Taxpayers Still on the Hook for General Motors' Bailout $9.7B
#46
Lexus Test Driver
As far as the credit, while it doesn't make sense over all, to those quants that ran the math they can make money with sub-prime auto loans, those loans are often ofter 6-7-8% and they can afford to lose on some, since the asset is often recoverable they can lose on more than people know and still make money.
One point a local apartment conglomerate made was people with scores under 650 still need homes and cars, they mostly pay their bills, may not be on time but they do pay. So there is money to be made when the math works. Also with the middle class shrinking you will see more subprime loans, people want to live its just going to come with a price.
Lets face it, the economic crash was not your normal downturn, other than great depression like collapse, they will likely keep making money on subprime loans while also moving a ton of cars.
#47
Lexus Test Driver
Good post, J.P. Virtually all of what you say here is right on. The only glitch is that I do find the Cadillac XTS somewhat disappointing, though the XTS's general lack of refinement in its road-manners is probably not as much of an issue in the V-Sport version you mention, since V-Sport buyers are usually not looking for DTS-like silkiness in the ride. So, in that sense, you are also correct there.
You say two weeks to the auto show. You going up to Detroit this year? As usual, I'm going to wait for the D.C. show, which starts January 23 and overlaps the last couple days of the Detroit show.
You say two weeks to the auto show. You going up to Detroit this year? As usual, I'm going to wait for the D.C. show, which starts January 23 and overlaps the last couple days of the Detroit show.
We are doing some marketing down there which I did not have plans to go even with that but since it seems the GS-F will be there I want to go see the damn thing!
#48
Lexus Test Driver
Because of what happened in 2008-2009, though, the chances of that actually happening again within most of our lifetimes are very low. It's like getting by-pass heart surgery (I know...I've had it). Once the doctors open your chest up, by-pass your clogged arteries/veins, and graft in brand-new ones, it's usually good for the rest of your life.
BTW most companies don't run their businesses thinking about 2008 type downturns, if they did you would see no capital expenditures at all and progress would stop.
#49
Lexus Test Driver
I was not a fan of the bailout but I say get over it, its 2015, its in the past, we have an American company creating jobs and investing in manufacturing on our soil whom is also bringing some pretty nice products to markets. At some point if they continue to succeed our country will recoup the $9B in one way or another but hoping they fail will not.
As far as "recouping the $9B in one way or another", what does that even mean? The $9.7 billion is gone - the taxpayer is not getting that back.
Last edited by gengar; 01-01-15 at 01:38 PM.
#50
Lexus Fanatic
The total cost is way more than $9.7 billion. Think about Ford, who did not take bail out money, they were robbed of their capitalist success (as were other auto makers) because GM should have gone under. This is blatantly counter free market.
#51
Lexus Test Driver
Or even better yet, many of those sales would have simply gone to the reorganized, not-bailed-out GM, which would have continued operating without disruption through a Chapter 11 bankruptcy.
I'll "get over it" once people correctly recognize that the bailout was a disaster instead of cheerleading losing 9.7 billion of taxpayer dollars. As I said, with this type of delusional perspective, is it any wonder the USA is 17+ trillion in debt?
As far as "recouping the $9B in one way or another", what does that even mean? The $9.7 billion is gone - the taxpayer is not getting that back.
I'll "get over it" once people correctly recognize that the bailout was a disaster instead of cheerleading losing 9.7 billion of taxpayer dollars. As I said, with this type of delusional perspective, is it any wonder the USA is 17+ trillion in debt?
As far as "recouping the $9B in one way or another", what does that even mean? The $9.7 billion is gone - the taxpayer is not getting that back.
I think the tax impact and cost of the unemployed would offset some of that $9B. I think corporations and people pay some kind of taxes right? I would rather have GM and all the Tiers up here booming rather than suffering. If they are making money then the corps and the employees are paying more taxes while keeping people off unemployment.
#52
Lexus Test Driver
I think the tax impact and cost of the unemployed would offset some of that $9B. I think corporations and people pay some kind of taxes right? I would rather have GM and all the Tiers up here booming rather than suffering. If they are making money then the corps and the employees are paying more taxes while keeping people off unemployment.
What actually would have happened is a short-term reorganization and restructuring, allowing GM to ditch their worst liabilities while strengthening core profitable operations (notably, much like Ford managed to do in the mid-2000s - except that GM would have been more effective and efficient since Ford didn't have to declare bankruptcy to do so). GM's brand was obviously valuable enough that any new corporation would carry its name, and while surely many sub-brands would have been eliminated either way, typical consumers probably wouldn't have noticed a thing changed. As I discussed above, Chapter 11 bankruptcy is designed precisely so that businesses can continue operating without disruption, and pragmatically, that's exactly what happens. The notion that bankruptcy immediately results in liquidation is nonsense.
