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Monday, November 10, 2008

Why General Motors Is Worth Saving

posted by on November 10 at 14:30 PM

General Motors will not see 2009 without a government bailout. What used to be the centerpiece of the American economy has a decent chance of not seeing Obama’s inauguration.

If this should happen, it would be an atom bomb dropping on the American middle class. It might be hard to see from here (or maybe not), but GM and the auto industry are among the few things that have worked in the US private sector, from a social and economic point of view. You know the deal. Work hard, turn in your hours, and you’ll be rewarded with the American dream: home, retirement, some vacations, and so on. Be part of the great, producing company, and all of this is yours.

On the other hand, the service sector that has come to dominate the US economy is most notable for producing shitty, disposable jobs that are considered a stepping stone to something better. So what future will we favor in these tough times—becoming underappreciated, union-less armies selling outsourced, imported goods? Or becoming a well paid worker that actually makes things?

And here’s what might be most shocking—despite being saddled with the costs and responsibilities of being the largest private pension and health insurance provider in the world, has made clever and key investments that deserve fulfillment. Yes, I’m talking about an American car-maker; hear me out.

Nevermind the now-defunct EV-1—the first modern mass-produced electric car. GM’s heavy-duty hybrid technology would be far more revolutionary than Toyota’s. Likewise, the technology in a Chevy Volt does a far better job of playing to the strengths of electric and gas motors than any competing hybrid. For more technical details, you should hop over to for an explanation.

GM has great ideas, their manufacturing quality is on par with the Japanese manufacturers, they have beloved small cars they’ve started pumping.

Early on in this crisis, we decided that AIG—an insurance company that made horrifyingly bad decisions—was worthy of rescue. We’re now up to $150 billion in a growing pit of despair attempting to save a company that did little to create or maintain a middle class. On the other hand, the same sum invested in American industry as loans would have a clear, immediate and profound effect on the economy—putting money into the pockets of line workers, new products on the global market that are competitive and even potentially make our society more energy efficient.

The alternative frightens me. If we allow GM and the auto industry to fail, it’s unclear what, if anything, would replace the key role it played in our economy. I cannot fathom how to renew an industrial middle class without the auto companies—and the vast manufacturing networks supported by them.

RSS icon Comments


"beloved small cars"?

you crazy.

Posted by max solomon | November 10, 2008 2:39 PM

Agreed, but taxpayers get warrants and preferred stock a la "talk-my-book" Buffett. Without massive US infusions GM is going down, pure and simple. It may well tank anyway, but if we do it right we'll at least get a nationalized manufacturer out of the deal when it does, with some hope for its workers, retirees, pensions and unions.

Posted by tomasyalba | November 10, 2008 2:42 PM

Make it the centerpiece of the new energy policy? Bail them out with the stipulation that they mass produce inexpensive, fuel-efficient and/or electric cars for the global marketplace?

Previous bailouts for the auto industry sure didn't stop them from making boneheaded business decisions, like focusing on the SUV market. They pretty much took the money and ran.

Posted by flamingbanjo | November 10, 2008 2:42 PM

GM's intellectual property doesn't disappear into the mist--if its an asset worth owning, then it will be bought by another manufacturer.

Why is GM going bankrupt? How will subsidizing it fix its underlying structural problems? Few would disagree that a strong middle-class is important; but subsidizing a single company in a single industry is a convoluted and ad-hoc way to foster that goal. Surely we can think of a more parsimonious intervention?

Posted by Andrew | November 10, 2008 2:44 PM

Those shitty service companies with their shitty jobs do one thing that GM doesn't seem to be capable of doing: they run a profit. If you can't do that, then it doesn't really matter what a great employer you are. Or to put it another way, I can be a great employer - better than GM! - if you give me billions of dollars to do it.

Posted by minderbender | November 10, 2008 2:45 PM

On the contrary, Jonathan, GM cars have no where near the reliability offered by Japanese makes. They have been consistently rated at or near the bottom for reliability by Consumer Reports for almost a decade. Only Chrysler is worse. It's only now - when it is too late, that GM has decided to build cars that Americans want and need. You might think it's an Atom bomb on the middle class if GM goes under, but I say go get a job at Toyota.

