U.S. Government forces head of GM to resign

[ERD50]

Well, to be fair, the rubber stamp boards that many companies have, have led to rather disasterous results.
Now, I don't know that the quality of the board will be any better, but the current ones haven't done well.

Those same CEO/BOD made money building and selling cars in the rest of the world.

Same board, same CEO. So what's the difference? (rhetorical question/answer - UAW and the US Govt).


-ERD50

 

[Zathras]

Actually ERD that is a great question. Just what is the control/management structure for GM overseas?
Obviously the market is different, and I am guessing the unions are different (but still present??). The regulations are different in some/most areas?

 

[armor99]

In order for just about any company to make money, they must be free to make their own decisions about what to do in their business. Why did the foreign imports do so much better than american cars for years? Because they built a product that more people wanted to buy. Had detroit changed direction years ago, they might have been more competitive.

The govt solution seems to be the idea that they should be able to control what it is that businesses produce. There are to be govt mandates of what sort of car they are "allowed" to manufacture. So the idea is.... they only sell X types of cars, and the govt controls that all the cars are "good for us". Meaning more fuel efficient, smaller, etc. Obviously if they are only making certain cars, most have to drive, and we can pick from those.

For me... this has shades of the famous "Taco Bell" of the future in the movie Demolition Man. Where ONLY healthy foods can be served due to govt regulation. Do you really want to live in a world where only govt sanctioned choices are available? What if my personal persuit of happiness means a Saturated Fat Big Mac now and again? What if my passion is cars and I am successfull enough to purchase one that has high performance but gets 10 mpg? I think it is very important to remember that everyone in America has rights. Not just the majority of people. I am not responsible for poor decisions that others make, and I will resist for as long as I can being forced to become my "brothers keeper". The idea of anyone else.. govt or otherwise becomming my "keeper" I find abhorant in the extreme...

 

[Zathras]

The govt solution seems to be the idea that they should be able to control what it is that businesses produces.

I disagree. I have not seen the government tie any of the bailout money to what cars can be built.
Completely seperate from the bailout, the government does have standards for safety and pollution that vehicles must meet, but not tied to the bail-out money.
What the government HAS said is that the companies must show a plan to viability. I believe that is to be expected since GM and Chrysler went to the government asking for money.
No one is telling the companies that they have to stop building Cameros.
As for Taco Bell's menu, I am sorry that you find fictional movies so terrifying

 

[samclem]

I disagree. I have not seen the government tie any of the bailout money to what cars can be built.

They have repeatedly said this is an objective, and will continue to do so.
Emphasis added:

WSJ:

To forestall a voter backlash, Obama aides and Ms. Pelosi separately made clear they intend to impose significant conditions on federal aid. Auto makers would have to offer the government equity stakes or warrants, one Obama adviser said, and would have to accept the same rules on executive compensation that financial-service companies have swallowed with the Wall Street rescue.
Auto makers receiving aid would also have to agree to strict rules aimed at building "green and clean" automobiles, one Obama adviser said.

 

[armor99]

I disagree. I have not seen the government tie any of the bailout money to what cars can be built.
Completely seperate from the bailout, the government does have standards for safety and pollution that vehicles must meet, but not tied to the bail-out money.
What the government HAS said is that the companies must show a plan to viability. I believe that is to be expected since GM and Chrysler went to the government asking for money.
No one is telling the companies that they have to stop building Cameros.
As for Taco Bell's menu, I am sorry that you find fictional movies so terrifying

In the games of chess, poker, and even engineering to a certain extent, are all about seeing 3-4 moves ahead, and not just the choice we are currently confronted with.

I am looking 3-4 moves right now, and I do not like the direction this is going. My king is running out of moves, and the govt has it's castles, knights, and pawns all bearing down on me. To make my chess analogy even stronger, when the govt controls the board, and the laws of the game on which it is played, what chance do I have?

People need to be reminded of who exactly is working for whom? I have a copy of the declaration of indepandance and the constitution, and I see no mention of a govt's right to take over any private business at any time. The rallying cry of "In the publics best interest", does not hold any water for me.

