GM pays back debt to US/Canadian governments

[Deegee]

Stunts like this sway me even further away from ever buying another GM or Chrysler product in my life again.

What a bunch of misleading pricks. I'm really surprised the media hasn't been more aggresive against their PR stunt.

[Suave]

Originally Posted by 3 Justin 3

We paid $9B, but then 1.9B stayed as loans and the rest went to stocks, etc. like that, and part of that was Opel.

The sale of Opel had nothing to do with bailout money given by the Canadian government. It was a private deal between two business (or was going to be). The same way GM was selling off Saab and Hummer.

[Cowperson]

Originally Posted by Hack&Lube

I wish I could get a "loan" from the government and only have to pay back 10% of it and consider it paid off!

Also, why aren't the banks paying back the American people for that stupid buyout

From mid-December . . .

Citigroup and Wells Fargo & Co. won agreements to begin extracting themselves from the U.S. government's grip by paying back a total of $45 billion in aid, marking a major milestone in the year-long effort to rescue the American financial system.

The U.S. financial system faced the possibility of collapse a year ago. With the deals announced Monday, however, banks will have repaid $161 billion of the $245 billion in capital that was pumped into about 700 institutions as part of the Troubled Asset Relief Program. Citigroup and Wells are the last major lenders to return their TARP money.

http://online.wsj.com/article/SB1000...479204352.html

Ensuring certain global financial institutions remained in business was necessary - even as you were holding your nose to make it happen.

Whether or not bailing out the automakers was necessary is another thing.

At the time, I used the analogy that financial institutions represented the blood flowing through the global economy whereas GM and Chrysler represented an arm and a leg.

You can live without an arm and a leg but you can't live without blood flowing through your body.

Eventually, lending to financial institutions may in fact turn into a rather sizeable money-maker for the USA government.

Cowperson

[Redliner]

Originally Posted by Deegee

Stunts like this sway me even further away from ever buying another GM or Chrysler product in my life again.

What a bunch of misleading pricks. I'm really surprised the media hasn't been more aggresive against their PR stunt.

Agree 100% - this stinks to high heaven. Maybe I just don't understand the intricacies of big business well enough, but I don't understand how they can go from the brink of destruction to swimming in enough cash to pay down billions of dollars in debt in one year. New car sales haven't rebounded that much. I also don't understand why the government would accept stock in lieu of payment for the remaining portion of the debt. Just doesn't seem to make sense.

I have much more admiration for a company like Ford that made the tough decisions and struggled through without taking the handout - even after the influx of government money tilted the playing field heavily in their competition's favour. Ford will be getting my money from now on when it's time to go car shopping.

[IliketoPuck]

The American car manufacturers are a joke, and have been since they lost their innovative ways and became followers of European and Japanese car makers. The automotive industry used to look to the American manufacturers for ideas and new products, until they realized they could make smarter, better looking, more reliable cars with higher margins than the American manufacturers.

I give some kudos to Ford for not taking bailout money, but make no mistake, just because they didn't take bailout money, doesn't mean that they weren't extremely close to being in the same situation as Chrysler or GM.

All the commercials showing how innovative the American automakers have become are all well and good, but they are 5-10 years behind Japanese automakers. Not to mention that the smear campaign on Toyota for their recall got a NASA investigation....I don't recall Ford being investigated by NASA or any other government agency for that matter when the Bridgestone tires on the Explorer were causing some traffic fatalities.

[valo403]

Originally Posted by Redliner

Agree 100% - this stinks to high heaven. Maybe I just don't understand the intricacies of big business well enough, but I don't understand how they can go from the brink of destruction to swimming in enough cash to pay down billions of dollars in debt in one year. New car sales haven't rebounded that much. I also don't understand why the government would accept stock in lieu of payment for the remaining portion of the debt. Just doesn't seem to make sense.

See my post above, it's an issue of liquidity on both fronts. And all cash deals are virtually unheard of for large public companies, various forms of stock is almost always a significant portion of any financing.

[LChoy]

Originally Posted by IliketoPuck

The American car manufacturers are a joke, and have been since they lost their innovative ways and became followers of European and Japanese car makers. The automotive industry used to look to the American manufacturers for ideas and new products, until they realized they could make smarter, better looking, more reliable cars with higher margins than the American manufacturers.

