Farrell Kramer

Not to mention that GM's brands are very popular in China, so by killing GM we'd be removing one of the few things that gets money to come back here from China (there aren't very many left). - Robert Scoble

GM has made many, many mistakes. Why should we let them stay in business? - Tyler Hurst via twhirl

Tyler: they have made many, many right decisions, too. My Saturn Aura is a great car (it is made by GM). When I was in Shanghai I saw GM cars all over the place. They employ something like seven million people around the world. So you are ready to put seven million people on the street? Why don't we put you and your business on the street? I'm sure you make mistakes every day too. - Robert Scoble

Chapter 11 doesn' have to put people on the street, as long as the govt provides a guarantee on DIP financing. See today's NYT Sorkin piece for details:-) - Francine Hardaway via IM

Yes, but my business isn't going bankrupt. Hey, I drive a GM car, I don't want them to go under, but why should my tax dollars save them? - Tyler Hurst via twhirl

Tyler: because if you put those people out of work they'll cost you tax dollars and you won't get anything in return then. - Robert Scoble

The bailout money would be better spent on assitance to those who are impacted... re-training, relocation assistance, etc. Now (NOT, I meant NOT) wishing for GM go go away - but they have big issues that NEED to be addressed... not patched over (again). - Brian Roy

But what would I be getting for a bailout? If it's anything like the banks, it seems like more of the same! Will GM diversify, streamline and stop making gaudy SUVs? If they are to be bailed out, someone better should be running the company. Where's the hybrid cars? Why aren't they making more of them? - Tyler Hurst via twhirl

Tyler: I agree with you, mostly. It's just that if you dump tons of people on the street to teach a corporation a lesson it increases the problems greatly. You also aren't going to find jobs for many of these workers, even after retraining. They simply aren't there. So, short term, I'm all for keeping the jobs going. - Robert Scoble

Tyler, that would be the point behind any kind of bailout. GM is told build hybrids and more fuel efficient cars in order to get the money. Use the bailout money as an incentive to restructure the industry. - Paul

Everyone keeps assuming all these people will get "dumped on the street", but I'm not sure I believe that. Will they shut down entirely? No. So how are 7mill losing their jobs? - ♫ Rahsheen™

"GM has made many, many mistakes." The mistakes were made in design and product decisions, not on the assembly line. Those who made decisions to manufacture Suburbans and ignore hybrid technology should suffer, not the guy bolting it together. And we'll either pay in "bailout" (which we might get back) or in unemployment benefits and other safety net spending (which we won't). - John Craft

A bailout is just a bandage. If it's not fixing the real problems, then why do it? Won't we go through this again? Instead of a bailout, why doesn't the gov't buy the damn company, fire all the upper management and subsidize sustainable/hybrid techology? - Tyler Hurst via twhirl

Hopefully there are enough STRONG rules attached to the bailout to force both the execs and the unions to change direction and start making good cars for the long term. a straight bailout will just prolong the business-fail-as-usual mentality that exudes from Detroit. - Glenn Batuyong

Rasheen, at some point another manufacturer (e.g. Honda) might buy some GM assets (factory). But the delay, and uncertainty, will further erode confidence. No one wants to prop up "business as usual" - the goal is to ease (and demand) the transition. - John Craft

Tyler: if you put all those workers on the street you'll have far more pain for far longer. Yes, we should get something in return, but I don't live in an ideal world and I don't always get what I want. - Robert Scoble

"why doesn't the gov't buy the damn company, fire all the upper management and subsidize sustainable/hybrid techology?" - Isn't that essentially what's happening? Have you read the bills introduced in the House and Senate? - John Craft

Rahsheen, any layoffs by GM, Ford or Chrysler is going to have ripple effect. It will cause layoff in their suppliers also. So the layoffs are going to be a lot larger then just GM..... - Paul

John- yes, but this isn't a takeover, it's a bailout. Just as Glenn said earlier, there must be STRONG rules to make sure this isn't just a handout. - Tyler Hurst via twhirl

Let them burn. The airlines had to restructure so will the auto makers. Enough with the fear mongering already. Fucking lemmings. - Leather Donut

CNNMoney weighs on on what the :real" problems are - http://money.cnn.com/galleries... - Bill Pennington via twhirl

Leather: where do you work? Can we say the same thing about your business? I'm sure your management hasn't made every best decision either. Plus, next year lots of businesses will lay people off. Should we cheer if you are one of those? - Robert Scoble

"there must be STRONG rules to make sure this isn't just a handout." Agreed. The House plan is pretty strong. http://www.freep.com/article/2... - John Craft

I think we can all agree that American automakers relied too heavily on SUVs. But what's the solution? - Tyler Hurst via twhirl

