Don't know if I can buy a government car?

[MrIcky]

Originally Posted by UCF w00t

This is all extremely uncharted territory. The government cannot legally compete with private enterprise. For example, with Amtrak, they've just been giving them the money. So I wouldn't be too surprised to see a lawsuit from F, TM, HMC, etc if this deal gets approved (although I'm not sure if TM and HMC would be allowed to sue the US federal government). Almost certainly Ford would though. This quote does scare me a bit...

"As a result of its ownership of GM common stock, the U.S. Treasury will be able to elect all of our directors and to control the vote on substantially all matters brought for a stockholder vote," GM said in a statement.

There is nothing expressly illegal about the Government participating in what should be private industy. It's a founding principal of the country that the government should not compete unless it serves the common interest or the common defense. For instance, Freddie Mac was quasi-governmental under the guise of insuring lower income people would be able to afford homes. It came to exist through an act of congress (I'm not arguing for or against Freddie-just an example). The government is in the position of deciding what's in the public good and a great excuse would be to shape the 'future of transportation for the good of the country'.

The quote though is beautiful, its the common sense outcome of the proposal- but somehow people are surprised.

[Mr. Wyndham]

It's been made painfully clear now....multiple times by both the US govt, and General Motors, that the treasury dept. has no intentions of running General Motors. They are not going to be nationalized, and they are not going to become "Government Motors"...yes, the Government has more than 0% influence in the company, and I agree that's too much. But guess what? They borrowed from the Treasury...everything you're seeing and reading is part of making a "deal with the devil", so to speak. It's not unexpected...

A couple things I want to point out first, I figure this is as good a place as any;

They DID NOT fire Wagoner, they asked him to resign in return for more loans because they felt he was not moving fast enough. Though I made it clear that I didn't like this move, and we've all witnessed what Wagoner has done...he wasn't moving quick enough. And if the gov't was to loan out more money...they have decent ground to request the replacement of the guy spending their money.

They ARE NOT dictating what cars are and are not being built. At most, they're influencing INDUSTRY trends with laws and standards like CAFE and various saftey standards. That is the extend of any product manipulation. As an aside...are cars like the Volt, and Cruze so terribly bad? Anyways.....

I've read reports that state it was General Motor's idea to offer the gov't common stock as a form of loan repayment. This also means the US Treasury will have a member on the board of directers with the intent to protect a taxpayer investment. Lets look at those points....

First of all, it was GM's idea to offer the stock...why? Why make any offer? Why in the world would GM want to give the gov't any more influence? To sweeten the deal. They want to appear attractive to the gov't to stave off any bankruptcy if possible. They want to put out a sign of good-will. And they want to force the gov't to have a hand in the pot...so as to insure their survival. At least that's why I'd be doing it...How is this attractive? GM stock is going to increase in value, that means the gov't will be able to sell that stock in a year or two, and make more money off the loans than they could have possibly made by a simple repayment. Unless I'm much mistaken, the gov't did this with Chrysler in the 70s, too. And lets be honest with ourselves, does anyone REALLY think that they won't sell the stock the minute it's worth more than they bought it? Even if this administration doesn't, you don't think the next will? Having stake in a company is pointless for a governing body unless there's money involved.

Second, the board member -- this should be an expected condition...This guy's interest in the company would soley be to make sure the company the gov't now has temporary stake in...doesn't do anything stupid.

Sorry for the long post/rant...I'm just tired of all this fear-mongering. This is one big clusterf**k....we're in difficult times, and some weird things are going to happen. They're not being nationalized, the world isn't ending....relax, already all this doomsday rhetoric is giving me a headache.

[Captain Awesome]

Nice post dragoneye. I think maybe the intent of what you say is good but I don't trust anyone in gov't to actually follow through on what they say. They're all hypocrites.

On one hand you have them spending billions of dollars we don't have, on the other hand you have them patting themselves on the back for insisting they trim a couple of million from the budget. It all seems like smoke and mirrors to me. I fear they will be involved in ways we will never know until it's too late, yet they will give the impression they are not involved, as you say.

