Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 02-15-2009, 05:07 AM   #21
Full time employment: Posting here.
Frugality_of_Apathy's Avatar
 
Join Date: Jul 2008
Posts: 622
Quote:
Originally Posted by samclem View Post
GM cannot survive as a company with the labor costs they pay now. If they can make cars at lower cost overseas and make a profit when they sell them here, that's what you (we, all of us) should care about as shareholders. If we aren't shareholders, then we don't have a say in the issue of where they build their cars.

It's likely bankruptcy is the only way GM can end up with labor rates and debt service costs that will allow them to build cars in the US and be competitive in the future. Reorg under the bankruptcy laws is the best way to save the company. Unfortunately, many politicians owe the unions a lot for support in previous elections, and hope to have their support in the future. These unions don't want to cure what ails GM, they want to keep the terminally sick GM on life support as a "pass through" to allow new government bailout funds from taxpayers to go to the unions and their members. Any taxpayer $$ supplied to GM under this scheme should be seen for what it is--a payoff to unions using your money, and a step which delays the day when the company can be a real business again.

Here's a fun bit of trivia. GM and Toyota sold within a couple thousand cars of each other last business cycle, and while Toyota had billions in profit GM had billions in loses.
__________________

__________________
Frugality_of_Apathy is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-15-2009, 05:20 AM   #22
Thinks s/he gets paid by the post
OAG's Avatar
 
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,598
Even Toyota is cutting workers (including management (CEO)), work schedules, and has stopped working on a new plant in MS to build new Pirious (sp). Last I saw their sales were down about 8%. They are still profitable, pay well, and will be there to "pick up the pieces" when GM "gives up the ship".
__________________

__________________
Vietnam Veteran, CW4 USA, Retired 1979
OAG is offline   Reply With Quote
Old 02-15-2009, 08:20 AM   #23
Recycles dryer sheets
 
Join Date: Jan 2009
Posts: 170
Quote:
Originally Posted by clifp View Post
I don't think so, although I have been unable to find a detailed article, probably because the negotiations are confidential, the Bloomberg article says this.
My "guess" would be that they would want to wipe out the higher interest longer term bonds with this equity for bond swap.
__________________
Gpond is offline   Reply With Quote
Old 02-15-2009, 09:11 AM   #24
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
As much as I hate what I expect to happen, GM and the other auto companies will continue to be given taxpayer money. It's not to save jobs because GM recently announced 10,000 salaried layoffs and longterm union worker plant closings. It's not to save retiree health benefits because the government thinks they are the only ones that deserve them. It's all about the UAW.

The UAW and other unions are big dem supporters. They get out dem votes in their key states. The elected officials that are from those states depend on the UAW and other unions. If GM, Ford and/or Chrysler go under, there goes a big hunk of union jobs even if they come right out of BK producing cars with the same number of workers. That does mean unions are losing a major share of the auto industry and the rest will soon follow. The uselessness of unionization in today's global economy will be evident for all to see.

Bush should have killed them when he had the chance. We'll be writing checks to keep the car companies at the mercy of the UAW for decades.

Why should the UAW agree to anything when they know they will continue to be taken care of by the US taxpayer? Here's the interesting part. If the companies can't fail, neither can their bonds. If you have guts of steel, there's a lot of money to be made as long as they don't go under. The government can't force bond holders not to force the auto companies into BK.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Old 02-15-2009, 09:17 AM   #25
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,613
The thing is, collectively as a country we're trying to have it all. To wit:

* We don't want to see the complete demise of American manufacturing.
* We want to see the preservation of good jobs in these industries.
* We want people to BUY what these jobs produce, even at higher prices than foreign competition with a much cheaper labor cost structure.

Short of enforcing "Buy American" as a policy, introducing protectionism and fueling a global trade war -- ill-advised, IMO, especially in this economy which could make it "Smoot-Hawley II" -- I don't think all three of these are feasible together. The genie of the "global economy" can't be put back into the bottle no matter how much we want to make it so.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 02-15-2009, 12:00 PM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Quote:
Originally Posted by ziggy29 View Post

Short of enforcing "Buy American" as a policy, introducing protectionism and fueling a global trade war -- ill-advised, IMO, especially in this economy...
I think this was the topic of another thread, but since you mentioned it here, it is relevant:

Obama was in Peoria the other day, talking with people at Caterpillar, and the CEO. While the CEO was positive on some aspects of the Stimulus bill, he was totally against the "Buy American" rules.

