Big Auto Wants $50B

[DC Tom]

When did this happen? I missed it.

 

Actually I, for one, have missed his postings and am glad he's back, at least part time.

 

Yes, the PPP Silver Cartel is back together. It's a good day...

[SDS]

It's not a fiscal idea as much as a point to be driven home that if the CEO's can't manage their own companies to avoid these things then they shouldn't be given Federal monies to reward that.

 

GM builds cars (crappy ones) for the sole reason of paying inflated salaries and lifetime benefits to its retirees. It can no longer do that. The UAW will make sure that the auto workers and the steel workers meet the same fate.

[finknottle]

It's not a fiscal idea as much as a point to be driven home that if the CEO's can't manage their own companies to avoid these things then they shouldn't be given Federal monies to reward that.

 

If by 'these things' you mean excessive compensation then I have to point out that - even though I am against it - there is a school of thought that say's that is what you need to pay to get good executives. There are, after all, companies with excessive compensatuion which are successfull. IMO the government should not be weighing in on whether it is indicitive of whether or not the company is run well and is therefore eligible for government assistance, any more than it should factor in offering workplace breakfasts or casual friday as evidence of waste or lack of discipline.

 

It should be a matter for the shareholders. If you want the abuse checked, the answer isn't government regulation of executive salaries but rather empowering shareholders rights (an entirely different topic).

[Steely Dan]

GM builds cars (crappy ones) for the sole reason of paying inflated salaries and lifetime benefits to its retirees. It can no longer do that. The UAW will make sure that the auto workers and the steel workers meet the same fate.

 

You're point? I don't see how that affects executive salaries.

[StupidNation]

So let's see....a private organization promises lavish benefits that it has no money to pay for to thousands of people, and now the taxpayers are supposed to step in and pick up the tab?

 

And what is stopping every other private organization from doing the same thing? Oh yeah...NOTHING. Because Congress won't fix the problem and won't tell anyone to f*%k off. Where are the cries of "regulation" when it comes to bailing out auto manufactures and airlines time after time?

 

Where were the cries for regulation on Fannie in 2004 by the Dems when it benefitted their constituency? Where is the analysis that regulation and subsidizing mortgages through gov't sponsorship of Fannie and Freddie, regulating the interest rate through central planning has caused the problem?

 

De-regulation is bad when it hurts their constituency so they regulate subsidies, and when they regulate it and subsidize it all of a sudden it's de-regulation's fault, and how that makes sense to anyone I have no idea. Will there be bubbles in capitalism? Always, but they are quickly correctable with some regulation. Whatever you subsidize you get more of those same problems.

 

Edit: this is not a Dem bashing post, the Repubs pushed the same backing to their lobbyists so I hold them, generally speaking, just as guilty

[finknottle]

You're point? I don't see how that affects executive salaries.

 

You said earlier

 

It's not a fiscal idea as much as a point to be driven home that if the CEO's can't manage their own companies to avoid these things then they shouldn't be given Federal monies to reward that.

 

Having locked yourself in to unsustainable salaries and benefits is a clearer sign of serious mismanagement that over-paying the CEO, since those are the real root problems for the auto industry. Would you be in favor of driving the point home that if a compnay hasn't managed it's payroll and benefit's situation than they shouldn't be given Federal money? Wouldn't a bailout reward that behavior?

[Dwight Drane]

When did this happen? I missed it.

 

Actually I, for one, have missed his postings and am glad he's back, at least part time.

 

I don't think he mean't "good" as in good....I think he meant "good" as in lots happening. Maybe I'm wrong.

 

There really isn't too much to say. They signed the bailout.....it was a coup. That is the final sign that they are going to move the goods out the backdoor before they burn the joint down. Typical gangster move.

 

Now people are seeing the real world effects starting to take hold. The real economy "died" in July. We have been on life support since then. An average business I talk to is down 20% year over year. People are IOU'ing each other to death and making trades and backdeals since they are out of cash. It's going to be sad.

 

I didn't comment on the election, but after watching Obama bring 200 people on stage yesterday...I think it is a clear signal that he is going to attack everything with Big Government. Not only that, you don't have time to bring in all these 'Chiefs" and research for a thesis paper on the economy that will be written in 2 years....you need to decide what you will do on a domestic and worldwide level, and NOW! Plenty of socialists and commies on that stage yesterday. In all reality, the stage has already been set and I'd put a good size wager that we have the next few years to crap our pants at will. It's only a matter of time before we have a UN flag flying overhead.

