The Government Owns the Means of Production

[Denny Crane]

You mean our own company.
The more money we make on GM over the next couple of years, the less taxes we have to pay. I'd think you'd be all for them being successful.

You're absolutely right. The $10B we make off of GM will nicely offset the $1.5T deficit.

True, and I don't think they went looking for this. GM went to the government and begged, and a lot of people believed that letting GM fail would hurt the country too much. So here we are. The fault is not as much with the government as with the board and management of GM, which didn't do their jobs.

barfo

No it was govt. that didn't (and isn't) doing its job. It killed the golden goose that gave people the ability to buy cars in the first place. Not only was GM hurting the past couple of years, Toyota and other auto manufacturers saw the first yearly losses in the company histories.

 

[BLAZER PROPHET]

the problem with GM is that its been a broken model, broken company for many many years. they have been getting their ass kicked by the japanese since the mid 80s.

the government owning them is like when you play co-ed basketball in grade school and they MADE you pass to the girl before you could score a basket.

Obama did not bail out GM. It bailed out the union. This has nothing to do with GM (or Chrysler). The union employees that worked for UAW and retired with a full company paid pension (that they were eligible for at age 48). There were no 401k's- it's all automaker paid. If any of them go under, hundreds of thousands of UAW retirees lose their entire pension. Obama was commited to preventing that. No matter what the cost to the US and to us, those automakers are going to stay in business. No matter how bad the vehicles are, no matter how much money the UAW workers make, no matter how much money the automakers lose... they will be fully supported so long as the dems control the White House. I'm not arguing whether this is goor or bad, only that it is what it is.

 

[Stevenson]

What do all of you anti-bailout folks propose instead?

Let them go out of business? Nice theory, disastrous policy in reality.

BTW, have any of you noticed that the mid-80s Chrysler bailout was a resounding success, despite Chrysler's current problems?

 

[BTOWN_HUSTLA]

You mean disastrous results in theory. You don't know what will happen if you let them fail since they didn't let them.

Sure there are people saying about all these part suppliers, blah blah blah, jobs lost, blah blah blah....but companies don't exist for the purpose of keeping other people employed, they exist to be profitable and to provide goods and services that people want.

People don't want GM products. If they are allowed to let the market play on itself someone else will step in. Its not like people WON'T need cars because there is GM. Its just a pride thing for America really....kind of stupid to support a failing company like that.

 

[Idog1976]

What do all of you anti-bailout folks propose instead?

Let them go out of business? Nice theory, disastrous policy in reality.

BTW, have any of you noticed that the mid-80s Chrysler bailout was a resounding success, despite Chrysler's current problems?

I'm far more for the bailout of the auto industry then for the Bank bailouts. You see these things have costs and our credit card is maxxed out. Nobody is buying our long term treasuries and bonds. Bill Gross of Pimco says that the US will lose it's AAA status for loans, this in the wake of the UK being downgraded from AAA stable to AAA negative. The long term bond yield is rising. This may not sound important but it is critical. The government has two (well three, but I will discuss that as well. Let's just say the 3rd is BAD) means of raising money:

One: we sell debt (e.g. T-bills, bonds etc.). To sell debt the AAA rating is key as it is a virtual guarantee that the investor will get their money back with a profit. The misrepresentation of Sub-Prime loans as AAA debt when converted into loan packages kicked off this disaster. Now we are having a hard time selling long term debt for the first time in modern memory, maybe ever.

Two: the collection of taxes. This year due to the recession/depression we lost so many jobs that we had a net loss on taxes as people earned more in tax refunds then the government brought in. This happened in the 1980's but things were different then. Since the 1980's we have a deficit so large that it is scheduled to consume 100% of the GDP within 5 years this is excluding long term commitments like Social Security, Veteran's benefits and Medicare (a private public scam for medical insurance companies benefits we need single payer universal health care which would cost FAR LESS!).


Option Three the bad one: So now we have taken up the Japanese idea of Quantitative Easing (QE) a euphemism for printing money. The Fed buying the treasuries with newly (electonically) minted dollars. This will cause extreme inflationary pressure. One might think with all the deleveraging we will face deflation but this is not so. Look at the price gains in commodities this year, the cost of gas, groceries etc. all are rising. QE might have worked for Japan as the rest of the world was not in recession and they could still sell their goods from their solid industrial base (we have no industry to speak of other then failing auto and military industrial) and their status as a creditor to the US. The US faces a situation far more akin to the Weimar republic or Zimbabwe where we have insurmountable debt, an extreme recession and now the printing of money.