Tyler: that's because of our emphasis on quarterly results. I sure wish our markets would reward long-term thinking rather than worrying about this quarter and next. Capitalism itself brought us these problems. - Robert Scoble

Tyler: the solution is to take 10% of oil industry profits and put those into developing newer cars that'll get us off of oil. But that never will fly past the lobbyists. - Robert Scoble

+100 Robert - the short term thinking of today's day trader/hedge fund market create many of our current problems. - Brian Roy

True. Side note, has everyone here read Hot, Flat and Crowded? Fascinating. Great look toward what we SHOULD be doing. - Tyler Hurst via twhirl

Tyler: I watched Thomas Friedman give a speech while in Shenzhen, China. I saw everything he was talking about right outside of my window. This is the #1 problem for the next 20 years. By far. Friedman's work is very important, he just travels a lot so sees the problems in a way that the rest of us can't. - Robert Scoble

Robert, if short term thinking is what caused these problems, then why does Apple create awesome products? What really concerns me is when all this bailout stuff is going to stop. We are going to have this same conversation over and over for each bailout, until we cause US Treasuries to lose their AAA rating, and China, Russia, and the Middle East will start using another currency to trade with. That's what we are risking with these bailouts. - Chris White

Here's a thought: why not eliminate all tax breaks for and/or apply all windfall profit taxes on the fossil fuel industry toward the auto industry bailout? Jack CAFE standard up dramatically and, as others have proposed, commit the Federal Government to a complete overhaul of its vehicle fleet within 5 years, with the prerequisites that replacements must be built in the US and use alternative fuels or new technology. ... - Kevin Pedraja

That would ensure that 1) energy prices don't fall so fast that alt fuel programs wither 2) car makers are both required and incented to invest in new technology. - Kevin Pedraja

I would rather use my taxes to pay unemployment for all of US auto assembly line workers than use my taxes to bail out their braindead asleep-at-the-wheel management. I want my taxes to support American workers, not American executives. - Bjorn Stromberg

Any deal to bail out auto makers MUST include government oversight (it's our money) and requirements to restructure and retool. I'm not opposed to floaiting the industry again because I understand the magnitude of the impact its failure would have; however, I'm not interested in doing what we've done the last three times the auto industry's come calling for a blank check: let them continue doing bad business. If they knew how to run those businesses, we wouldn't be bailing them out, frankly. That said, the associated industries that will collapse if the auto industry is allowed to fail is 10x what the financial industry would result in the long term. - Bob M. Montgomery via twhirl

Any truth to reports that the $750 billion wall street bailout had $25 billion earmarked to auto industry? - Kevin W.

There is no reason to believe that "government oversight" would contribute to creating a successful auto industry. - Sean McBride

plus 1 for Sean - Dave Hodson

At different times, the chariot, horse buggy, and paddleboat industries were very important to the economies and infrastructures of their respective societies. Since we no longer have many chariots, buggies, or steamboats, 1 of 2 things happened: companies adapted or they died. The internal combustion, fossil-fuel-powered automobile is on the decline. Companies must adapt or die. It would be *very* painful for everyone to let them die. So, since they have shown no appetite for adapting on their own, we should use the leverage of any loan/bailout to force them to adapt in ways that will benefit everyone. - Robert Clockedile

The auto industry has destroyed $465 billion of capital in the last two decades. It's over. http://bit.ly/Zu5B - Carter Rabasa

I agree that the auto industry is like Katrina. It's a disaster that taxpayers and consumers need to be saved from. - Chris White

+1 ChrisW - Carter Rabasa

Steve, that's nonsense. Bankruptcy protection works if the company has the cash flow to continue operating. GM is failing because it has insufficient cash and can't go to the banks to borrow to keep operating. - Dave Winer

This is what I meant about people not paying attention to what's going on. There's a financial crisis. They would be failing even if their products were perfect. Toyota is in deep shit too. - Dave Winer

GM is failing because its products are inferior and it refuses to innovate. - Chris White

Chris, in word, no. - Dave Winer

I'm not a big fan of big government, but it's obvious that the auto industry is inept and incapable of fixing itself. So, if its collapse cannot be allowed under current circumstances and we have to give them money, someone has to force the industry to adapt, as it's proven incapable of doing so itself. It's less an assumption that the government can do no harm and more of an understanding that it's in a position to intervene. - Bob M. Montgomery via twhirl

Dave: wrong. GM has plenty of revenue (http://bit.ly/vV3T), they just spend more than they earn (legacy costs, labor costs, etc). - Carter Rabasa