I give some kudos to Ford for not taking bailout money, but make no mistake, just because they didn't take bailout money, doesn't mean that they weren't extremely close to being in the same situation as Chrysler or GM.

All the commercials showing how innovative the American automakers have become are all well and good, but they are 5-10 years behind Japanese automakers. Not to mention that the smear campaign on Toyota for their recall got a NASA investigation....I don't recall Ford being investigated by NASA or any other government agency for that matter when the Bridgestone tires on the Explorer were causing some traffic fatalities.

Really off topic, but the US response to Japan's auto industry was what kicked off the war in Tom Clancy's Debt of Honour

[IliketoPuck]

That and G.W. Bush stealing the Japan Premier's level 47 Dugtrio. Them's be fightin' words.

[chemgear]

Originally Posted by Lchoy

Really off topic, but the US response to Japan's auto industry was what kicked off the war in Tom Clancy's Debt of Honour

Spoiler:

I swear I was totally freaked out during the original radio news about 9/11 - I had read that novel a few months before (with the whole plane suicide airline crash into building thingy.)

[Bill Bumface]

Originally Posted by IliketoPuck

I give some kudos to Ford for not taking bailout money, but make no mistake, just because they didn't take bailout money, doesn't mean that they weren't extremely close to being in the same situation as Chrysler or GM.

In North America we were totally blind to how good Ford actually was because of the garbage union deal the current executives at Ford inhereited.

They've been producing "Car of the year" award winners in Europe for quite some time. They just weren't allowed to bring them here.

Now that they are, the difference between Ford's of the late 90's and the Fords now with the Euro content and the stepped up domestic quality are night and day.

I used to say I'd never drive a Ford, now they'd be the first domestic dealership I'd visit.

[IliketoPuck]

Interesting point Hulk.

I think the fact that the American manufacturers have to deal with significantly higher labor costs due to union workers is a point that gets under represented when talking about the comparisons between American manufacturers and Japanese/European counterparts.

Don't get me started on Union's either I'm biased towards Japanese cars, and when I get the money I will be treating myself to a BMW. Can't say I'm ever going to buy American, right or wrong.

[TopChed]

Originally Posted by hulkrogan

In North America we were totally blind to how good Ford actually was because of the garbage union deal the current executives at Ford inhereited.

They've been producing "Car of the year" award winners in Europe for quite some time. They just weren't allowed to bring them here.

Now that they are, the difference between Ford's of the late 90's and the Fords now with the Euro content and the stepped up domestic quality are night and day.

I used to say I'd never drive a Ford, now they'd be the first domestic dealership I'd visit.

When I watch some older episodes of Top Gear, and see some of the Focus and Fiesta models the European market got, I was always wondering why they wouldn't sell those here. Ford's done well over there, and it's improved my opinion of theirs. I still wouldn't touch a GM or Chrysler though.

[Azure]

Originally Posted by hulkrogan

In North America we were totally blind to how good Ford actually was because of the garbage union deal the current executives at Ford inhereited.

They've been producing "Car of the year" award winners in Europe for quite some time. They just weren't allowed to bring them here.

Now that they are, the difference between Ford's of the late 90's and the Fords now with the Euro content and the stepped up domestic quality are night and day.

I used to say I'd never drive a Ford, now they'd be the first domestic dealership I'd visit.

Plus they didn't take bailout money.

[Bill Bumface]

Originally Posted by TopChed

When I watch some older episodes of Top Gear, and see some of the Focus and Fiesta models the European market got, I was always wondering why they wouldn't sell those here. Ford's done well over there, and it's improved my opinion of theirs. I still wouldn't touch a GM or Chrysler though.

I highly suggest you take a current generation CTS out for a test drive some day (the V if you can somehow convince someone to let you get your hands on it, although not bloody likely).

It will change the way you view interiors and build quality on American cars forever.

The problem is they need to be able to get the same ideals into their lower end stuff which definitely still hasn't happened. It's tough when you're paying a few thousand dollars in health car costs for every single car you build.

[sclitheroe]

Originally Posted by Cowperson

Whether or not bailing out the automakers was necessary is another thing.

I have read that 1 in 6 US jobs is tied to the auto industry.

So in my opinion, PR stunts, mismanagement, ineptitude, etc, are all kind of irrelevant in the short term - if the bailouts allowed for a softer landing to an industry that was otherwise 100% completely ready to implode, it’s probably money well spent.

