GM Prepares for Bankruptcy; Borrows Another $4B

[IronRyan21]

At least with shares at $1.06, the employees wont worry about the value dropping too much. LOL

 

[doomtomb]

A real shame they are going under but I kinda knew this day would come and I think so did they.

 

[apache_lives]

there isnt a car they product that i want - thats the first major issue to me

 

[pochacco007]

general motors need to go asap. it's bad but it's also good. but i stongly agree that it will be a very good thing.

 

[enforcer22]

[citation][nom]chripuck[/nom]You have no clue what you're talking about. The "melt-down" of our economy can be traced back to two primary sources, relaxed lending standards implemented by Fannie Mae and Freddie Mac at the behest of democrats AND republicans and the blind-eye towards commodity trading that has existed for decades. It starts with attempts to achieve the great American dream of owning a home. Democrats, and to a lesser extent Republicans, during the late 90's began pushing Fannie Mae and Freddie Mac to begin relaxing standards on their mortgage "auto-buy" program. In essence, if a bank lent money for a home and that loan matched Fannie and Freddie's "auto-buy" standards then they would automatically buy the loan up, no matter the conditions. Fannie and Freddie would then take these bought up loans, package them together as a mortgage backed security and sell them on the open market. When those bad loans began to default these securities quickly became near worthless. Without people buying their securities, Fannie and Freddie were no longer able to buy loans from community banks. Unable to sell their loans to Fannie and Freddie, banks began to tighten up on home loans given out which dried up an important part of their revenue stream, closing costs and origination fees. With tighter credit people were no longer able to buy new and existing homes for sale which led to an oversaturation of homes on the market. Law of supply and demand states that with an increased supply and lower demand, prices must fall, thus home prices began to tank. Lower home prices meant people had negative equity which dried up many peoples line of credit on their homes. With lower lines of credit and unable to sell their homes more people began to default and the circle continues. As this scare perpetuated through the economy more and more people began to not spend (which is the last thing you should do during a recession, unless you are jobless which is understandable.) Less spending hurts every company out there thus the trickle down effect throughout our economy.The other issue being the lack of regulation on commodities market. This one is self-explanatory. Nobody should be able to corner the oil futures market and drive up the price, not when it is a neccessity of life. This loophole has existed for decades and needs to be closed. This, along with the lower spending capacity as mentioned above, is what has put GM in the place it's at. They planned poorly with poor fuel economy vehicles so soaring gas prices killed them and then on top of that people stopped spending money in general. Very little of this had to do with Bush and his administration and I'd challenge you to point out what in his 8 years influenced the outcome we're at.PS I'm not a Bush fan, but I'm tired of people jumping on an obvious "popular" bandwagon.[/citation]

The usless trillians spent in iraq didnt help. If i didnt just wake up i would shell out alot more of that idiot monkeys mistakes but TBH he was a waste on the country. it would be a much shorter list and way easyer to tell me what the dip nut did right and DIDNT do to tank the econemy.

 

[Guest]

Unfortunately, for America to really become competitive again we need to close GM, Chrysler, and Ford. They each have their problems with fiscal responsibility only being a fraction. I will say this, however, too many folks complain about gas guzzlers, SUVs and Trucks. Well, some industries (construction, farming, and ranching to name a few) would have a difficult time doing their jobs with a Civic or Prius. And foriegn trucks are not much better than the American ones. In that area the entire industry needs to be fixed.

 

[IzzyCraft]

[citation][nom]LATTEH[/nom]if the CEOs weren't getting paid over 20 million a year they wouldn't be in backruptcy![/citation]
If the reform of how we did business didn't change in the 1970's to rewarding higher ups instead of pay raises equivalent to raises in productivity the minimum wage in the us would be nearing 20 dollars that's the national minimum wage. Greed motivates apparently the people are gm were not greedy enough to be motivated enough to save their company.

 

[Hellbound]

This is what you get with out of control union labor cost. The union has been dictating for years what its members were going to get paid/benefits.

A company cant succeed if its losing money on the products it sells. In 2007 GM spent $4.6 billion on health care alone. Thats $1,525 per vehicle sold.

This maybe bad for me to say. But a failed company needs to fail. To throw billions at it like the government did and have it still fail is a total waste. GM received 25 billion in bailout money...all for nothing.

What the government is doing is wrong. They are just delaying the inevitable by throwing money out to failed companies like GM. Yes, I understand losing jobs is bad. But people, and companies, have been living/operating beyond their means for years now. The inflation bubble has been growing exponentially. It was just a matter of time before it burst...and it did. Now its time to cut the fat.