Seeing ahead that 3-4 moves again, the govt can inoke that again at any time of their choosing, and that does bother me. So you are right... there is no such govt mandate that "they have to stop building Cameros". But the rules and laws have been stacked in such a way, as to make it impossible even if they wanted to.

 

[Zathras]

Auto makers receiving aid would also have to agree to strict rules aimed at building "green and clean" automobiles, one Obama adviser said.

Did the advisor also say they were going to prevent the auto makers from building any other cars?
I don't mind the government telling the auto companies that they need to build a vehicle that leads the world in technology, or greenness, or whatever. What I find abhorent is the the company NEEDED to be told this in the first place.

Seeing ahead that 3-4 moves again, the govt can inoke that again at any time of their choosing, and that does bother me. So you are right... there is no such govt mandate that "they have to stop building Cameros". But the rules and laws have been stacked in such a way, as to make it impossible even if they wanted to.

There is a difference between your imaginations of what their end goal is and what they are actually doing.
Sure, it is possible they are one in the same, but I don't see it as likely.
Saturn, one of GM's most fuel efficient lines is being sold/scrapped and the government is not saying anything about that being a bad idea. Hummer is also going away.
GM lost it's image as a leader and focused too much on big vehicles. They couldn't make money on small vehicles, not because of government regulation, but because of their own bowing into demands of the UAW.
If you ask me, the government has no place bailing out the auto companies and should just keep it's nose out of it.
But since the auto companies came ASKING for the government to step in, I don't think they have any right to complain with the reasonable steps the government is taking to protect taxpayers investments.

 

[samclem]

They couldn't make money on small vehicles, not because of government regulation, but because of their own bowing into demands of the UAW.

Not exactly. They couldn't make money on small vehicles in large part because of government regulations put in place by the government to appease the UAW.

"The Two Fleet Rule" (Pew)
"GM Bankruptcy? Tell Me Another"

And, their small cars were crappy--but possibly at least in part because the only way they could come close to the price of the imports (given the mandate to use higher-cost union labor--see above) was to cut the cost and quality of everything else that went into the cars.

There's plenty of blame to go around. But government played a huge part in scuttling the big three, and to think government intervention (especially dictating what they should build irrespective of consumer desires) will improve their situation seems to go against the evidence.

 

[Zathras]

Not exactly. They couldn't make money on small vehicles in large part because of government regulations put in place by the government to appease the UAW.

"The Two Fleet Rule" (Pew)
"GM Bankruptcy? Tell Me Another"

Interesting, but the first link discusses the two fleet rule and states at one point...

The United Auto Workers (UAW) and domestic automakers, on the other hand, claim that dropping the two-fleet rule would cost U.S. jobs.

Later it mentions:

On June 21, 2007, the U.S. Senate passed a comprehensive energy bill by a vote of 65-27.

Which included eliminating the two fleet rule, exactly what the UAW didn't want.

Listen, I agree that the government should not have stepped in here. But they did at the request of the companies.

And as part of the bailout, there is again, no requirements that they build or don't build any particular type of vehicle.
If you want to argue OTHER regulations make these demands, that is fine. There are a number of rugulations which are questionable. But none tied the bailout that I have seen, nor exclusive to GM and Chrysler.

 

[samclem]

Which included eliminating the two fllet rule, exactly what the UAW didn't want.

Sorry, but not quite right. The two fleet rule was inserted back into the legislation before final passage (apparently after the Pew article was written). Among those who crafted this re-insertion of the onerous provision were Rep John Dingle and a Senator named Barrack Obama. This was done at the behest of the UAW. They got what they wanted then and will continue to get what they want under this administration--too much is owed to them.

The two fleet rule was eliminated for trucks in 1996. Guess what--US auto makers compete well against foreign makes in the truck market.

But, I think fundamentally we agree--government shouldn't be in the car biz, and the sooner they get out the better for US industry and taxpayers.

 

[Zathras]

Thank you for the correction, I was not aware of that as I was going by the information in the link you provided.

