's been waiting all this time to use his "comeback?"

-Arrian

[KrazyHorse]

Sometimes I feel bad when I destroy people so completely that they continue to pwn themselves even after I put them on my ignore list.

Other times it makes me happy. Now is one of those times.

[Garth Vader]

Originally posted by KrazyHorse


a) I'm not sure you understand what the bailout of financial firms involved. The US gov't got an equity stake in Goldman in return for providing needed liquidity. And there is every reason to think that an investment in Goldman at the price the Treasury paid will provide handsome returns. Warren Buffett certainly thinks so. On the other hand, the reason nobody wants to lend money to GM is that GM isn't going to pay them back.

b) Don't say "CEO" or "Executive" pay when you mean pay to partners

I thought the government got a considerably worse deal than Buffet got.

So what's the difference between executives and partners? Is it that partners have an stake in ownership?

[snoopy369]

Originally posted by Garth Vader
So 100's of billions in bailouts to the financial industry that either went right to CEO bonuses or were completely untracked is fine, but a much smaller bailout of the auto industry where the government gets some actual control in the process is not?

No. Neither one was right.

And, note that I consider the government getting some actual control in the process to be part of the problem. I don't like any bailout, but I'd much rather a straight-cash bailout than a government control bailout. It's, again, the whole part about me not being communist...

Government has no business whatsoever being in business. It's one thing if the government makes an investment (putting cash into a business, and expecting a part of the profit back, but otherwise not involving itself in the business decisions); I still don't like it, but it's far less bad than the government actually making business decisions to me. The government is spectacularly bad at making business decisions; and it's a very small step from this to socializing entire sectors (like, say, the auto industry) which is really, really bad. Really bad. Really.

[Dinner]

Originally posted by DanS
Looks like GMAC, GM's financing arm, may file bankruptcy before the end of the year, as its conversion to a bank is not meeting the requirements.

Yeah, GMAC screwed up bad. They started off just financing cars to consumers and stock for dealerships but supposedly they branched out into all sorts of financial services including buying a whole bunch of the toxic stuff. :\

[Dinner]

BTW here's a PDF of proposed auto bailout: http://msnbcmedia.msn.com/i/msnbc/se...ilout_bill.pdf

Here's an article from BusinessWeek about "How the auto bailout plan could succeed".

http://www.msnbc.msn.com/id/28160117/

[KrazyHorse]

Originally posted by Garth Vader
So what's the difference between executives and partners? Is it that partners have an stake in ownership?

Partners have an ownership stake and have less direct control over the day-to-day running of the business as a whole than executives do.

In a firm like GS partners are just people who have worked for the company for a long time. They've probably risen to some sort of senior management position.

When the US purchased part of Goldman (don't know if they got direct equity or warrants) they diluted the ownership stake of the partners. Each and every one of those people took a hit.

[DanS]

Reading through the bill, the Purposes mentions that one of the purposes of the bill is to "safeguard[] the ability of the domestic automobile industry to provide retirement and health care benefits for the industry’s retirees and their dependents."

This is precisely what we don't want to do. The UAW's health care for retirees is one of those gold plated items that would have to go. Few other workers in the United States get similar benefits. I sure won't.

[KrazyHorse]

Aren't employee pensions supposed to be senior to bondholder claims in a bankruptcy filing?

[DanS]

Support for pensions is separated into a pension fund. The pension fund is independent of the firm.

But the big thing here is the medical benefits for retirees and dependents. As far as I know, none of the Japanese or European transplants offer medical benefits to retirees. Therefore, the American companies would still compete at a disadvantage.

[KrazyHorse]

Teh medical benefits for retirees are, I'm assuming, contractual. So they have a claim on GM. YOu can't eat ito them without first wiping out all bondholders.

[DanS]

In the US, the bondholders would be senior to the labor contract. The labor contract can be jettisoned by the bankruptcy judge upon request of the bankrupt company.

[Arrian]

I've got an idea:

Do away with the "gold plated" healthcare for retirees *and* Congresscritters. Deal?

-Arrian

[snoopy369]

Actually, I don't mind the congresscritter healthcare, as long as other Gov't employees get it also (which they do, as I understand). It's one of the few reasons good people go to work for our government, and we need good people in there so the stupid ****ers don't **** it up too much.