Maybe it won't be done on purpose or intentionally. It may just happen by accident because a few people do things to be helpful behind the scenes or to help their own careers and nobody will notice it's the wrong thing until after the fact.

I'd much rather isolate them from any chance of accidentally ruining things.

[Mr. Wyndham]

Originally Posted by Captain Awesome

Nice post dragoneye. I think maybe the intent of what you say is good but I don't trust anyone in gov't to actually follow through on what they say. They're all hypocrites.

...I fear they will be involved in ways we will never know until it's too late, yet they will give the impression they are not involved, as you say.

I'd much rather isolate them from any chance of accidentally ruining things.

Agree 100%. I just refuse to live in fear or paranoia, especially when things are unsure. I mean, being afraid to buy a car because they might maybe could be with a chance of possibly being in bed with the gov't? Please...

[stovt001]

While buying from a nationalized company does bother my principles somewhat, the Camaro is cool enough to possibly make it worth it.

However, if the government mandates they only make boring econoboxes, I'll go to Ford, Mazda, Nissan, or a used BMW.

[dkb]

Originally Posted by Dragoneye

Agree 100%. I just refuse to live in fear or paranoia, especially when things are unsure. I mean, being afraid to buy a car because they might maybe could be with a chance of possibly being in bed with the gov't? Please...

It has nothing to do with fear ... it's philosophical. Why would I buy a car ... the proceeds of which are going NOT to individual investors but to Congress. Frankly it's bizarre. I pay taxes. Barney Frank takes my taxes and buys general motors. Then with the money I have left over I buy a car from Barney Frank. Actually what I've read today is that the UAW is going to end up with nearly 80% of the company ... which I've only seen in one place ... I need to find out more about that little bit of news.

I will keep my camaro order in place because I like the car and it will likely be the very last GM car not influenced by government bureaucrats. Nevertheless it's bad news. It has to make any sane person take another look at the 2011 Mustang or whatever they have on the way ....

I've noticed some of the comments on the thread keep talking in terms of the gov getting a return on its investment. They're clearly missing the point. It has nothing to do with the investment or the return ... it's about power. The billions in loans is chump change to these guys. Literally. They could care less about getting paid back. They just passed a budget of what ... nearly $5 TRILLION. And they're projecting in a rosy scenario something like $15 trillion in new debt over the next ten years. $50 billion is honestly not even noticeable to these guys. They waste that amount every few months ....

What they're interested in is controlling a major american industrial company. They can hand out jobs and contracts to their favored consitutencies ... they can placate the green movement by dictating the production of green cars that will lose money and that will have to be subsidized. But since they "own" the company who cares if they lose billions. Again .. it's chump change.

They'll run this thing like they run everything .... very poorly and straight into the ground.

[bigralph]

^

[MrIcky]

Dragoneye, I like the way you think in general. I don't think it's doomsday, even if GM did go under I don't think the earth would rip apart and pull us in. I do have some disagreements though so I'm just inserting them in italics or whatever.

Originally Posted by Dragoneye

It's been made painfully clear now....multiple times by both the US govt, and General Motors, that the treasury dept. has no intentions of running General Motors. They are not going to be nationalized, and they are not going to become "Government Motors"...yes, the Government has more than 0% influence in the company, and I agree that's too much. But guess what? They borrowed from the Treasury...everything you're seeing and reading is part of making a "deal with the devil", so to speak. It's not unexpected...

They may not be running GM directly, however having a controlling stake in board elections means that whatever oversite committee that is set-up in this deal WILL control the future vision of GM.

A couple things I want to point out first, I figure this is as good a place as any;

They DID NOT fire Wagoner, they asked him to resign in return for more loans because they felt he was not moving fast enough. Though I made it clear that I didn't like this move, and we've all witnessed what Wagoner has done...he wasn't moving quick enough. And if the gov't was to loan out more money...they have decent ground to request the replacement of the guy spending their money.