Think about that a second. Here is an American Manufacturer, against a "Buy American" policy. It's not a contradiction - he knows that there is more harm than good in that policy, it's a net negative for American Manufacturers.

Now, shouldn't Congress and the President listen to the people who are doing this for a living? And Caterpillar is exactly the kind of story America needs - they provide good jobs, they manufacture in the US, and they *export* those goods at a profit. Yes, I think we should listen.


Quote:
The genie of the "global economy" can't be put back into the bottle no matter how much we want to make it so.
Yep. The only thing that I can see that will keep our standard of living from coming closer to the global mean, would be some new technology advancement that gives us some sort of regional advantage.

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 02-15-2009, 01:13 PM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by ERD50 View Post
Yep. The only thing that I can see that will keep our standard of living from coming closer to the global mean, would be some new technology advancement that gives us some sort of regional advantage.
-ERD50
Agreed. Luckily, the US still has tremendous advantages compared to many developing countries. Our transportation system is good, our property rights (incl intellectual property) are very well established and robust compared to many developed and developing nations, our work force is literate, our domestic and "nearby" energy availability is better than most nations. Despite the loss of much of our manufacturing base, we still have a broader range of producers and expertise than many other countries. As we've seen, our capital markets have some problems, but they are still the envy of much of the world when you look at their transparency and efficiency. There's a built in consumer market that no developing nation can match. Heck, even the availability of illegal immigrants is a plus. So, the hourly labor rates in the US won't have to match Indonesia for our companies to be successful in the world market. But, neither can our industry successfully compete if they pay factory workers $70,000 per year with lifetime medical and huge retirement benefits--the gravy train is over.
We'll have to get closer to the worldwide labor rate average, but we won't have to go all the way there. The longer we wait to "get religion", the more advanced these other countries become, lessening our systemic advantages and assuring our workers will have to take lower hourly rates. The UAW and their ilk are sealing the fate of the next generation for the sake of a few bucks now.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 02-15-2009, 01:49 PM   #28
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
George owns a restaurant in a small town. Twenty years ago he served very good food at a reasonable price. He had lots of customers and life was grand.

George got rich and began to play golf, taking cruises, and throwing big parties. While his service and food went downhill and his prices went up to support his new lifestyle. Georges's employees, seeing George's lifestyle demanded more, and George gave it to them.

Soon other restaurants opened in the town. They served good food and a reasonable price. George was not worried because he owned 'The Restaurant' in town. However more people were beginning to eat at their restaurant than George's.

As George began to loose money, he cut corners, lowered quality, cut service all the while increasing his salary and the salary of his employees.

George now finds himself facing bankruptcy, and is demanding that the city bail him out. And, isn't it quite obvious they should? Poor George!

So if you think George deserves a bailout, send me an email and I let you know where to mail your check.
__________________
Rustic23 is offline   Reply With Quote
Old 02-15-2009, 01:57 PM   #29
Thinks s/he gets paid by the post
OAG's Avatar
 
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,598
Rustic good analogy, but the rest of the story is that the city "fathers" always take care of "George" because all of the city father's kin work for George. So, yes, George will get bailed out, and keep serving the lower quality food and keep taking his vacations now using his private jet, purchased with bail-out money, to do so.
__________________
Vietnam Veteran, CW4 USA, Retired 1979
OAG is offline   Reply With Quote
Old 02-15-2009, 01:59 PM   #30
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,620
Quote:
Originally Posted by samclem View Post
The UAW and their ilk are sealing the fate of the next generation for the sake of a few bucks now.
Hunh, I'm pretty sure that's what was done by the last generation of GM management & UAW leaders... what's the dollar value of retiree obligations priced into each new GM vehicle today?
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 02-15-2009, 02:04 PM   #31
Recycles dryer sheets
 
Join Date: Oct 2007
Posts: 80
Quote:
Originally Posted by Frugality_of_Apathy View Post
Here's a fun bit of trivia. GM and Toyota sold within a couple thousand cars of each other last business cycle, and while Toyota had billions in profit GM had billions in loses.
I've read that GM and other American car manufacturers have some extremely efficient plants in Brazil, etc. but they can't build those same plants in the U.S. because the UAW won't let them. (Because too many employees would need to be laid off because they weren't needed anymore)

IMO, to me that is ridiculous. I understand some of the value of the unions, but the UAW seems psycho...