Here is the result, the man might be a millionaire or even a billionaire but that don't help you when a loaf of bread costs millions or billions.

Or if you prefer to see a white person in trouble because you are desensitized to the plight of africans:

In the Weimar republic seen above it became more cost effective to burn money for warmth as it took so much money to buy firewood you got more heat from burning the money.

The solution? Buy some equities that are solid, buy physical gold and silver (and their related stocks e.g. mining stocks or futures but NOT ETFS!) also oil and other energy stocks and buy productive land. Physical silver is cheap still (maybe $16.50 per ounce) and can be bought here in Portland. Physical silver went from 8 marks in 1919 to about 80,000,000,000 marks in 1923 in the Weimar republic. At the same time a loaf of bread went from roughly 4 marks to about 20,000,000,000 marks for comparison. It is unlikely that it will be nearly this bad in the US but a five to tenfold increase in prices in the next 3 years is quite likely indeed.

If you don't believe me perhaps you will believe Jim Rogers the one time business partner and co-founder along with George Soros of the Quantum Fund in the 1970's which had 1000+% returns. Jim Rogers correctly called the bull market in China in the 1980's.

*********

Here is someone who thinks we have a shot at a new bull market based on green tech. I have green tech positions for this exact reason. I also have heavy commodity positions for the above reasons.

 

[Denny Crane]

What do all of you anti-bailout folks propose instead?

Let them go out of business? Nice theory, disastrous policy in reality.

BTW, have any of you noticed that the mid-80s Chrysler bailout was a resounding success, despite Chrysler's current problems?

Loan them the money and let them run their own business. The govt. didn't take over Chrysler or fire their CEO or change the ownership, they lent them the money they needed to reorganize on their own.

 

[bluefrog]

The whole premise of the OP is faulty.

The U.S. owns the postal service and the TVA and both of those compete with private companies without problems. Besides, the U.S. is not looking to compete in the auto industry.

The economy would look very similar if the Republicans had won the last election.

 

[Idog1976]

Loan them the money and let them run their own business. The govt. didn't take over Chrysler or fire their CEO or change the ownership, they lent them the money they needed to reorganize on their own.

Eactly, loans on good terms for both parties, or let GM fail and the market do it's job. What pro-union folks on the left want is protected jobs what the rich want is protected markets. Unfortunately, globalization doesn't work that way. What is problematic is all the protectionism that goes on and of course all the environmental degradation and human rights violations of unfettered globalization. The solution has to be adoption of the UN universal declaration of human rights and a similar declaration to prevent catastrophic destruction of the environment. We probably will need to re-organize economics around the new realities of globalization, overpopulation and techonological and communication advances. Capitalism is preferable to communism and facism but we may need something new as infinite growth is no longer a tenable proposition.

 

[Idog1976]

The real problem with GM is GMAC. It turns out GM hasn't been profitable for years but they created a financial wing that got into sub-prime and horrible derivatives like Credit Default Swaps. This is what killed the company beyond repair. If they had reorganized in the late 1990's and stayed out of finance the problem would be FAR less severe.

 

[barfo]

You're absolutely right. The $10B we make off of GM will nicely offset the $1.5T deficit.

I didn't claim anything like that. But making a $10B profit (if in fact we do) is better than not.

No it was govt. that didn't (and isn't) doing its job. It killed the golden goose that gave people the ability to buy cars in the first place. Not only was GM hurting the past couple of years,

You mean the past couple of decades...

Toyota and other auto manufacturers saw the first yearly losses in the company histories.

And that's why we bailed out Toyota and other auto manufacturers. Right?
Not every automaker is bankrupt, because some of them were better managed than others. But yeah, it is all the governments fault. They killed GM because they liked Ford better. And now they are saving GM because they hate Ford. The government is so fickle sometimes.

barfo

 

[barfo]

Loan them the money and let them run their own business. The govt. didn't take over Chrysler or fire their CEO or change the ownership, they lent them the money they needed to reorganize on their own.