Asking Wagoner to resign as a prerequisite to getting loans may not technically be firing him- but it's splitting hairs. Sure the Government had the right and ability to attach strings to loans though- as would any lender.

They ARE NOT dictating what cars are and are not being built. At most, they're influencing INDUSTRY trends with laws and standards like CAFE and various saftey standards. That is the extend of any product manipulation. As an aside...are cars like the Volt, and Cruze so terribly bad? Anyways.....

I would agree that you are historically correct, however manipulating the board (which would be their right as majority holder) to people who would prefer Priuses to Tahoes is more likely than not to be the net outcome. Is this bad or not? I guess that depends on if you like Priuses or Tahoes.

I've read reports that state it was General Motor's idea to offer the gov't common stock as a form of loan repayment. This also means the US Treasury will have a member on the board of directers with the intent to protect a taxpayer investment. Lets look at those points....

First of all, it was GM's idea to offer the stock...why? Why make any offer? Why in the world would GM want to give the gov't any more influence? To sweeten the deal. They want to appear attractive to the gov't to stave off any bankruptcy if possible. They want to put out a sign of good-will. And they want to force the gov't to have a hand in the pot...so as to insure their survival. At least that's why I'd be doing it...How is this attractive? GM stock is going to increase in value, that means the gov't will be able to sell that stock in a year or two, and make more money off the loans than they could have possibly made by a simple repayment. Unless I'm much mistaken, the gov't did this with Chrysler in the 70s, too. And lets be honest with ourselves, does anyone REALLY think that they won't sell the stock the minute it's worth more than they bought it? Even if this administration doesn't, you don't think the next will? Having stake in a company is pointless for a governing body unless there's money involved.

Energy policy is one of the most hotly debated issues in government today and an identity issue to the majority leadership of congress. Energy policy goes hand in hand with transportation. You can't predict whether the governing body will think it's pointless or not to hold on to one of the largest manufacturers of transportation devices in the world.

Second, the board member -- this should be an expected condition...This guy's interest in the company would soley be to make sure the company the gov't now has temporary stake in...doesn't do anything stupid.

Sorry for the long post/rant...I'm just tired of all this fear-mongering. This is one big clusterf**k....we're in difficult times, and some weird things are going to happen. They're not being nationalized, the world isn't ending....relax, already all this doomsday rhetoric is giving me a headache.

I 100% agree with your conclusion. The world is not ending. In the grand scheme of things, whether GM cancels Camaro production to tool up for building those wierd Segway things is inconsequential compared to making sure my kids have food. You just have to say "crap, well I hope this turns out well" and go on with your day. However, it's interesting to watch.

*edit* wow that turned f'ing long Sorry!

[dbotsfordtat]

GM went tits up as a private entity so I guess I don't understand why anyone would be worried about the Feds' owning GM. Bank deposits are insured by the government (FDIC) because private banking went broke and lost all the depositors money during the great depression. Would you keep your money in a bank that wasn't insured by the fed? Our current crisis was caused by unregulated private business, mostly bankers. Government isn't the problem, greed is. I think this is a great opportunity for our Government to re-regulate these huge corporations and bring some sanity back to the market. I would like to see a lot more transparency in our Government but I still think its better than trusting private business. Humans are greedy, until that changes, we need Government.

[Fireball]

The government wrecked General Motors with burdensome regulations such as CAFE standards, safety standards, emission standards, wage controls, etc. GM has been producing cars to appease politicians & bureaucrats rather than appealing to customers in the marketplace. Now that Obama has stepped into GM to infiltrate the company with his cronies, are we to expect the government will turn things around?

[dbotsfordtat]

I think regulations have done more good than harm. I say that because of past abuse to our environment by big business, safety considerations for workers and consumers, and so on. I think many that are worried about government intrusion on private business should look at our history before regulations. Hell, remember what happened to our Bald Eagle population? Big business almost killed our national bird off. Look at China's pollution problems and their subsequent health issues. Just because its good for business doesn't mean its good.