It's also ironic that you bring up GM's corporate taxation as a revenue stream. Keep in mind that GM was allowed to keep tax loss carry-forwards (something that is forbidden by law for companies in GM's situation - but hey, when the government wants something, it gets to ignore its own laws, right?). What this means is that GM has gotten to (and will continue to get to) deduct pre-bankruptcy losses from their current and future tax liabilities. Had GM gone through a typical Chapter 11 without intervention from the government, they would not have been able to carry forward these losses! The result of this is that the ultimate impact on taxpayer money is actually far more than $9.7 billion - I believe that GM reported that they would not have to pay around $14 billion in taxes due to the carry-forward. So while deductions are certainly favorable to destruction of taxpayer-funded capital, it's still $14 billion that is removed from taxpayer funds. The bailout is a gift that keeps on giving!
Finally, I don't understand why there is any talk of GM "suffering" or "failing". Of course a successful GM is good for the country so long as it's for the right reasons. The issue is whether GM would have "suffered" or failed without the bailout to the extent that bailout proponents claim, and the answer is clearly no - especially not to the tune of $9.7 billion of taxpayer money destroyed.
Last edited by gengar; 01-01-15 at 08:19 PM.
#53
Moderator
Because of what happened in 2008-2009, though, the chances of that actually happening again within most of our lifetimes are very low. It's like getting by-pass heart surgery (I know...I've had it). Once the doctors open your chest up, by-pass your clogged arteries/veins, and graft in brand-new ones, it's usually good for the rest of your life.
I wholeheartedly agree with gengar. I don't live in the past but bailing out GM was as disaster. Either way what's done is done. I personally feel if GM gets in financial trouble again we the taxpayers should not bail out GM another time...
Last edited by Trexus; 01-01-15 at 08:24 PM.
#54
Lexus Fanatic
The two at Chrysler (especially the second one) are markedly different from what happened at GM.....that's why I did not specifically include them in my earlier statement. The first one, in 1981, involved classic mismanagement of the company in the 1970s when Lynn Townsend was in charge (and it showed in the p**s-poor quality of their products at the time). Lee Iacocca and Hal Sperlich had come over to Chrysler from Ford when Henry Ford II (a completely self-centered tyrant of a CEO who ran his company like a fiefdom) fired them. Iacocca had found a disaster at Chrysler waiting for him.....Townsend admitted to Iacocca he couldn't run the company the way it was structured, was ready to retire, and asked Lido to take his place. Lido had to work VERY hard (with also a certain amount of sheer luck) not only to try and rebuild the disorganized, failing company, but just as hard persuading Congress to approve the first loan....with some very strict terms to it. (all this is graphically described in detail, in Iaccca's a autobiography, which I've read). So Congress, in the first loan, didn't just idly or blindly toss money at Chrysler. It was a VERY structured loan, in a specific amount, with very specific terms, and, even so, just barely saved the company, along with Lidos reforms...but, despite all of Lido's TV ads and slick talk about quality, the fact was the company still made poorly-constructed cars a the time....some of the worst I've remember in my lifetime.
The second time, in 2008-2009, was something totally different.....under totally different circumstances......and I wouldn't even call it a loan because, technically, as I saw it at least, it wasn't a loan. Unlike in 1981 when it still had some life left if the loan could save the company, by 2008, Chrysler was clearly finished as an independent American-based corporation, and the money, unlike in 1981, simply was added to what Fiat was already putting up with its take-over buyout. Chrysler, like with the Daimler-Mercedes and Cerebrus buyouts some years earlier, was simply becoming part of Fiat, with Sergio Marchionne as the new CEO.
That was different from GM, which remained basically an independent corporation, though partially Government-owned for a few years until most of the loan was paid off. Another big difference between the two is that GM lost half of its divisions in the buyout, while Chrysler, even under Fiat, kept its Dodge, Jeep, and Chrysler, having shed Plymouth and Eagle years earlier in business-decisions not related to any Federal money. So, in hindsight, I would consider most of what happened to Chrysler in 2008 simply a sellout to a foreign corporation, not a U.S. government/UAW takeover like what happened at GM.
#55
Lexus Fanatic
iTrader: (20)
Second, If dealers are selling or leasing new vehicles to those who basically can't afford them, then that's not the corporation's fault.....that's the fault of the sales managers and business managers at the dealerships who approve the sales. GM and Chrysler can't control that from their corporate headquarters...dealerships are usually privately-run, privately-owned businesses.
And, besides, most of those failures aren't going to affect the corporation as much as the dealership. Once the dealership orders a new car from the factory and pays for it wholesale, the corporation gets its money (and profit) onr the car.
you're entitled to your opinion although off-topic, and maybe you don't want to buy the 2nd best selling vehicle in america (silverado truck) or what is considered one of the best mass produced sports cars ever (C7), or their widely praised impala, or the pretty awesome cadillac cts... gm may not be for you or me, but millions find their vehicles 'worth buying'.
I was not a fan of the bailout but I say get over it, its 2015, its in the past, we have an American company creating jobs and investing in manufacturing on our soil whom is also bringing some pretty nice products to markets. At some point if they continue to succeed our country will recoup the $9B in one way or another but hoping they fail will not.
again, incorrect. gm certainly has made some horrendous decisions and bad deals with the uaw in the past which came back to haunt them, but the bankruptcy was more about the housing crash than gm, which was definitely headed in the right direction at the time of the economic crash.