 

Silver is fine. It's selling $4-6 over paper price. I could find good silver (Maples/Eagles) cheaper when spot was $15 instead of the $10 it is at now. Just another fine example of the fraud going on the past year to surpress anything anti-dollar and stock market. There are rumors going around that some big players will try and get enough contracts to force COMEX to open their vault for physical delivery....and then bankrupt the ETFs. That would be scary.

 

I'll post more when the big stuff starts taking shape.

[YellowLinesandArmadillos]

Agreed on your later comment about letting them die a slow death. Unfortunately that only works if the workforce and the dependent workforces steadily decline to (politically) negligable numbes first.

 

But I differ on the whole pay compensation issue, which has also been discussed with the banks. I think it is a compete red herring - it has no real impact on the bottom line. I don't like them getting the pay that they do, but that's an issue for me as a shareholder. It is *not* an issue the government. There are those who say a company is better run if you pay outrageous salaries, just as there are those who say you need to throw sponsorship money at every sport in sight. It's not the governments place to decide on these tactics, it is the market-places.

Normally I would say yes, it is not the government's place to intervene, but when it affects 25% of the U.S. economy, that is an unrealistic statement. Hoover applied that theory and paid both the political and we paid the economic price. I don't know what would be the best form of government intervention.

 

Executive compensation should also normally be left to share holders. The idea however, that you should pay through the nose for executive compensation is ludicrous unless buying that name which makes such a difference in either sales or enthusiastic workforce productivity increases. However, once taxpayer money gets involved, the government has every right on behalf of taxpayers to limit compensation to executives...

 

My two cents.

[DC Tom]

Normally I would say yes, it is not the government's place to intervene, but when it affects 25% of the U.S. economy, that However, once taxpayer money gets involved, the government has every right on behalf of taxpayers to limit compensation to executives...

 

Then let them take an equity stake, elect board members, and fire the executives. If they're going to loan the industry fifty billion, on the other hand...creditors and bond holders don't get a say. Until the debtor defaults...then the creditors become owners.

 

I mean, I see your point. But I disagree with the principle of "We're the government, so the rules are different for us." Even when they are.

[YellowLinesandArmadillos]

I mean, I see your point. But I disagree with the principle of "We're the government, so the rules are different for us." Even when they are.

I can't help but laugh on the last point.... as convoluted as it took you to explain it, your above sentence is about as succinct as you could have written it.

 

My problems is that every time we talk about welfare cheats and giving money away to poor people for assistance, the same folks that say leave these corporate execs alone are the one's that complain that people on welfare need conditions. IMO you can't have it both ways.

 

I do agree that government can be heavy handed at times, but if you invite Gov't in for help, they should have a say in what gets done. Any other private lender, depending on their risk assessment, would establish their own requirements for a company to adhere to...cuts in employee salaries, hiring freezes and other ideas that are often associated with required restructuring demands by lenders.

[East Brady]

Now that we have the bailout mania running it's course, everyone that supports it is in fact, A Welfare Queen. How does it feel to be no different than the lowly Welfare Queens that my friendly ppp'ers look down upon??

 

One of my favorite bloggers has written an absolutely hard f'n core assessment of the current sad state of affair's, this IMO is a must read. From Sat. 11/8/08.

 

http://market-ticker.denninger.net/

 

 

Also of interest is this little piece: Bloomberg sues the FED

 

http://www.bloomberg.com/apps/news?pid=new...id=aKr.oY2YKc2g

 

 

The Silver Cartel is now intact.

 

 

Drane stick around, you are needed.

[Chalkie Gerzowski]

a bailout by taxpayers eh? save us lemmings!

 

 

 

 

SAVED BY ZEEEE-WOE, SAVED BY ZEEEE-WOE...

 

taxpayer - you are a zeeee-woe.

[Steely Dan]

You said earlier

 

 

 

Having locked yourself in to unsustainable salaries and benefits is a clearer sign of serious mismanagement that over-paying the CEO, since those are the real root problems for the auto industry. Would you be in favor of driving the point home that if a compnay hasn't managed it's payroll and benefit's situation than they shouldn't be given Federal money? Wouldn't a bailout reward that behavior?

 

Payroll is just an expense that needs to be managed. Granted the unions make it very hard to control but it's not impossible to make a profit with those contracts.