[Mr. Wyndham]

Originally Posted by dkb

It has nothing to do with fear ... it's philosophical. Why would I buy a car ... the proceeds of which are going NOT to individual investors but to Congress. Frankly it's bizarre. I pay taxes. Barney Frank takes my taxes and buys general motors. Then with the money I have left over I buy a car from Barney Frank.

The government wouldn't take any bit of the profit, with exception of the stock value when they sell it.

Originally Posted by dkb

Actually what I've read today is that the UAW is going to end up with nearly 80% of the company ... which I've only seen in one place ... I need to find out more about that little bit of news.

I've read in multiple places the number for that was more like 39%...and again, it's all a temporary discussion. They are seeking to put stock in place of cash, because they don't have any...eventually, that stock will have to turn into cash; It's being used to fund the VEBA...and you can't buy health insurance with stock...

Originally Posted by dkb

I've noticed some of the comments on the thread keep talking in terms of the gov getting a return on its investment. They're clearly missing the point.

What they're interested in is controlling a major american industrial company. They can hand out jobs and contracts to their favored consitutencies ... they can placate the green movement by dictating the production of green cars that will lose money and that will have to be subsidized. But since they "own" the company who cares if they lose billions. Again .. it's chump change.

You could argue that point, yes...but then explain to me why they made such a hassle about loaning the money in the first place...it's just "chump change", right? They are politicking. And if they make money off the stock, which they WILL, then the administration can turn to the taxpayers and say "look what we did for you guys"....it is about power, yes...but there is no benefit power-wise for them to hold a majority stake in GM...they don't know wtf they're doing, and they know it. Government regulation of vehicles will stay limited to CAFE and friends, not the boardroom of General Motors. You surely agree that the country would be in an uproar if there was a blatant "nationalization" of such a large corporation. Without getting into it, the nation would go from blue to red overnight........

Originally Posted by dkb

They'll run this thing like they run everything .... very poorly and straight into the ground.

**IF** they run it at all...again -- this is what I meant when I said that about "fear". Perhaps it was the wrong word; but the point remains -- there's a group of folks already assuming that the government will own GM!! Hell, there's been two misguided people that've already abandoned Camaro because of it!!!

#1; this is still a PROPOSAL. The gov't has not agreed to take the stock, yet -- and they very well may NOT. That would be an added force to send the company into that "surgical" bankruptcy, which - I'll admit, looks mildly appealing.

#2; The treasury...the President, GM PR, and the CEO himself have all said, repeatedly, that the government has "no intentions of controlling or running General Motors Corporation." The question then becomes do you believe them...all of them...or not? If not...fine. But be advised that you have no evidence to the contrary until something 'happens'.

Originally Posted by MrIcky

Dragoneye, I like the way you think in general. I don't think it's doomsday, even if GM did go under I don't think the earth would rip apart and pull us in. I do have some disagreements though so I'm just inserting them in italics or whatever.
Fair enough! I'll respond to what I can.

They may not be running GM directly, however having a controlling stake in board elections means that whatever oversite committee that is set-up in this deal WILL control the future vision of GM.
Not necessarily. They'll have an entity on the board, but this person, or person(s) will be the newbie, so to speak, with most likely 0 knowledge about the car business. In the most probable cases, this person(s) will refer to everyone else, so long as they can be assured the venture is in the best interests of the taxpayer...which also happens to be the consumer...

The other scenario, is that they place somebody with a moderate, to good bit of knowledge about the Industry on there. There's plenty of analysts, and Industry Insiders that could be picked...in this case...it may not be so bad -- every desicion they make may not be a screw up.

I guess my point is that in either scenario, there will be other parties involved. They will act as a buffer of sorts; the gov't won't have 100% say in what happens, which is good. ALL involved will be interested in making money, and none will be interested in making a decision or series of decisions that will hurt the company, or the consumer.