Perhaps there was more reason to believe in Lee Iacocca than in Rick Wagoner. Should the government loan money to anyone who asks? If I run my business into the ground, should I get a government loan? Shouldn't the government exercise some due diligence about who it gives loans to?

Giving out loans to people who couldn't pay them back is what got us into this fix. Your solution is more of the same?

barfo

 

[Denny Crane]

I didn't claim anything like that. But making a $10B profit (if in fact we do) is better than not.

$1T in, $10B out is not a good result.

You mean the past couple of decades...

Nah, it neatly coincided with Nancy becoming Speaker.

And that's why we bailed out Toyota and other auto manufacturers. Right?
Not every automaker is bankrupt, because some of them were better managed than others. But yeah, it is all the governments fault. They killed GM because they liked Ford better. And now they are saving GM because they hate Ford. The government is so fickle sometimes.

barfo

We regulated Toyota into a better position to succeed. Ford and GM both gambled on green technology. GM's gamble on Ethanol failed, the nation pushing ethanol inflated the cost of food and created shortages. Ford gambled on diesel cars that get 60 MPG and sold a lot more cars overseas.

You do know that GM and Toyota joined forces to build the Geo Metro and other vehicles. They sold like hotcakes - NOT.

 

[Denny Crane]

Perhaps there was more reason to believe in Lee Iacocca than in Rick Wagoner. Should the government loan money to anyone who asks? If I run my business into the ground, should I get a government loan? Shouldn't the government exercise some due diligence about who it gives loans to?

Giving out loans to people who couldn't pay them back is what got us into this fix. Your solution is more of the same?

barfo

Govt. should loan when it determines a big player in a big industry needs the help.

Govt. loans to small business, too - see SBA.

 

[barfo]

$1T in, $10B out is not a good result.

Yes, no one is arguing that $1T isn't much larger than $10B, if that's the point you want to make.

Nah, it neatly coincided with Nancy becoming Speaker.

Right. Pelosi becoming speaker instantly tanked GM. She's all-powerful. And GM was in perfect shape before that. That's why their market share had been declining for so many years.

We regulated Toyota into a better position to succeed.

That's right. We made regulations that applied to everyone but Toyota. It was totally unfair.

Ford and GM both gambled on green technology. GM's gamble on Ethanol failed, the nation pushing ethanol inflated the cost of food and created shortages. Ford gambled on diesel cars that get 60 MPG and sold a lot more cars overseas.

Hmm. Gambled, huh? They just picked those strategies on a roll of the dice? They didn't make any effort to try to make projections? It couldn't be that Ford made better conscious decisions than GM?

You do know that GM and Toyota joined forces to build the Geo Metro and other vehicles. They sold like hotcakes - NOT.

Yes, but I'm not sure why you bring it up. Just suggests to me that GM has the reverse Midas touch.

barfo

 

[barfo]

Govt. should loan when it determines a big player in a big industry needs the help.

No matter what? No matter how unlikely the money will ever be paid back?

barfo

 

[e_blazer]

I just wonder how many Penskes may have come out of the woodwork and bought up portions of GM and Chrysler if the market had been allowed to work.

 

[barfo]

I just wonder how many Penskes may have come out of the woodwork and bought up portions of GM and Chrysler if the market had been allowed to work.

Depends on what you mean by allowing the market to work? Do you mean if the government had refused to put money into GM?

GM would have entered bankruptcy a few months earlier, but in a more uncontrolled fashion (and at a time of greater economic uncertainty). In the end, what could be sold would still be sold, but without debtor-in-possession financing GM itself would have had to be shut down and liquidated.

barfo

 

[Denny Crane]

Yes, no one is arguing that $1T isn't much larger than $10B, if that's the point you want to make.

The point I want to make is that it's foolish to consider GM some sort of investment that's going to make back what we're dumping into it.

Right. Pelosi becoming speaker instantly tanked GM. She's all-powerful. And GM was in perfect shape before that. That's why their market share had been declining for so many years.

Tanked the whole economy in fact.

That's right. We made regulations that applied to everyone but Toyota. It was totally unfair.

Not quite. The regulations (CAFE standards, $45/hour salaries for workers) favored companies like Toyota. People demonstrated which cars they wanted with their wallets, and they were SUVs.

Hmm. Gambled, huh? They just picked those strategies on a roll of the dice? They didn't make any effort to try to make projections? It couldn't be that Ford made better conscious decisions than GM?