EDIT: I really really hope we let GM declare bankruptcy and then re-organize. It's the only way they'll ever be long-term viable...
__________________
HornedToad10 is offline   Reply With Quote
Old 02-15-2009, 02:34 PM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by samclem View Post
Agreed. Luckily, the US still has tremendous advantages compared to many developing countries. Our transportation system is good, our property rights (incl intellectual property) are very well established and robust compared to many developed and developing nations, our work force is literate, our domestic and "nearby" energy availability is better than most nations. Despite the loss of much of our manufacturing base, we still have a broader range of producers and expertise than many other countries. As we've seen, our capital markets have some problems, but they are still the envy of much of the world when you look at their transparency and efficiency. There's a built in consumer market that no developing nation can match. Heck, even the availability of illegal immigrants is a plus. So, the hourly labor rates in the US won't have to match Indonesia for our companies to be successful in the world market. But, neither can our industry successfully compete if they pay factory workers $70,000 per year with lifetime medical and huge retirement benefits--the gravy train is over.
We'll have to get closer to the worldwide labor rate average, but we won't have to go all the way there. The longer we wait to "get religion", the more advanced these other countries become, lessening our systemic advantages and assuring our workers will have to take lower hourly rates. The UAW and their ilk are sealing the fate of the next generation for the sake of a few bucks now.
How can Germany be so successful with a robust manufacturing economy, a high standard of living and high wages, an age structure worse than the US, good health care, and nonetheless a postive balance of trade? Is it that thery are better governed or are they inherently a more effective people?

I realize that like everyone they are having current cyclical problems, but they seem far out ahead of us.

ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 02-15-2009, 03:06 PM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by haha View Post
How can Germany be so successful with a robust manufacturing economy, a high standard of living and high wages, an age structure worse than the US, good health care, and nonetheless a postive balance of trade? Is it that thery are better governed or are they inherently a more effective people?

I realize that like everyone they are having current cyclical problems, but they seem far out ahead of us.

ha
I don't agree that Germany has a healthier economy than the US. Many people believe it, but the stats don't support it.

Per this article (written in 2004) At least in 2001, the per-capita GDP of Germany was the same as Arkansas.

In addition:
Quote:
In other words poverty is relative, and in the U.S. a large 45.9% of the "poor" own their homes, 72.8% have a car and almost 77% have air conditioning, which remains a luxury in most of Western Europe. The average living space for poor American households is 1,200 square feet. In Europe, the average space for all households, not just the poor, is 1,000 square feet.
So what is Europe's problem? "The expansion of the public sector into overripe welfare states in large parts of Europe is and remains the best guess as to why our continent cannot measure up to our neighbor in the west," the authors write. In 1999, average EU tax revenues were more than 40% of GDP, and in some countries above 50%, compared with less than 30% for most of the U.S.
Now, per-capita GDP surely doesn't capture every nuance of the situation, but German workers produce less on average than their US counterparts. Before the current "turbulence", Germany had higher unemployment than the US (I don't know the situation today). While the US is busy marching toward increased government ownership of businesses and a higher social safety net (please don't call it socialism, it upsets people), Germany and the EU have been down that road and have retreated--they are busy re-privatizing industries in hopes of again being competitive on the world market.
Edited to add:
Here's a chart with unemployment rates 2001-2005. I don't think the situation has changed much in a relative sense.

I don't think we should look to Europe as a model for our future--that's the road to nowhere. They've seen that, and are now striving to look more like the US. No sense repeating the mistakes of others.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 02-15-2009, 03:29 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by samclem View Post
I don't agree that Germany has a healthier economy than the US. Many people believe it, but the stats don't support it.

Per this article (written in 2004) At least in 2001, the per-capita GDP of Germany was the same as Arkansas.

To me all this proves is that these stats are very imperfect at describing the overall condition of an economy. For example, America's GDP depends on idiots borrowing themselves to the hilt to stock their garages with junk in their McMansions financed with underwater sub-prime mortgages. Germany's depends on manufacturing and high end services.

When Germany starts financing their existence by trading IOUs with stronger manufacturing nations I will take a look. IMO, not likely to happen.

Another thing, just look at healthcare. Say Germany spends 2/3 of what we do, yet achieves results roughly equal to ours. Their GDP is commensurately larger. Is is even possible to think this means they have a stronger economy?

Arkansas= Germany. Not too sure this is very helpful either Have you driven across Arkansas, say on I30? Compare to the Autobahn. If you tired to drive 100 mph on I-30 you'd wind up in the trees somewhere with broken springs and a bent axle.

Last but not least, would you prefer to live like the median German, or the median Arkansan?