Asking Wagoner to resign as a prerequisite to getting loans may not technically be firing him- but it's splitting hairs. Sure the Government had the right and ability to attach strings to loans though- as would any lender.
It is splitting hairs, and I confess I did it knowingly; Intending to make the distinction that there was a difference between the influence they have over the loan money and it's uses, vs. an outright takeover of the company.

I would agree that you are historically correct, however manipulating the board (which would be their right as majority holder) to people who would prefer Priuses to Tahoes is more likely than not to be the net outcome. Is this bad or not? I guess that depends on if you like Priuses or Tahoes.
See above about the board. It's a rosey outlook, for sure, but it's got as much merit as the gov't-f**ks-up outcome...

Priuses to Tahoes....yeah, probably...but what about everything else? What about Prius vs Volt? ....NO gas...."oooohhhh" says the board member. There's more to GM than their trucks...MUCH more...and I'm positive whoever MIGHT get placed on the board will realize this.

Energy policy is one of the most hotly debated issues in government today and an identity issue to the majority leadership of congress. Energy policy goes hand in hand with transportation. You can't predict whether the governing body will think it's pointless or not to hold on to one of the largest manufacturers of transportation devices in the world.
No, I can't. But again, as I said above -- by internally manipulating the company to make unwanted cars...it would be evident that the gov't is screwing up...and it would severly harm the company in terms of sales and finances....that the gov't now as stock in, literally. Personally, I see a greater benefit in such a case as the company working WITH the gov't versus the gov't taking over the company...I would guess they do, too...which is why they want to 'protect' them in bankruptcy court. They need them, but they can't own them.

*edit* wow that turned f'ing long Sorry!
Don't be! This is important, and must be talked about -- but with far less doomsday predictions, and more fact-checking and rational thinking.

Originally Posted by dbotsfordtat

I think this is a great opportunity for our Government to re-regulate these huge corporations and bring some sanity back to the market.

I would like to see a lot more transparency in our Government but I still think its better than trusting private business.

I agree with the first half -- with one addition, there MUST be a happy medium. We were in it for the better half of the last century...we must find that again, as over-regulation can cripple the market.

I disagree with your last statement. Private business is all about making money, and serving their stakeholders...people can be fired in private business for failing to do that, so they are always hard at work with fulfilling that criteria, with the occasional exception. Whereas gov't officials are elected, for the most part, willy-nilly. Very few actually know what they're doing, and getting a goal completed satisfactorily is a rare occasion due to the nature of beaurocracy. They cannot be fired without going through a long and dragged out process, and they answer to their most valuble ($$$) supporters, not the public at large. The exception to this rule is rare, but welcome.

Rules are set in place by the gov't. Yes...but of the two entities, which is more likely to break the rules? the guy who has to follow them, or the guy who made them?

Those are the characters of the two entities as I have observed them for the past twenty years or more if you include outsider's input I have gathered. Would you disagree with the above assesment? If so...why? But if not -- who would you really rather trust? They guy you can fire if he screws up, or the guy who can't get anything done to begin with?

[dkb]

Originally Posted by Dragoneye

The government wouldn't take any bit of the profit, with exception of the stock value when they sell it.


I've read in multiple places the number for that was more like 39%...and again, it's all a temporary discussion. They are seeking to put stock in place of cash, because they don't have any...eventually, that stock will have to turn into cash; It's being used to fund the VEBA...and you can't buy health insurance with stock...


You could argue that point, yes...but then explain to me why they made such a hassle about loaning the money in the first place...it's just "chump change", right? They are politicking. And if they make money off the stock, which they WILL, then the administration can turn to the taxpayers and say "look what we did for you guys"....it is about power, yes...but there is no benefit power-wise for them to hold a majority stake in GM...they don't know wtf they're doing, and they know it. Government regulation of vehicles will stay limited to CAFE and friends, not the boardroom of General Motors. You surely agree that the country would be in an uproar if there was a blatant "nationalization" of such a large corporation. Without getting into it, the nation would go from blue to red overnight........