Yep, gambled. No green technology is profitable, it's just a matter of which ones governments around the world are going to subsidize - and thus benefit the auto maker taking the gamble.

Yes, but I'm not sure why you bring it up. Just suggests to me that GM has the reverse Midas touch.

barfo

See my comment about wallets and SUVs. GM made the kind of cars Obama and you seem to think GM should have been making and it wasn't a success. Where's the poor judgment on management's part there? Careful, if GM's management had poor judgment all along, then so does Obama now.

 

[barfo]

The point I want to make is that it's foolish to consider GM some sort of investment that's going to make back what we're dumping into it.

Ok. No one said otherwise.

Not quite. The regulations (CAFE standards, $45/hour salaries for workers) favored companies like Toyota. People demonstrated which cars they wanted with their wallets, and they were SUVs.

That isn't even consistent. If people want SUVs, there are plenty available. Many of them made by GM. SUVs have not been regulated out of existence.

Yep, gambled. No green technology is profitable, it's just a matter of which ones governments around the world are going to subsidize - and thus benefit the auto maker taking the gamble.

Some people have more insight into government regulations than others, apparently. Not that I believe your thesis anyway. How much money did GM spend on ethanol, as a percentage of their overall budget? I'll bet it is tiny.

See my comment about wallets and SUVs. GM made the kind of cars Obama and you seem to think GM should have been making and it wasn't a success.

GM also made the kinds of cars you seem to think GM should have been making - in much larger quantities - and it wasn't a success.

Where's the poor judgment on management's part there? Careful, if GM's management had poor judgment all along, then so does Obama now.

That doesn't make much sense at all. GMs had multiple major problems. Acting as if the Geo Metro was what killed GM is ridiculous.

barfo

 

[Denny Crane]

Ok. No one said otherwise.

You're the one who talked about Obama's GM folly with the term "profit":

I didn't claim anything like that. But making a $10B profit (if in fact we do) is better than not.

That isn't even consistent. If people want SUVs, there are plenty available. Many of them made by GM. SUVs have not been regulated out of existence.

Nobody said they were regulated out of existence. That's a very different thing than the regulations favoring Toyota (which they do).

Some people have more insight into government regulations than others, apparently. Not that I believe your thesis anyway. How much money did GM spend on ethanol, as a percentage of their overall budget? I'll bet it is tiny.

GM invests in 'trash to ethanol' start-up - CNET News

GM spreads bets with investment in second ethanol start-up | Green ...
GM, Marathon invest in cellulosic ethanol's future - Ethanol ...

GM, Chevron, Pacific Ethanol Collaborate on E85 Project in CA ..

GM - Environment - News - Janesville Assembly Plant Produces ...

&c

The investment seems large enough:

http://en.wikipedia.org/wiki/General_Motors

GM is the North American leader in E85 flex fuel vehicles, with over 3 million FlexFuel vehicles on the road in the U.S. As of 2009, GM offers 18 ethanol-enabled FlexFuel cars and trucks in the US, and produce more than one million new FlexFuel vehicles. GM's goal is to have half of their annual vehicle production be E85 or biodiesel capable by 2012.http://en.wikipedia.org/wiki/General_Motors#cite_note-66

(My note: 50% of their vehicles with no fuel distribution here, and agressively by 2012)

GM also made the kinds of cars you seem to think GM should have been making - in much larger quantities - and it wasn't a success.

It was all along. GM's problems seem to stem from GMAC being a home lender.

That doesn't make much sense at all. GMs had multiple major problems. Acting as if the Geo Metro was what killed GM is ridiculous.

barfo

Obama's acting like the Geo Metro is going to save GM.

D'oh!

 

[barfo]

You're the one who talked about Obama's GM folly with the term "profit"

Yes. But all I said was that it would be better to make a profit than not. That doesn't seem a very controversial statement.

Nobody said they were regulated out of existence. That's a very different thing than the regulations favoring Toyota (which they do).

But you claim people have voted with their wallets for GM anyway.

links

There isn't any question they spent some money on ethanol R&D. My question was what percentage of their overall budget they spent on that.

It was all along. GM's problems seem to stem from GMAC being a home lender.

You haven't noticed their market share declining over the past 20 years? That was all due to GMAC?