Unless you really love hog jowl, I'd recommend Germany.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 02-15-2009, 04:52 PM   #35
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
We lived in Germany from 80 - 83. I would have to say the German standard of living is not comparable to the U.S. Now I don't know how that effects there economy, I just know that looking at the average German compared to the average American the American has a better way of life. I would also question what their economy would be like if all the U.S. bases closed. Many Germans live in duplexes with an American couple paying rent on half. Often, we were told that rent paid the entire mortgage payment. In our home we had to run water into a holding tank, heat it, then drain it into the sink to wash dishes. German family did not tend to have two cars. Most towns were small, people walked to the market and there was little need for mass transit. Larger towns were similar to the U.S. The Autobon is great, but most of the interstates in Texas are better. While there is a 100mph speed limit, there are many times near the city that you were lucky to do 20.

My point is that comparing Germany and the U.S. or any other country is difficult unless you compare everything.
__________________
Rustic23 is offline   Reply With Quote
Old 02-15-2009, 05:09 PM   #36
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
Just a little anecdote. My mom is in the process of buying a brand new car in Europe. Car dealerships and manufacturers have so little stock, she has to wait 16 weeks to receive her run-of-the-mill car. Car manufacturers have tightened the supplies and they pretty much build on demand.
__________________
FIREd is offline   Reply With Quote
Old 02-15-2009, 05:16 PM   #37
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
Quote:
Originally Posted by haha View Post
How can Germany be so successful with a robust manufacturing economy, a high standard of living and high wages, an age structure worse than the US, good health care, and nonetheless a postive balance of trade? Is it that thery are better governed or are they inherently a more effective people?

I realize that like everyone they are having current cyclical problems, but they seem far out ahead of us.

ha
Couple of things come to mind. Germany has very few illegal aliens and few legal aliens for that matter compared to the rest of Europe. They do not spend much on defense and don't get involved in foreign wars. They, as most of "old Europe" let the Americans take care of that stuff (because they know we will). They also have a very efficient "apprenticeship" program that trains future workers.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 02-15-2009, 05:19 PM   #38
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by haha View Post
To me all this proves is that these stats are very imperfect at describing the overall condition of an economy.
I'm sure they are imperfect. But we have to start somewhere. German unemployment is higher and they produce less per capita. Maybe we don't like the things Americans produce (financial products vs cars) , maybe we think they should spend their earnings in some other way, but the numbers are what they are. Germany does have a positive balance of trade--so do the well-known economic powerhouses Iran, Burma, and Kazakhstan.

All I know about Germany is what I've seen from walking around there. I'm not really sure how a "median income" German would live. But, if given the choice between
A) a 500 sq foot 12th floor apartment in one of the glorious concrete tenements of East Germany and no car or
B) a doublewide on an acre of land in Arkansas with a '72 Dodge Dart

then I'd happily choose that hog jowl and an occasional Moon Pie.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline   Reply With Quote
Old 02-15-2009, 05:31 PM   #39
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
There is no doubt that the American lifestyle is far superior to the German/European lifestyle. I lived/worked in both places, travel between the 2 continents all the time and I am familiar with incomes, taxes and lifestyle expenses on both sides of the Atlantic. And the difference is clear. But, I don't think that the American lifestyle in its current form is sustainable in the long run.

You can even compare the US with Switzerland if you want. Switzerland is probably the European country that bears the most resemblance with the US (in terms of GDP per capita, incomes, healthcare, etc...). There is no doubt that the Swiss lifestyle is far more restrained than the American lifestyle.
__________________
FIREd is offline   Reply With Quote
Old 02-15-2009, 06:44 PM   #40
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by samclem View Post
But, if given the choice between
A) a 500 sq foot 12th floor apartment in one of the glorious concrete tenements of East Germany and no car or
B) a doublewide on an acre of land in Arkansas with a '72 Dodge Dart

then I'd happily choose that hog jowl and an occasional Moon Pie.
Not even Germans want to live in the former DDR, except perhaps in Berlin.

ha
__________________

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Help with Financial Aid Decision TromboneAl Other topics 31 05-20-2007 02:10 PM
Bankruptcy and Home Ownership ferco FIRE and Money 5 01-04-2007 12:32 PM
GM Bankruptcy fears ESRBob FIRE and Money 31 12-13-2005 08:41 AM
Spendthrifts Get Financial Aid TromboneAl FIRE and Money 38 06-16-2005 03:38 PM
Bankruptcy Code amendments Martha Other topics 6 04-19-2005 08:42 AM

 

 
All times are GMT -6. The time now is 10:11 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.