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Originally Posted by 2010-1SS-IBM
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I can't help but think we're talking about two different things here....because that has nothing to do with what I said.
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Originally Posted by 2010-1SS-IBM
First, going bankrupt because you were mis-managed isn't "external conditions". Markets go up, markets go down, and companies are expected to whether the ups and downs (it's called a fiduciary responsibility). You can believe the credit crunch caused GM's bankruptcy all you want, but they put themselves in that situation by becoming so leveraged that they couldn't survive a credit crunch. There were plenty of companies who didn't go broke.
Oh yes, they did. See above.
Humbly, I suggest you read up on your history and stop trying so hard to crucify somebody because it's an easier chip to argue with.
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The facts are: US gov't provided immense tax breaks to transplant factories, while providing nothing to domestic automakers. US consumer flocked to cheaper foreign vehicles produced with an unfair market advantage of cheap offshore labor, forcing domestics to cut costs. Consumer then blames and abandons domestic automakers for making 'cheap cars'. UAW agreements during times of prosperity and comradery led to debilitating legacy costs decades down the road. Gas crisis of the 70s leads the government to enact fuel economy standards and forces additional development costs on car companies. Progessive malcontent of the US consumer (thanks to above conditions) drives them away from domestic auto products throughout the 90s and '00s leading to massive losses in profit. Consumer demand and lack of ability to compete in small car segment leads domestic automakers to focus on large SUVs. Gas Crisis of '08 halves US SUV sales, debilitating domestic automakers further, Credit Crisis of 2009 eliminates all sources of private credit, for both the companies and the consumer. Leading to no safety net, and massively reduced sales. And that's the abbreviated version....
Let's get one thing PERFECTLY clear. No human is perfect, and if you can prove me wrong, I invite you to do so. Yes, management over the course of 100 years will tend to make mistakes. But the reason for the old GM's failure is NOT solely their fault. It was a combined effort on the part of the American consumer, gov't incentives to foreign makers, worker legacy costs, and yes managerial mistakes. At least 75% of all of that was completely outside their control, or direct responses to external conditions. So I believe it...because it's TRUE. Not because it helps me sleep at night.
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Originally Posted by 2010-1SS-IBM
You assume they would have crashed without government aid, and also assume that crash would have affected the entire country. Here's my counter assumption; they would have been bought voluntarily by investors, and the new investors would have taken on the risk of getting GM solvent (and making any profits) without risking public funds.
See how much better that is?
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Yes, that does look great. Unfortunately I don't live in the Mushroom Kingdom. This go around, all the financial institutions were either failing, being propped up, or publicly crucified. Nobody was spending money or taking any sorts of risks at this time.
Cerberus tried that with Chrysler, and they ended up in bankruptcy, too. Only an auto group has the expertise and ability to run another brand. But none of the auto groups had any money to spend. Go back and see how difficult it was for GM to sell Hummer, Saab, and try to sell Opel. Not only that, but none of the auto groups needed/wanted to have anymore brands. Everyone was consolidating and shrinking. And if they WERE bought? It would have been for the intellectual property alone. Maybe some of the manufacturing resources. The company would have been totally liquidated and all 2+ million people either directly employed or in other sectors would have been jobless.
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