Maybe the auto industry will rebound completely, maybe it will have to contract or morph into something different, I don’t know, but it seems that gradual change is preferable to what could have happened.

[Bill Bumface]

In my humble opinion GM and Ford (more so Ford) showed they were worth saving. They should have let Chrysler rot and die as their last "resurgence" still mattered to sputter and die at the peak of worldwide auto sales volumes.

GM is lucky to have the Volt in their back pocket. They need to get that to production ASAP, just not the kind of ASAP where it's a pile of crap due to oversights and lack of quality control.

[Claeren]

Originally Posted by Cowperson

Ensuring certain global financial institutions remained in business was necessary - even as you were holding your nose to make it happen.

Whether or not bailing out the automakers was necessary is another thing.

At the time, I used the analogy that financial institutions represented the blood flowing through the global economy whereas GM and Chrysler represented an arm and a leg.

You can live without an arm and a leg but you can't live without blood flowing through your body.

Eventually, lending to financial institutions may in fact turn into a rather sizeable money-maker for the USA government.

Cowperson

But the government has still created far far too big of a moral hazard for the future.

The only reason the markets have rebounded like they have is that the American Government has essentially said that no one will ever really pay the price for taking stupid risks....

The government could have and should have gotten two things for their money:
1) Total ownership of all of the worst companies assets. (That they then should have sold off in pieces to the companies in the market who didn't take stupid risks.)
2) Total and complete reform of the industry on every front deemed necessary to align the market with reality/main street.


Now that those companies have rebounded on free government money they are not willing to bend even a little on regulation, and without risk being properly priced into the market we are on the EXACT same path to destruction we were before (although governments around the world have taken most of the private losses from this last crisis and converted them into public losses for the long term, further handcuffing a response WHEN next time hits).



The money these companies needed simply did not exist in the market, the government was their only choice.

If roles were reversed I assure you that those companies would have bent uncle sam over a barrel for hundreds of billion in aide....


It has all made a joke of capitalism if you ask me.


Claeren.

[Azure]

Its not capitalism though.

Governments bailing out businesses are made stupid risks goes against what capitalism is all about.

[Cowperson]

But the government has still created far far too big of a moral hazard for the future.

I would agree governments are responsible virtually entirely for the entire mess . . . . . . if you let the lions out of the zoo in the middle of a city, don't be surprised if they go out and start killing things.

Originally Posted by Claeren

Now that those companies have rebounded on free government money they are not willing to bend even a little on regulation .

So what?

They're going to be put back in their cages anyway. They have the right to lobby their position but, really, they're not in a good spot for sympathy right now.

They can jump up and down all they want but, in the end, governments should and probably will act in the public interest in restoring a certain level of regulation to diminish the potential of similar situations in the future.

Really, their whining is just background noise . . . . . I'm in the business of being an arch-capitalist and even I'm against them.

Basically, the real failing of de-regulation was the assumption animals in the zoo would act in the long-term interests of their shareholders even if allowed to roam free.

What we found out is the short-term interests of the individuals running the show came to the fore and little apparent thought was given to potential consequences . . . . in essence, the animals reverted to their primal instincts. If one was doing it and benefiting, all had to do it because immediate consequences were nil beyond the fact you might be fired if you didn't put up the same numbers.

In truth, the animals in the zoo need to be in cages. Now we know (and should have known anyway).

It's just the size of the cages that's at issue.

How much is too much regulation? How much is too little?

Clearly there was too little in the end but was there too much before? It is also true that it is against the public interest to make the cages too small.

These animals do have a useful - even essential - function in our society and we must give that some respect . . . . . but, you know, they're a little dangerous if you give them too much freedom.

Eventually, in about 10 or 15 years, we'll forget that lesson again. We always do.

Cowperson

[Locke]

I just find that advertising such an obvious load of BS proves that GM didnt learn a damned thing about how to improve the basic operations of their business.

They're still lying right to people's faces and expecting them to buy their crap product purely based on the fact that they're GM and they deserve it.

At what point do these major American institutions come to the realization that their Goodwill is totally spent and that they have to start putting some effort into regaining it. Very few people will be buying GM simply based on the fact that its GM anymore, that type of brand loyalty for that particular manufacturer is totally shot. The sad part is, they're the ones that pulled the trigger.