This week on CBS News I watched a brief interview with the CEO of General Motors. When asked directly was the Government "bailout" necessary, he said he might be offending some customers, but that in his opinion the situation for GM, the American auto industry, including auto parts suppliers and the United States' economy would have been far worse had the Obama administration let the American auto industry go into bankruptcy. There are those that don't care that the outcome was a success, regardless how much economic suffering was avoided, and how much quicker the "bailout" of GM and Chrysler was an important factor in the speed at which our domestic economy has rebounded. It is easy to say let them all go into bankruptcy, but has anyone calculated who the "all" is in economic terms? How many tangential industries, companies and jobs would have been affected by a bankruptcy of GM and Chrysler? Does anyone believe that the total number of bankruptcies would have been just those two automakers? Could Ford Motors have survived if GM and Chrysler went into a long protracted bankruptcy? It doesn't take a Nobel Laureate economist to realize that any supplier to the American auto industry that was heavily dependent upon that industry would certainly find their company at risk of bankruptcy. Talk about a domino effect! This would have been a domino effect that would have taken down many more companies than just those supplying the auto industry. General Motors is back selling more cars and making bigger profits, and thousands and, in my opinion, millions of people are working today because the federal government came to the aid of an industry that affected so much of our domestic economy. So, in conclusion, I think the CEO of GM was right in his analysis of what would have been had not the Obama administration taken the actions they did. For conservatives, the saving of jobs and preventing a severe economic downturn may not justify the "bailout", but that is where I disagree with them and their philosophy of the role of government and its relationship to its people in the 21st century.
Stay tuned.
Posts
3 comments:
Right on, Fred.
Well, as you know I was from the supplier side of GM, a GM company that changed its name when GM sold it. GM bought the Dayton Electric Company way back in the beginning of the automobiles early years so they could put the electric started on the Caddy and the first ever shock absorber on their cars. Delco made more components for GM than any other supplier. Mostly electrical, ride control, bumper shocks to protect the occupants and car from parking lot crashes, ride control and wiper motors. Right here in Kettering, OH we made electric motors from the fractional sizes, 1/4 horse all the way up to locomotive motors used on our railways.
I will say that GM, like Chrysler back in the 80's, needed help but the issue is not that fact. The issue with Obama is how he and his Auto Czar did the job and at the expense of people that had 40 yrs of service and are now reduced by as much as 70% of their "promised" pensions and benefits. Obama said there would be sacrifices made. That is about the only part that is true. If you were an IUE union member you would loose your health care but not immediately. You would get this back but you would be paying for it by being allowed by the courts to join a VEBA with the DSRA (Delphi Salaried Retires Association). Your pension would be topped off to full amounts, the main part would be paid by the PGGC. If you were a UAW or GM salaried retiree you lost nothing. If you were a Delphi salaried retiree you lost pension amount through a very complex formula that even some PGGC personnel can't explained. I got my Fedex letter in Feb. of 2009 giving me one month to find a new or keep my existing health care. My insurance went up 1,068% in one month. That number is low in comparison if I hadn't stayed on my old plan due to my predetermined conditions, heart and cancer. Later that year or the next, in bankruptcy court, the DSRA was given the right to form the VEBA which allowed us to find insurance and we were given a sum of money to set it up and do the shopping with. About the time I started getting my pension from the PBGC my insurance changed for the better with the support of the HCTC (Health Care Tax Credit).
During bankruptcy all contracts are to become null and void. With taxpayer money, money that had been given to GM for support was in turn given to Delphi so that GM could buy certain plants back, one being the Inland Vandalia plant in Vandalia, OH. Also, during bankruptcy, you either file to excuse yourself from all debt and go out of business or restructure yourself. GM did not really restructure, all they did with the help of the government was to put dealerships out of business, do away with legacy contracts and promote themselves has something they aren't.
Obama said in one of his townhall meetings and campaign meetings that it was and is wrong for an American company to take its business overseas and pay no taxes, yet be called an American company. He said if they ship from overseas back to the States that there should be tariffs as if they weren't American. Right after the taxpayers gave this company money GM cancelled its orders with a tire manufacture from Knoxville, TN and took the business to China. The US company filed bankruptcy.
I voted for this man. I can't stand any of the GOP's candidates to date. I don't necessarily think that all the GM issues are with Obama, more likely he didn't really know what was going on. Geithner, Snowbarger, these are the guys that let the upper level people live and destroyed the lives of so many others.
There is a court order in Michigan by a judge that has said that the PBGC, Tim Geithner and the Treasury supply the our lawyers with information as to how the government and its agencies came up with the plans that were put into effect and how or why certian groups were discrimated against.
So, was it necessary, probably, afterall, it is true that as GM goes so goes the Nation. However, this man and his group need to answer questions and they won't.
We know Romney's philosophy......withdraw as much capital out of the business....and if it doesn't survive...so be it. (afterall, the investment group needs to put bread on their table).
I worked for a company that was "sold" to a private investment group (our CEO and other executives became multimillionaires). We were taken over with borrowed funds. Eventually we had to lay people off because we weren't able to pay the loans. The company went bankrupt. The investment company made millions on the deal.Then they went on to conquer other bussinesses.
THIS IS NOT HOW AMERICA SHOULD BE RUN. I understand the profit motive. The company I worked for was very profitable before the takeover. NO ONE cares about the community...it's just about money....just try asking to have the minimum wage increased!!!!! Sorry folks, there is not enough for everyone.
Post a Comment