 

IMO, unions are only effective when they represent a job that can't be shipped overseas. (i.e. teachers, repairmen, installers, construction and others) The UAW has shot itself in the foot. Toyota and Subaru aren't union affiliated and are having an easy time with the manufacturing in the U.S. the benefits may not be as good as a UAW member but it makes it profitable enough to keep the manufacturing here and not in Mexico.

[DC Tom]

I can't help but laugh on the last point.... as convoluted as it took you to explain it, your above sentence is about as succinct as you could have written it.

 

My problems is that every time we talk about welfare cheats and giving money away to poor people for assistance, the same folks that say leave these corporate execs alone are the one's that complain that people on welfare need conditions. IMO you can't have it both ways.

 

I do agree that government can be heavy handed at times, but if you invite Gov't in for help, they should have a say in what gets done. Any other private lender, depending on their risk assessment, would establish their own requirements for a company to adhere to...cuts in employee salaries, hiring freezes and other ideas that are often associated with required restructuring demands by lenders.

 

I know of no lender that does that. I've never even heard of a situation where a private lender loans money and dictates how the borrower then arranges their finances and business (hell, if that were common practice, the mortgage market wouldn't be !@#$ed six ways to 2012 right now). For the government to do that would be holding the government to a different set of rules...and again, while I understand it can happen as a practical matter, I can still disagree in principle.

 

And like I said...if you WANT that, it's not too difficult to have the government take an equity stake. Even make it an issue of preferred class of shares that gives the government a voting majority, if you like. Then they can dictate whatever they want. It is effectively nationalizing the industry...but then, so is a loan with the same rights. Either option is giving up control to the federal government to get money.

 

Only option I see for maintaining a private US auto industry is to give them the money with no strings attached save the promise to pay it back (i.e. a regular loan). Or the government can let them go bankrupt. Since I don't see the US auto industry ever paying that big a loan back...I guess that means I expect the US auto industry to go the way of the US steel industry.

 

Must be why I shorted GM at 9.

 

 

(And lest anyone forget...GM's still got that pesky GMAC thingy. Which was, among other things, a mortgage lender. Which is absolutely killing them. GM's problems aren't limited to their inability to sell sh------- cars. Just wanted to mention that, to point out that the issues here aren't strictly linear.)

[sweet baboo]

I would hope there would be some sort of solution that would let GM hang in there while making a transition to new technology. That would keep many of the existing jobs and create new ones as the migration takes place. But it's going to be slow, and painful.

That's assuming that whatever transition GM makes turns out to be successful. With their track record, would you be willing to bet on them with your own money?

 

It would be kind of funny is Dubai stepped in and bought the big three though.

I suppose, but those guys only want good investments.

[finknottle]

My problems is that every time we talk about welfare cheats and giving money away to poor people for assistance, the same folks that say leave these corporate execs alone are the one's that complain that people on welfare need conditions. IMO you can't have it both ways.

 

I don't hear many people saying leave the execs alone, they are getting paid what they should. No, what we are saying is that it should be up to the owners of the company - the shareholders - to decide what is paid.

 

I am against the huge disparity between executive and worker pay - not because it is immoral, but because I think it is wastefull, unneccessary, and sends a bad message to the workforce. But that's just my opinion. I should be free to exercise that opinion in companies in which I have a share. Companies in which I have no stake should be run entirely the way their owners think most effective, independent of my opinion.

 

Whether we choose to support or oppose welfare stems from the idea that as citizens we have an ownership stake in the US and what it does with its money. Same principal.

 

Conservatives who are concerned about executive pay do not look to the government to impose a solution. To the extant that they see a government role, it is for guaranteeing shareholders rights within corporate governance. They want the shareholders to have greater power in controlling the Boards and therefore how the company is run. They do not want the government coming in and imposing arbitrary salary restrictions, any more than they would accept the UN stepping in and saying "no welfare."

[YellowLinesandArmadillos]

I know of no lender that does that. I've never even heard of a situation where a private lender loans money and dictates how the borrower then arranges their finances and business (hell, if that were common practice, the mortgage market wouldn't be !@#$ed six ways to 2012 right now). For the government to do that would be holding the government to a different set of rules...and again, while I understand it can happen as a practical matter, I can still disagree in principle.

 

And like I said...if you WANT that, it's not too difficult to have the government take an equity stake. Even make it an issue of preferred class of shares that gives the government a voting majority, if you like. Then they can dictate whatever they want. It is effectively nationalizing the industry...but then, so is a loan with the same rights. Either option is giving up control to the federal government to get money.

