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I am a self proclaimed coffee addict and Executive Director of a non profit missions agency working primarily in the Mexican cities of Oaxaca, Guadalajara, and Ensenada. I've been married for over 30 years to Chelle, and we have one grown son, Joseph, a graduate of Auburn University in Alabama.

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Tuesday, December 02, 2008

Nationalize GM?

The Chevy Corvette ZR1 ~ In the words of Dan Neil, "Amazing!"

As congress thinks about how to handle the auto makers crisis in Detroit, many have taken to trying to come up with a solution that might work. Remember what I said before. Congress is going to do something. So let's get the best deal we can for the majority of US taxpayers.

Los Angeles Times Pulitzer prize winning automobile writer Dan Neil has another idea. Nationalize General Motors. That's right. Nationalize General Motors.

Now before you assign the Times and their writers to some sort of left leaning conspiracy, check out what he says. Here is part of it.

To be clear, I mean that the federal government should buy GM; forget rathole loans or nonvoting equity shares. The company's stockholder value has been essentially wiped out. The company's enterprise value -- the lock, stock and forklift price -- is about $32 billion; its total debt is $45 billion. Let's make GM an offer.

If you feel the gall of free-market ideology rising, consider that the measures being bruited about as preconditions for a bailout -- firing GM's top management; forcing a bankruptcy-like renegotiation of contracts with the UAW, suppliers and dealers (it has too many); and creating a czar of product development to force the building of green cars -- are nationalization in all but name. I say embrace it. GM-USA.

Click here to to read the entire article.

Comments on "Nationalize GM?"

 

Blogger Pastor David Curtis said ... (9:15 AM) : 

Why are we wasting our time trying to fix GM when what we should be fixing is the BCS? How unfair that Ball State and Boise State are on the outside looking in. Give me a playoff system!!!

Concerning GM. I say let the dinosaur die. I know that the ramifications are huge, but in a culture that expects others to help us when we have created our own issues we can't always bail everyone out. I guess buying them out would accomplish the same. I think if the government buys them out then just eat the debt and sell of the assests to companies that actually know how to function. Maybe in Toyota or Honda built chevys they might actually work better. I am just sick and tired of all the bailout talk. Companies need to run in such a way that they are profitable. A company that isn't profitable should get a handout.

 

Blogger Dave Miller said ... (9:38 AM) : 

I assume you meant "shouldn't" get a handout.

And generally you are correct. But, and this is a big one, the Big 3 are responsible for over 10% of the American workforce [parts, repairs, sales, etc.] and that is a lot of jobs to potentially lose.

COuple that with how much Car sales mean to the American GDP, and we've got a mess.

I suppose you could argue that those sales would be picked up by the foreign models, but who knows.

On the BCS, try this on.

Florida beats Alabama, but is so far back in the computers [a real possibility given their current ranking] that they are unable to jump Texas, Oklahoma, or even perhaps Alabama in the BCS poll.

Then what?

By the way, what happened to O State? I know you are all beaver fans, but you missed the shot at the Rose Bowl.

 

Blogger Patrick M said ... (3:39 PM) : 

I'd argue the point, but on rolls the Bush/Obama socialization of America, and I can't imagine any politician who's going to stop it. Oh well. I didn't expect Social Security to survive. Guess I'll have to build my own transportation when the American Automobile Administration collapses under the weight of our collective stupidity.

 

Blogger TAO said ... (4:45 AM) : 

Actually, if you break out the legacy costs that American automakers bear the labor costs for a Detroit built car are cheaper than a Japanese built car. In Japan, the government assumes the legacy costs of their automakers while in the US the company does. The japanese build factories in the US because they escape the legacy costs they have institutionized in japan.

The reason GM is profitable overseas is because they do not have the legacy costs that they do in the US....which makes them just like the japanese.

What I find the most hilareous is the fact that it is our companies begging for socialism....not our people!

 

Blogger Dave Miller said ... (7:05 AM) : 

Even more interesting is that both countries automakers leave their shores to avoid the legacy [read health care and other benefits] costs.

So if the automakers do not pay those costs, do they pay a wage sufficient to allow the workers to buy their own comparable insurance, at least here in the US of A?

 

Blogger James said ... (10:26 AM) : 

I have to say I agree with Pastor David on one point: Let it die. It is our system of Darwinian Capitalism. If Dominos died there would not be a bailout. Same with Microsoft.

But if we are to bailout the company, I liked the socializing idea at first. But then, if our government owned the company that made our cars, would they start pushing them on us? Tax breaks for buying GM? Instead of war bonds, buy a GM and support our troops?

I do not like that idea. Im already uncomfortable with the idea of my taxes paying for a war that neither I nor the majority of our country supports, but I don´t want to have to start worrying about the car I buy paying for American Imperialism, or whatever dumb decision our government makes next.

Again, let it die. Or lets go with your idea, Dave. Give the money to the people in the form of a car coupon to be used at GM. That way we actually get something out of it, instead of just handouts to cars that just plain dont work as well as Foreign-Designed cars. Heck, my $10,000 Hyundai will run longer than my parents´ Ford will.

 

Blogger Dave Miller said ... (11:12 AM) : 

James, you probably have the same Hyundai Accent that I have.

$10,000 to buy, 35 miles to the gallon, good for 250,000 miles if you take care of it. Includes airbags, AC and a decent radio.

No major maintenance needed. Why can't Detroit make a car like that?

 

Blogger TAO said ... (5:17 AM) : 

Hyundai is supported by the South Korean government which is ONE OF THE REASONS why Detroit cannot make cars like that.

I remember in the 1980's Hyundai's construction business was always low bidding all of these construction projects...which wasn't hard for them to do considering that their employees were actually serving out a mandatory 3 years military service by working construction for Hyundai in foreign countries. This also lowered Hyundai's labor costs because the government was paying them.

If you break out the legacy costs of Detroit labor and then match that against the Japanese labor costs you actually end up with Detroit being the same....

The Japanese benefit because the government picks up their legacy costs.

That still leaves Detroit with the issue of dealers, customer service, and design....which is where the real issue for Detroit is at.

 

Blogger Dave Miller said ... (6:04 AM) : 

Gracias Tao.

 

Blogger James said ... (10:30 AM) : 

Good points Tao. I don´t want our government running the car companies because of exactly what you said about Koreans serving in the military by working on the cars. If the US started doing that? Do we really want our car factories becoming military targets? Terrorist targets?

Plus, this just opens the doors for a whole mess of things. Prisoners working on our cars instead of cleaning up the highways. The military running those factories? There go a bunch of jobs that we were trying to keep in the first place.

And back to my earlier point, with the US Government running one of the big three, would that make me unpatriotic to buy from one of the other big ones? Am I not supporting our troops if I buy Ford?

This just opens up a can of worms. Whats next? Apple has been kicking butt against all the PCs out there. Should the government buy Gateway? Dell? Then it would be Steve Jobs competing against the US government? Corporate sabotage therefore becoming treason? Ugh.

 

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