Dave, are you saying that GMs products are superior and it continues to innovate, or are you saying that it isn't important to have superior products and innovate? Their cash flow problem didn't happen overnight. Toyota, Honda and BMW aren't going out of business. - Chris White

GM invested heavily in a short-term market during the late 80s and early 90s (gas-guzzling SUVs and trucks) without any long range planning--actually, it was more arrogant and dismissive than a lack of planning even. There's been no incentive for the big three to innovate in the last 20 years; "just put knew fins on the car and they'll buy it" is an old auto industry mantra, one that's been dead for a few years now. I think this is an opportunity for the country to invest in itself and its future by ensuring the survival of these American companies and jobs while forcing them to adapt. - Bob M. Montgomery via twhirl

Carter, thanks for the multiple choice exam, but no thanks. :-) - Dave Winer

Bob, I agree with everything you say right up until the part about "ensuring the survival of these American companies." I really wonder if Microsoft, IBM, Apple, and Google were having tough times if we'd be asking taxpayers to bail them out. I would guess not. - Chris White

Please: will anyone here please explain to me why he or she believes that any government bureaucrat is capable of creating a successful high tech industry in a highly competitive environment? Why do you believe this? Do you have any idea how difficult it is to create a financially successful high tech product? - Sean McBride

Chris, I get your point completely. I think the essential difference is the scale of manufacturing jobs. We've watched entirely too many of these manufacturing jobs shipped out of the country in the last 3 decades already; the result is a weakened overall financial picture where once-strong manufacturing jobs have been replaced with weak service industry jobs (in a continuing effort to dumb down the American people into nothing more than consumers of goods instead of producers of goods). Of the four companies you mentioned, only IBM actually 'makes' things (at least on a research level; our Vermont IBM facility just underwent another round of cuts). The other companies have no manufacturing infrastructure to support, at least not at the scale that the auto industry does. It's always healthier for an economy to have people working and making things than importing everything and relying on low-paying retail jobs to fill the vacuum. It's no simple answer, but it's no simple problem. - Bob M. Montgomery via twhirl

Bob, Apple makes computers. In fact, it just introduced a revolutionary way of manufacturing laptops. It's just done in China. As far as US manufacturing goes, European and Japanese companies hire American workers to produce cars in the USA. It's just not done in Detroit, it's done in the South. - Chris White

I'm aware Apple makes computers, as I own 4 of them. None of Apple's manufacturing takes place in the States, so they're different in my mind. I'm fully aware of the the Toyota plants in Kentucky, the Kubota Tractor plants outside of Atlanta and such (I've visited several, as I'm in the equipment industry). Those numbers are, when compared to the rest of the manufacturing sector, token at best. They're valuable but small as a percentage. The number of manufacturing jobs lost and replaced with weak service jobs is staggering in the last 2 decades; the reason for this is a 'free market' corporate sector that's proving to be fairly inept when faced with consumer backlash, sagging incomes and global changes. All of the automotive industry is facing these challenges, but as has been pointed out, Toyota and Honda aren't being hit nearly as badly because they - Bob M. Montgomery via twhirl

...they planned ahead and changed gears over a decade ago (a result of a different corporate philosphy that demands true long range planning); they're also both very diversified through different sectors, which lessens the blow. - Bob M. Montgomery via twhirl

BTW, this is the precise conversation that needs to be going on all over America. Again, this is not a simple issue; there won't be simple answers, but the more people open up the discussion, the better. - Bob M. Montgomery via twhirl

The sea change is the big three need to get into the business of making autos, presently they are in the business of running a benefits and retirement trust. The only ones winning are the high ticket execs who continue to get big cake. - Dave Martin

I think people better wake up. Nobody will come out of this mess unscathed. Whether it be losing your job, losing equity in your home or losses in your investments or 401k. Pointing fingers isn't going to help here because we're all going to lose. For those looking for ideological purity in a solution forget it. Ideology makes for really bad policy. Letting the big three fail solves nothing but satisfies the need to punish the people we may feel responsible for the mess. - Paul

Paul - the main point is not whether the government SHOULD save the auto industry but whether it CAN save the auto industry. I don't see anyone here addressing that question. Yet again we are being stampeded into spending huge sums of money on projects that haven't been clearly explained. - Sean McBride

Sean - It may be foolish optimism, but I think it's possible that if the US automakers can survive this recession and come out of it leaner, producing with an eye towards the future instead of the past, and maintain significant manufacturing jobs, it's more than possible to save the industry as a whole. I go back to the possibility of also splitting up the big three into their component parts like the telcos as a viable option to boost success. - Bob M. Montgomery via twhirl

I think as important as if the government should bail out companies is where it's getting the money to do so. - Patricia