Recessions are a necessary evil. Recessions culls away weak companies and force stronger ones to reduce expenditures (cut the fat).

Anyways I better stop because I can go on and on.

 

[Bugermass]

What pisses me off is that GM COULD HAVE been at the forefront.. They had the Saturn EV1 and they puposely abandoned and destroyed any chance for it to grow into somthing more mainstream. Also thanks to the great CARB board for lifting the mandate that set a timeline at which all auto manufacturers were required to have a certain % of electric vehicles.

 

[joeman42]

[citation][nom]ct1615[/nom]you sir are truly an idiot! I work with the auto industry, both foreign and domestic car manufactures. True these workers will be out of work and not paying taxes but they are currently getting paid with tax dollars. So what you are telling me is I should be happy I am getting 10 cents for every dollar I give you to work on a product I don't want. You should teach business 101 to the mentally challenged, they will anoint you their king![/citation]
With workers like you it's obvious why the industry is going under. I will try to put this in terms you can grasp:
1. The worker salaries are NOT 100% paid by bailout dollars, unlike unemployment.
2. There is a saleable product at the end, unlike unemployment.
3. That sale and the intermediate purchases and sales generate revenue and taxes from multiple parties.
You still with me?
4. The collapse would cost all the mfg AND suppliers their jobs, permanently. See Detroit and multiply across the country.
5. All of the prior investors, poorer now, would completely lose their investment.
6. New investors and customers, will not buy the product without the guarantees which would allow GM to recover to which EVERYONE will benefit.
You are not supposed to "like" it, but the alternative (which you have none) is worse, understand?
It is your type of defeatist attitude, and, I reiterate, IGNORANT, ranting that caused this mess. BTW, I spoke to the "mentally challenged" and they have anointed you their god.

 

[Luscious]

[citation][nom]Bugermass[/nom]What pisses me off is that GM COULD HAVE been at the forefront.. They had the Saturn EV1 and they puposely abandoned and destroyed any chance for it to grow into somthing more mainstream. Also thanks to the great CARB board for lifting the mandate that set a timeline at which all auto manufacturers were required to have a certain % of electric vehicles.[/citation]
You make a valid argument. The 90's were a time in which automakers should have developed alternative technologies a lot more. The fact that the CARB board was pressured and influenced by outsiders for revoking their decision was a grave failure on many fronts. Big oil could have still survived along with EV, but the fact that they are realizing this 20 years too late has now taken big oils biggest friend - GM - down the toilet.

 

[kato128]

Last I heard the CEO for GM was working for $1 per year after taking the govt bailout money.

 

[matchboxmatt]

[citation][nom]chripuck[/nom]You have no clue what you're talking about. The "melt-down" of our economy can be traced back to two primary sources, relaxed lending standards implemented by Fannie Mae and Freddie Mac at the behest of democrats AND republicans and the blind-eye towards commodity trading that has existed for decades. It starts with attempts to achieve the great American dream of owning a home. Democrats, and to a lesser extent Republicans, during the late 90's began pushing Fannie Mae and Freddie Mac to begin relaxing standards on their mortgage "auto-buy" program. In essence, if a bank lent money for a home and that loan matched Fannie and Freddie's "auto-buy" standards then they would automatically buy the loan up, no matter the conditions. Fannie and Freddie would then take these bought up loans, package them together as a mortgage backed security and sell them on the open market. When those bad loans began to default these securities quickly became near worthless. Without people buying their securities, Fannie and Freddie were no longer able to buy loans from community banks. Unable to sell their loans to Fannie and Freddie, banks began to tighten up on home loans given out which dried up an important part of their revenue stream, closing costs and origination fees. With tighter credit people were no longer able to buy new and existing homes for sale which led to an oversaturation of homes on the market. Law of supply and demand states that with an increased supply and lower demand, prices must fall, thus home prices began to tank. Lower home prices meant people had negative equity which dried up many peoples line of credit on their homes. With lower lines of credit and unable to sell their homes more people began to default and the circle continues. As this scare perpetuated through the economy more and more people began to not spend (which is the last thing you should do during a recession, unless you are jobless which is understandable.) Less spending hurts every company out there thus the trickle down effect throughout our economy.The other issue being the lack of regulation on commodities market. This one is self-explanatory. Nobody should be able to corner the oil futures market and drive up the price, not when it is a neccessity of life. This loophole has existed for decades and needs to be closed. This, along with the lower spending capacity as mentioned above, is what has put GM in the place it's at. They planned poorly with poor fuel economy vehicles so soaring gas prices killed them and then on top of that people stopped spending money in general. Very little of this had to do with Bush and his administration and I'd challenge you to point out what in his 8 years influenced the outcome we're at.PS I'm not a Bush fan, but I'm tired of people jumping on an obvious "popular" bandwagon.[/citation]
Easily the best explanation of what happened I've read so far.