So what possible incentive would GM have to change? None, if they tank again (which looks inevitable) then hello government money.
is it any wonder the USA is 17+ trillion in debt?
don't get me started on medicare/medicaid fraud, or that we have 50 MILLION people receiving food stamps now (you believe they all should really get them?), or that the govt is shelling out billions on bogus 'disability' claims... then there's public education (how about that high school in LA that cost over 500 MILLION to build ), and on and on...
as for ford, they had JUST refinanced some debt at very favorable rates right before the crash and dodged the fatal bullet, JUST, due to timing, plus alan mulally's GREAT leadership. i do agree they were then left competing against government bailed out competitors. ford WAS offered the same deal however, and turned it down. they of course have the number 1 selling vehicle in america, and many other great vehicles - they're doing just fine.
#56
Lexus Fanatic
Respectfully, I have to disagree. Much of what dealers actually loan out for car-financing comes from local banks. That's why their terms and interest rates are often different from regular GM financing....the bank is the one really calling the shots, through the dealership.
sorry, that's not how dealers work. the cars on their lot are basically on 'consignment' with a fee paid for each day they remain on the lot giving dealers more and more incentive to sell the car. when a car is sold, the dealer gets the sale price less the wholesale price less any finance fees, typically not much! dealers basically make very little on selling cars - the real money is in service.
Last edited by bitkahuna; 01-03-15 at 10:28 PM.
#57
Lexus Fanatic
again, incorrect. gm certainly has made some horrendous decisions and bad deals with the uaw in the past which came back to haunt them, but the bankruptcy was more about the housing crash than gm, which was definitely headed in the right direction at the time of the economic crash.
#58
Lexus Test Driver
EDIT: I'll add here that I missed mmarshall's earlier comment that GM's "remaining employees" took a pay cut of as much as half during the bailout. This is inaccurate, as only new employees at the lowest tier of hiring were subject to those pay cuts. By and large, all workers who were already at GM had their pay secured, not to mention that many pensions were actually funded higher as a result of the bailout, something usually unheard of during a Chapter 11 reorganization. So if you want to know where the $9.7 billion went - well, that's where.
And as I already noted above, using the $9.7 billion figure is not accurate in terms of tax revenue. GM was granted tax loss carry-forwards worth apparently $14 billion in reduced tax liability, despite being against the law. So that's $14 billion more in taxes that is not being paid by bailout GM as compared to if GM had not been bailed out and instead gone through a normal Chapter 11 bankruptcy.
(This is also ignoring that the taxpayer loss on GM stock was actually $11.2 billion - the $9.7 billion reported in the article posted by Vh_Supra26 factored in gains from Ally Financial.)
the u.s. has just spent $1 TRILLION on afghanistan (so far). so the $9B loss on GM seems a bit tiny, no? the u.s. is building tanks the military has said it doesn't want but can't seem to stop. the f35 fighter was a vast waste of money since drones are the future. we have over 25,000 troops on the S.Korea/N.Korea border which i don't think S.Korea pays for (but should). not picking on military, but it's a giant sink hole of waste.
don't get me started on medicare/medicaid fraud, or that we have 50 MILLION people receiving food stamps now (you believe they all should really get them?), or that the govt is shelling out billions on bogus 'disability' claims... then there's public education (how about that high school in LA that cost over 500 MILLION to build ), and on and on...
don't get me started on medicare/medicaid fraud, or that we have 50 MILLION people receiving food stamps now (you believe they all should really get them?), or that the govt is shelling out billions on bogus 'disability' claims... then there's public education (how about that high school in LA that cost over 500 MILLION to build ), and on and on...
BTW, South Korea does pay for US military presence. I think it's about US $1 billion a year. No idea if this actually reimburses the total cost (I doubt it). Getting OT though.
Sorry, missed this earlier. Hope you had a good New Year's. If you want my thoughts on bailouts in general (such as where I "draw the line" on bailouts - the quick answer is I don't because I basically don't support any bailouts), I am more than happy to discuss in the Debate Forum.
Last edited by gengar; 01-02-15 at 01:31 AM.
#59
Lead Lap
This is complete bull, sorry. GM was trending towards bankruptcy for a long time a market crash is not the primary reason they went under. The bankruptcy was mostly about bad management and the economic crash just pushed them from standing on the edge to finally falling off the cliff.
Last edited by nipponbird; 01-02-15 at 03:05 AM.
#60
Lexus Fanatic
Originally Posted by gengar
EDIT: I'll add here that I missed mmarshall's earlier comment that GM's "remaining employees" took a pay cut of as much as half during the bailout. This is inaccurate, as only new employees at the lowest tier of hiring were subject to those pay cuts. By and large, all workers who were already at GM had their pay secured, not to mention that many pensions were actually funded higher as a result of the bailout, something usually unheard of during a Chapter 11 reorganization. So if you want to know where the $9.7 billion went - well, that's where.
Sorry, missed this earlier. Hope you had a good New Year's. If you want my thoughts on bailouts in general (such as where I "draw the line" on bailouts - the quick answer is I don't because I basically don't support any bailouts), I am more than happy to discuss in the Debate Forum.
Last edited by mmarshall; 01-02-15 at 06:51 AM.