Bob -- everyone I know thinks that the American auto industry has been producing second-rate products for decades, and most of us been predicting the collapse of the industry for quite a few years. The executive leadership of the industry has been completely unresponsive to real-world feedback, and has been coasting along on the past and rapidly dwindling accomplishments of its predecessors. Without entirely new leadership, there is no conceivable way that this industry can get back on a competitive footing. You can't bring new leadership into power with a wave of the government wand. Ain't gonna happen. These processes are spontaneous and organic, not programmatic. Good money after bad. This era is over. - Sean McBride

Sean, I don't disagree with you. I don't advocate just handing out money here. I think any money that is provided should come with strings. I think we also need to realize that the best sounding idea may not work. The solution may entail a combination things (e.g. bankruptcy, bailout, sale, breaking up the companies). It may require that we scrap our original idea and try a new one. I hate to gloomy about this but doing nothing is just not an option. This problem is world wide now. - Paul

I'm still surprised no one is at least bringing up the idea Tom Evslin had on his blog about actually replacing the government's vehicle fleet. http://blog.tomevslin.com/2008... I guess there must be some fatal flaw to the idea, I'm just not seeing it right now. - mikepk

Instead of a bailout, it's actually *buying* something, and forcing the big three to re-tool and redesign based on mandate. Seems like a win-win. - mikepk

I'm with Paul on this (and Dave's original thrust). - Dennis E. Hamilton via twhirl

Sean - I agree with everything you said, up to the point that new leadership can't be forced on the company. I have a sneaking suspicion there are some really good, bright people at GM who could do it but have been held back by the existing top crust of old guard. I think as part of a bailout/restructuring, the government could require that existing leadership step down. They've all been overcompensated for years anyway. I keep coming back to splitting up GM in my mind because it would make new, more nimble companies with more incentive to do what we agree needs to happen: make good products that people can afford to buy and drive with an eye towards the future. - Bob M. Montgomery via twhirl

Can you imagine if the government demanded that Yahoo or Microsoft or Google "re-tool" and "redesign"? What would that even mean? Would they have the slightest idea of what they were talking about? - Sean McBride

There is one other point here, that is on the macro level: DEFLATION! The collapse of the auto industry in this country will have a ripple effect in commodity prices. Central Banks around the world are in dire fear of asset prices collapsing, which will lead to other industries going under. It is one of the causes of the Great Depression. - Paul

Sean - 99% of the time, I would be right with you. I have little confidence in the government, in general, having actually worked on Capital Hill for a while. I think, though, in this circumstance that it's necessary. And, there are people in the Federal government who are former industry people, as well as those who work on the emissions standards and Federal guidelines who probably know more about the auto industry than GM's entire management team. - Bob M. Montgomery via twhirl

@Sean - it happened with Ma Bell, and nearly (maybe not-so-nearly) happened with Microsoft (both for different reasons of course) - Steve

This is precisely what Chapter 11 was written for. - Vikrum J. Singh

Bob -- I respect your arguments, and they have some merit. This is an issue with uncertain outcomes no matter which path we pursue. But I am going to lobby very hard against any aid for the auto industry because on the deepest gut level I think that this industry is beyond saving. - Sean McBride

Sean - Agreed. I'm not 100% sold on bailing out a sinking ship either. It's the alternative that scares the dickens out of me. If we weren't in the current self-created fiscal disaster and there was money out there to loan, I'd be with you. Let GM fail, and allow the vacuum to be filled with other automakers, including new ones. Unfortunately, there's no capital out there for new companies to start up, nor is there $ for other companies to jump in. It's a tough place; uncertain outcome for sure. - Bob M. Montgomery via twhirl

Sean, they already do! Through tax policy and regulation. The auto industry already has to meet fuel efficiency requirements, environmental requirements and safety requirements. - Paul

Bob -- let me hasten to add that I am as scared as you are about the direction of the American and global economy, and what the collapse of the American auto industry portends. We are looking at a major disaster here. I just don't think spending government money on an industry which destroyed itself is going to avert the disaster. - Sean McBride

What if, and this is just throwing spagetti on the wall, but GM were forced into a restructuring that included breaking it up into it's compenent divisions, then, based on solvency and saleability, allow individual divisions to file Chapter 11 as new companies? The idea is that the individual segments wouldn't have the same impact in Chapter 11, lenders would be more inclined to loan/invest. An idea only. - Bob M. Montgomery via twhirl

Bob - a creative and interesting idea -- one which deserves thinking about. The objective (as I see it): to try to set free creative forces within the industry that are currently bottled up. Shake it up and shake off the bad management that caused the current mess. - Sean McBride