Obama's acting like the Geo Metro is going to save GM.

Yes, because the Geo Metro is the only fuel efficient car that it is possible to make, and no fuel efficient cars sell well. That's why Toyota is doing so badly, after all.

barfo

 

[Denny Crane]

Yes. But all I said was that it would be better to make a profit than not. That doesn't seem a very controversial statement.

It's an absurd expectation. To make a "profit" we'd have to get out more than we put in.

But you claim people have voted with their wallets for GM anyway.

The #2 selling vehicle in the USA right now is the Chevy Silvarado (light truck). GM's sales are down 25% from last year, compared to Toyota and Honda whose sales are down close to 50%.

linky: http://blogs.cars.com/kickingtires/2009/06/top-10-bestselling-cars-may-2009.html

There isn't any question they spent some money on ethanol R&D. My question was what percentage of their overall budget they spent on that.

Significant if they're intending to have 1/2 their vehicles be ethanol in 2 years. The 2012 model year is 2011, right?

You haven't noticed their market share declining over the past 20 years? That was all due to GMAC?

Their market share declining is simply because there are lots of other automakers out there, particularly the korean ones. Even so, GM still makes gas guzzlers that sell in the top 10 of all vehicle models sold.

Yes, because the Geo Metro is the only fuel efficient car that it is possible to make, and no fuel efficient cars sell well. That's why Toyota is doing so badly, after all.

barfo

Toyota's sales are down 50%, as I pointed out before.

What Toyota does have in its favor, aside from regulations, is their patents on hybrid technology.

 

[barfo]

It's an absurd expectation. To make a "profit" we'd have to get out more than we put in.

You are making up strawmen and arguing against them. I never said I expected to make a profit. In fact, either in this thread or in another one, yesterday I predicted that we'd sell at a loss.

The #2 selling vehicle in the USA right now is the Chevy Silvarado (light truck). GM's sales are down 25% from last year, compared to Toyota and Honda whose sales are down close to 50%.

And according to your linky:

Of course, Honda and Toyota were setting sales records at this time last year

Significant if they're intending to have 1/2 their vehicles be ethanol in 2 years. The 2012 model year is 2011, right?

No, that doesn't logically follow. If they intended for 1/2 their vehicles to be black two years from now, how much investment would that require?

Their market share declining is simply because there are lots of other automakers out there, particularly the korean ones. Even so, GM still makes gas guzzlers that sell in the top 10 of all vehicle models sold.

Right, which puts the lie to your claim that gas guzzlers have been over-regulated.
More competition doesn't inevitably lead to lower market share. More competition that is better than you does, however.

What Toyota does have in its favor, aside from regulations, is their patents on hybrid technology.

Which they stole from GM, right? Because certainly they couldn't have made better business decisions than GM.

barfo

 

[Denny Crane]

You are making up strawmen and arguing against them. I never said I expected to make a profit. In fact, either in this thread or in another one, yesterday I predicted that we'd sell at a loss.

You seem to "get" Obama's plan. I haven't seen one articulated. Go for it, I'm all ears (or eyes, whatever).

And according to your linky:

Logic flaw. If Toyota's sales were $.01 and last year were $.02, record sales!

No, that doesn't logically follow. If they intended for 1/2 their vehicles to be black two years from now, how much investment would that require?

Let's say virtually all of their R&D. As well as the acquisitions and investments I already linked.

Right, which puts the lie to your claim that gas guzzlers have been over-regulated.
More competition doesn't inevitably lead to lower market share. More competition that is better than you does, however.

No, it puts the lie that they're regulated out of business to rest. And it puts the lie that people don't want vehicles like the Silverado to rest, too.

Which they stole from GM, right? Because certainly they couldn't have made better business decisions than GM.

barfo

No, but it is a nifty competitive advantage. Toyota will license their patents for a nice fee, jacking up the regulated prices of GM's vehicles even more.

 

[Idog1976]

Come on guys do you seriously think either major party really manages things to the benefit of anyone but their politically connected buddies? Blaming the economic crash soley on Pelosi/Obama (or Clinton) is as absurd as blaming it all on George W. Bush (Or Bush I/Regan). BOTH parties managed the economy to the benefit of the financial "industry" and their other politically connected buddies.