On June 21, 2007, the U.S. Senate passed a comprehensive energy bill by a vote of 65-27. The bill, H.R. 6, contains a provision that would significantly improve automotive fuel economy standards for the first time in thirty years. The product of a careful bipartisan compromise, the provision calls for an increase to 35 mile per gallon by 2020 – averaged across the entire fleet manufactured or sold in the United States – while providing flexibility for automakers to cost-effectively meet the standard without jeopardizing U.S. jobs. The Senate bill eliminates the two-fleet distinction by treating foreign and so-called "domestically-made" cars the same in an attributed-based system where cars and trucks meet various requirements based on their size classes.

And yes, we do agree, it would be much better for the government to stay out of it. It just bugs me when people (not you Samclem) paint the auto companies as the victim or the government as the big bad guy (excluding the companies own responsibility).

 

[FinanceDude]

Thank you for the correction, I was not aware of that as I was going by the information in the link you provided.

And yes, we do agree, it would be much better for the government to stay out of it. It just bugs me when people (not you Samclem) paint the auto companies as the victim or the government as the big bad guy (excluding the companies own responsibility).

The auto industry has never been a victim. They are paying for their arrogance and poor decisions, including mortgaging their future to the UAW because they were too afraid to allow a strike by the workers. GM management has agreed to almost every outlandish demand the UAW has made. I guess they never counted on the fact that at some point the American consumer would move on to higher quality carmakers, they counted too much on "patriotism", instead of focusing on improving quality. Hopefully its not too late to change course. I think the Chevy malibu could have been made 10 or 15 years ago........

 

[Zathras]

I've heard some really good things about the new Ford Focus Hybrid as well (or was it Fusion).

 

[FinanceDude]

I've heard some really good things about the new Ford Focus Hybrid as well (or was it Fusion).

It is the Fusion (Ford) and Milan (Mercury). Ford decided to use more Mazda products in their new cars and it is paying dividends. The Focus has been pretty reliable also. The Fusion Hybrid looks interesting and has clean lines.

A saw several Chevy Traverses when I was on my trip. I talked to one owners when I was filling up at a gas station. He loved the vehicle and said he was getting around 24-25 on the highway, so that is encouraging.......

 

[unclemick]

Sooo - this fall I trade in my Chevy Equinox for a nice 2009 4.0 L V8 Toyota Tundra?

Grin and bear it when I find out the trade in value.

heh heh heh - I remember the fun in the 70's, motor vehicle wise adjusting to smog controls and unleaded gas. This go round ought to be a trip! . Tesla as a second car if I hit Powerball.

 

[FinanceDude]

Sooo - this fall I trade in my Chevy Equinox for a nice 2009 4.0 L V8 Toyota Tundra?

Grin and bear it when I find out the trade in value.

Won't be much, but I am sure you got a lot of money off when you bought it...hasn't GM had $5000+ rebates for about 10 years?

heh heh heh - I remember the fun in the 70's, motor vehicle wise adjusting to smog controls and unleaded gas. This go round ought to be a trip! .

My mechanic buddy in college took off his catalytic converter and some other hoses and things under the hood and stuck them in his trunk. His car had more power after that......

 

[samclem]

An update in the ongoing saga!

From the WSJ:

Don't you just know that former GM CEO Rick Wagoner is all broken up about this. He's probably already sent poor Mr Rattner some flowers.

A further update regarding Steve Rattner, the government official who fired the elected head of GM's board. The Karmic train just keeps coming around:

Former Obama administration official Steven Rattner was sued by the U.S. Securities and Exchange Commission and New York Attorney General Andrew Cuomo on Thursday for his role in a pay-to-play scheme involving New York's pension fund.
Mr. Rattner agreed to pay $6.2 million and to a two-year ban from associating with any investment adviser or broker-dealer to settle the SEC allegations, the SEC said Thursday.
Separately, Mr. Cuomo's office filed two lawsuits against Mr. Rattner, seeking at least $26 million from Mr. Rattner and an immediate lifetime ban from the securities industry.