 

Only option I see for maintaining a private US auto industry is to give them the money with no strings attached save the promise to pay it back (i.e. a regular loan). Or the government can let them go bankrupt. Since I don't see the US auto industry ever paying that big a loan back...I guess that means I expect the US auto industry to go the way of the US steel industry.

 

Must be why I shorted GM at 9.

 

 

(And lest anyone forget...GM's still got that pesky GMAC thingy. Which was, among other things, a mortgage lender. Which is absolutely killing them. GM's problems aren't limited to their inability to sell sh------- cars. Just wanted to mention that, to point out that the issues here aren't strictly linear.)

I hear you, it is a helluv a conundrum. They are too big just to let fail all at once. They need to retool and get smaller, but they won't be the same no matter what. So if it untenable for the government to do anything but give a loan they won't pay back, then the taxpayers need to get something out of it if we are just chasing good money after bad. Why not just fully fund the pension funds and provide them with money to cut and retool but nothing else..., no payroll money. That is just wasting time... IMO that probably is politically untenable. So the only thing is throw a bunch of requirements on the loan. He my credit union wanted a certain amount of money held in reserve when theygave us our mortgage. We were moving out of state and I did not have a job lined up. And my credit was very good.

[YellowLinesandArmadillos]

I don't hear many people saying leave the execs alone, they are getting paid what they should. No, what we are saying is that it should be up to the owners of the company - the shareholders - to decide what is paid.

 

I am against the huge disparity between executive and worker pay - not because it is immoral, but because I think it is wastefull, unneccessary, and sends a bad message to the workforce. But that's just my opinion. I should be free to exercise that opinion in companies in which I have a share. Companies in which I have no stake should be run entirely the way their owners think most effective, independent of my opinion.

 

Whether we choose to support or oppose welfare stems from the idea that as citizens we have an ownership stake in the US and what it does with its money. Same principal.

 

Conservatives who are concerned about executive pay do not look to the government to impose a solution. To the extant that they see a government role, it is for guaranteeing shareholders rights within corporate governance. They want the shareholders to have greater power in controlling the Boards and therefore how the company is run. They do not want the government coming in and imposing arbitrary salary restrictions, any more than they would accept the UN stepping in and saying "no welfare."

 

Understood and I agree generally, but then the free market should rein and we should let these car companies and banks fail. If they come with their hand out to the taxpayers, then they should accept certain limitations IMO. Otherwise, keep their hands in their pockets. It will force more attention from shareholders and more accountability on decision making to know that their isn't a bailout anytime they get in trouble. It makes welfare queens look responsible and a helluv a lot cheaper!

[KD in CA]

I don't hear many people saying leave the execs alone, they are getting paid what they should. No, what we are saying is that it should be up to the owners of the company - the shareholders - to decide what is paid.

 

I am against the huge disparity between executive and worker pay - not because it is immoral, but because I think it is wastefull, unneccessary, and sends a bad message to the workforce. But that's just my opinion. I should be free to exercise that opinion in companies in which I have a share. Companies in which I have no stake should be run entirely the way their owners think most effective, independent of my opinion.

 

Whether we choose to support or oppose welfare stems from the idea that as citizens we have an ownership stake in the US and what it does with its money. Same principal.

 

Conservatives who are concerned about executive pay do not look to the government to impose a solution. To the extant that they see a government role, it is for guaranteeing shareholders rights within corporate governance. They want the shareholders to have greater power in controlling the Boards and therefore how the company is run. They do not want the government coming in and imposing arbitrary salary restrictions, any more than they would accept the UN stepping in and saying "no welfare."

 

Good post.

 

 

The responsibility to bail out GM should be that of the GM owners. GM should be going back to their stockholders to ask for more capital, and if they can't get enough, they can recapitalize the company. And if no one is willing to invest at any price, they should go out of business. If the shareholders aren't happy with that, they should vote out the board and make the appropriate changes. Of course it might help if the system wasn't rigged against them in favor of labor unions, but that's another story for another day.

[blzrul]

Speaking of labor unions - most of you probably know that the Boeing strike is over. The union got a good deal, with progressive raises and guarantees on job retention in the U.S.

 

Therefore I LOVED it this morning when I saw a full-page ad, directed to those union members, in today's paper. Apparently there are a handful (12, or 21, I can't remember) of members of their union who work at a local Ford dealer. These union member supported the Boeing strikers and are now challenging them to start buying Fords AND having their automobiles serviced at that dealership.

 

Interesting. And good for them. Let's see if their 'brethren' support them.