Here's an article that might open your eyes that ran in the Atlantic it is bi-partisan in blame laying as it should be.

I like Libertarians and, I also like Progressives on the left, there are certain elements of both of their platforms that I agree with and elements I disagree with. The environment is in fact what keeps this spaceship livable but it's undeniable that a free market makes people more free, it is managed economies whether the result of socialism, facism or Monopoly capital that are devastating to freedom, of course personal rights are critical as well. Democrats and Republicans are so far adrift from the principles that most of their constiuients hold its absurd.

 

[barfo]

You seem to "get" Obama's plan. I haven't seen one articulated. Go for it, I'm all ears (or eyes, whatever).

As far as I know, the plan is to get it out of bankruptcy, get the stock relisted, and divest as rapidly as possible without driving the price down too far.

Logic flaw. If Toyota's sales were $.01 and last year were $.02, record sales!

No, that doesn't make any sense. You'd have to know the sales for all years prior to last year in order
to know whether last year's sales of 2 cents were a record.

I've no idea what you are trying to show anyway. If Toyota sales were only 2 cents last year, then the 50% drop this year that you brought up is meaningless.

Let's say virtually all of their R&D.

Let's just make things up, you mean?

No, it puts the lie that they're regulated out of business to rest. And it puts the lie that people don't want vehicles like the Silverado to rest, too.

Again, you are arguing against strawmen. I certainly haven't claimed people don't want Silverados.

No, but it is a nifty competitive advantage. Toyota will license their patents for a nice fee, jacking up the regulated prices of GM's vehicles even more.

That's capitalism for you. Everyone is out to make a buck. Some succeed (Toyota). Some fail (GM).

barfo

 

[barfo]

Come on guys do you seriously think either major party really manages things to the benefit of anyone but their politically connected buddies? Blaming the economic crash soley on Pelosi/Obama (or Clinton) is as absurd as blaming it all on George W. Bush (Or Bush I/Regan). BOTH parties managed the economy to the benefit of the financial "industry" and their other politically connected buddies.

That's certainly true to some extent, people are people, after all. No one in politics is selfless.

Here's an article that might open your eyes that ran in the Atlantic it is bi-partisan in blame laying as it should be.

I read that awhile back so I only skimmed it today, but it is interesting.

I like Libertarians and, I also like Progressives on the left, there are certain elements of both of their platforms that I agree with and elements I disagree with. The environment is in fact what keeps this spaceship livable but it's undeniable that a free market makes people more free, it is managed economies whether the result of socialism, facism or Monopoly capital that are devastating to freedom, of course personal rights are critical as well. Democrats and Republicans are so far adrift from the principles that most of their constiuients hold its absurd.

What principles are those?

barfo

 

[Idog1976]

That's certainly true to some extent, people are people, after all. No one in politics is selfless.



I read that awhile back so I only skimmed it today, but it is interesting.



What principles are those?

barfo

Well both parties claim they respect the rights of the individual and both routinely enact policy that violate those constitutional rights. A good example of this is the warrantless wiretapping. Bush ordered it and Obama voted for retroactive immunity for telecom companies for any crimes they may have committed. Both parties claim to believe in the family even if they have different visions and yet both parties enact policy that hurts the family by using our schools as a political battle zone rather then preparing our children for our highly competitive globalized economy. Those are just two examples.

Also both parties hurt small business and both attack capitalism in a free market form and help to create protected markets and monopoly capital (1996 telecommunications act, many many bush policies etc.). Meanwhile, they get everyone all hyped up about gay marriage, abortion and evolution vs. creationism. While everyone is all stirred up about those issues and silly ideologies they pick our pockets and cede greater power to the financial industry and monoply capital and non-competitive protected markets.

 

[Denny Crane]

I'm with Idog on this. Especially the bit about managed markets being doomed to failure and it's time to keep the govt. out of business.

As far as Obama's plan...

Presidents say things that become memorable. Reagan said, "govt. isn't the solution, it's the problem." GHW Bush said, "Read my lips, no new taxes."

I think Obama's famous quote is going to be, "we're out of money."

 

[Shooter]

I guess those of you that fear Obama better arm yourselves and start the revolution.

Good luck Red Dawn!

Here is the government's weapon

Here is your's

And if Obama and the other radicals get their way, soon we won't even have rifles anymore.