 

[Guest]

25 BILLIONS divided to all the people having difficulties paying their house would help much more!

 

[AncientNoob]

lol @ ct1615 and joeman42

 

[tbq]

Just because a company goes bankrupt doesn't mean that all employees are instantly out of a job. Look at the airlines, most of the major ones have declared bankruptcy at least once in the last decade, yet they still exist.

 

[Guest]

I love the 'Letterman' Logic on some of these comments. He made the following observation when speaking to the Tesla co-founder on his show: 'If foreign automakers are profitable making hybrids why can't the American automaker do it too?' If only they were making the right product...that's really the only issue right? Hybrids and all electric are the key, then everything will be OK...

Instead he should have asked why can't the American car companies compete with foreign automakers on gas based cars? When gas was 'cheap' and SUV's were popular (and these have large profit margins) why were the US automakers already declining? What will be different when they face similar competition on hybrids and all electric? (actually it's worse because the US automakers are behind on many of these technologies)

This is insnaity - the US automakers are simply not cost competitive with the rest of the world. The only way they can overcome this is if they had a product that commands a premium to offset this cost or they figure out a way to be more efficient than their competition. Neither of these secnarios will happen, so the only way they will survive is either through gov't help (current solution) or protectionism (potential, ugly, future solution). I guess the other obvious solution would be to cut costs to levels where they are competitive, but this is America, where you spend your way out of problems; so this ain't happening...

Now that the UAW is part owner in some of these companies (Chrysler, GM), do folks honestly believe wages/benefits will be cut in line with the rest of the world???? The UAW is one of the most powerful unions in America (along with the trial lawyers) and there is no way Obama (or the Dems) will take a tough stance with them when they can just throw taxpayer money at the problem... welcome to the beginning of socialism.

CRHIPUCK - great explanation, the only thing I would add in as a contributing factor is the easy money (low interest rates), weak dollar policy dating all the way back to Greenspan. This obviously made loans more widespread (and may it that much easier for financial institutions to make bad loans) as well as driving up many of the commodities as these are generally dollar based markets and the continued low interest rates led to a weak dollar, which in turn drove up the price of commodities. I think the presidential impact (both Clinton and Bush) is minimal - the real damage was being done by the Fed (interest rates, weak dollar) and the Congress (Actually checking to see if companies are following regulations instead of just writing new ones? And the whole Fannie/Freddie debacle.. )

 

[my_name_is_earl]

My thought was the pigs at GM wanted more money and then take it for themselves and call it bankruptcy soon nor later and keep the money and don't have to pay a dime back. Free tax, free money, why not do it? One company down, another will rise. Oh, have anyone see that pathetic electric vehicle that they use billions of dollar of tax payer money to make? It's as pathetic as the company is. The govt already took funds out of the school, roads, health care, and the likes for these dam irresponsible company. Why would anyone support company like this.

 

[safcmanfr]

All this crap is caused by having quarterly , short-term targets rather than longterm targets.

Lets maximise our profits for the next 3 months, and forget about planning for the next 5 years.

 

[Zingam]

[citation][nom]joeman42[/nom]With workers like you it's obvious why the industry is going under. I will try to put this in terms you can grasp:1. The worker salaries are NOT 100% paid by bailout dollars, unlike unemployment.2. There is a saleable product at the end, unlike unemployment.3. That sale and the intermediate purchases and sales generate revenue and taxes from multiple parties.You still with me?4. The collapse would cost all the mfg AND suppliers their jobs, permanently. See Detroit and multiply across the country.5. All of the prior investors, poorer now, would completely lose their investment.6. New investors and customers, will not buy the product without the guarantees which would allow GM to recover to which EVERYONE will benefit.You are not supposed to "like" it, but the alternative (which you have none) is worse, understand? It is your type of defeatist attitude, and, I reiterate, IGNORANT, ranting that caused this mess. BTW, I spoke to the "mentally challenged" and they have anointed you their god.[/citation]


Welcome to the Eastern Block! What you propose is what brought the Eastern Block down. That kind of economy destroyed USSR and the Eastern Block and not Reagan with his idiotic ideas about Star Wars etc.

Get it people! Never put money in something that looses money! That was the biggest problem of socialism ineffective economy due to lack of competition and government support for companies that would have went bankrupt in a free market economy. The reason to do that was not to loose any job ever. Everybody knows the result who is old enough.

Greetings from an ex-Commiee Bastard!