**IF** they run it at all...again -- this is what I meant when I said that about "fear". Perhaps it was the wrong word; but the point remains -- there's a group of folks already assuming that the government will own GM!! Hell, there's been two misguided people that've already abandoned Camaro because of it!!!

#1; this is still a PROPOSAL. The gov't has not agreed to take the stock, yet -- and they very well may NOT. That would be an added force to send the company into that "surgical" bankruptcy, which - I'll admit, looks mildly appealing.

#2; The treasury...the President, GM PR, and the CEO himself have all said, repeatedly, that the government has "no intentions of controlling or running General Motors Corporation." The question then becomes do you believe them...all of them...or not? If not...fine. But be advised that you have no evidence to the contrary until something 'happens'.




I agree with the first half -- with one addition, there MUST be a happy medium. We were in it for the better half of the last century...we must find that again, as over-regulation can cripple the market.

I disagree with your last statement. Private business is all about making money, and serving their stakeholders...people can be fired in private business for failing to do that, so they are always hard at work with fulfilling that criteria, with the occasional exception. Whereas gov't officials are elected, for the most part, willy-nilly. Very few actually know what they're doing, and getting a goal completed satisfactorily is a rare occasion due to the nature of beaurocracy. They cannot be fired without going through a long and dragged out process, and they answer to their most valuble ($$$) supporters, not the public at large. The exception to this rule is rare, but welcome.

Rules are set in place by the gov't. Yes...but of the two entities, which is more likely to break the rules? the guy who has to follow them, or the guy who made them?

Those are the characters of the two entities as I have observed them for the past twenty years or more if you include outsider's input I have gathered. Would you disagree with the above assesment? If so...why? But if not -- who would you really rather trust? They guy you can fire if he screws up, or the guy who can't get anything done to begin with?

Well Dragoneye ... I just simply don't agree with your points unfortunately.

Yes they DO think they know what they're doing. I just finished reading about how Barack is currently deep in personally restructuring Chrysler. This is a man who has not a single day's experience in business or finance of any kind. He's forcing Chrysler to be bought by Fiat. He's transferring 55% of the company to the UAW ... 25% is being retained by himself ... and the remaining portions are going to Fiat. The new president of the combined company is likely to be the head of Fiat. He's offering the legitimate debtors roughly 20 cents on their dollars. The government and the UAW will hold 80% of the company. He's preventing Chrysler from declaring bankruptcy to protect the unions who spent close to $400 million helping him get elected. When they Do threaten bankruptcy they talk in terms of a "controlled" bankruptcy that no doubt will be designed to protect union contracts which of course is the source of their financial problems.

Next up .... GM.

I have serious qualms about buying a car from a company hatched in the white house between congressional chairmen and union bosses. And it's anybody's guess what the politics are behind this strange Fiat/Italy connection? Did anyone see this coming?

When you say they won't be making any of the profits ... you're correct in the sense that NO public company directly "distributes" profits. But any money they DO make will be reflected in stock prices presumably or in some kind of dividend. Nevertheless ... whether you want to call it profits or not I WILL be paying roughly $35,000 for my camaro to the owners of a restructured GM which if Chrysler is any indication will be largely the government and the union organizations and NOT to private stockholders.

You say if they didn't care about the money why are they making such a hassle about the loans? Well believe me it's not the money. They're politicians bargaining/pressuring for as much control of these companies as they can buy with our money.

Possibly the ONLY thing in life that you can totally count on is that the government will never voluntarily relinquish power or influence in anything.

Chrysler and GM are toast.

My money SHOULD go to Ford if I can bring myself to get excited about the Mustang.

It's sad for sure.

[Mr. Wyndham]

You don't have to agree with me...but the apparent facts are not in your favor, that's all.