Posted by crazycatguy | November 10, 2008 2:51 PM

One minute you fools are ranting about light rail and CO2.

The next you want to "save the industrialized worker".

Which is it?!?

Posted by John Bailo | November 10, 2008 2:53 PM

Jonathan - Would you have made the same argument 150 years ago about farming? At that time, roughly 90% of American jobs were directly or indirectly tied to farming. As the industrial sector grew, there was much hand-wringing over the loss of farming jobs - what will those people do? where will they find jobs? Ironic that industry is now in need of protection and subsidy in order to make sure that people don't have to face... the service economy.

Anyway, to summarize: things change, usually for good reason. Otherwise you'd be pitchforking hay and beheading chickens instead of blogging from your MacBook.

Posted by Lionel Hutz | November 10, 2008 2:55 PM

American manufacturers should be producing new technologies! We shouldn't be bailing out companies that can't innovate and keep their heads above water!

We should be building public transportation and green energy farms and totally different cars and new bridges and stuff that nobody has thought of yet. . .free-of-charge human-powered gyms that keep the lights on in the malls they inhabit . . . escalators running on batteries charged by the power generated by conversion of potential energy as other people use a gravity-based device to go down . . . sidewalks that capture energy from being walked/rained on . . . like, I don't know, NEW STUFF to save our asses from a carbon economy.

Fuck GM!

Posted by violet_dagrinder | November 10, 2008 3:01 PM

GM cars are shit and have been for decades. And, therein lies the root of the problem. If GM goes under, then we can hope that Toyota or Honda opens more manufacturing facilities in North America.

If the government really wants to help, then additional incentives for foreign car companies to manufacture its products in the US is the way to go.

Posted by Mahtli69 | November 10, 2008 3:02 PM

1) I am not a fan of the AIG and other financial firm bailouts, but there are nonetheless some important ways that finincial firms bailouts are more justifiable than industrial firm bailouts. Financial firms an enablers of vast and diverse sectors of the economy. GM just makes one product. Financial firms are failing because of counter-party risk. GM is failing because no one wants its products at a price high enough to cover its costs. Because of counter-party risk, the failure of a large financial firm could disrupt the ability of the entire financial sector to fulfill demand for financial products. Were GM to fail, other car-makers could certainly step in and fulfill demand for cars.

2) Basically, you are making an argument that GM should be saved not because of the value it brings to consumers, but because of its value to its workers, and to the larger community of unionized labor that can point to it as a guiding light. But a great deal of its troubles lie precisely that model of labor relations, which strapped it with high pension and retiree health care costs that continue to go up even as its production goes down. If anything, we need to move away from that "Detroit Model" and toward a model, like that used by the Japanese automakers operating in the U.S., in which a firm's obligations to workers end with the employment relationship.

Posted by David Wright | November 10, 2008 3:02 PM

How else are they going to learn from their stupid mistakes?
This would give the opportunity for smaller, more innovative car companies (like Tesla) focusing on hybrid/electric/other technology to gain ground in a marketplace dominated by giants.
They are probably 'too large to fail' just like AIG, but that doesn't mean they deserve a bailout.
And if we do bail out any company, why don't we fire all of the dumbfucks that couldn't do their jobs in the first place?

What innovation has GM done for us lately? The crossover?!?

Posted by Keying Hummers like its my job | November 10, 2008 3:04 PM

The UAW deserves the lion's share of the blame here. Note that the Japanese manufacturers with non-unionized plants in the US have been thriving.

Posted by john cocktosin | November 10, 2008 3:07 PM

the industrial middle class isn't coming back Golob. the time it actually existed was an anomaly. the 1950 and 60s were an anomaly in our time and we paid the price for it with unsustainable western cities and toxic environmental damage.

Further any comparison to AIG and GM is completely ridiculous.
1. GM has been on the slide for decades
2. GM has relied on credit expansion in private households to expand and maintain business and cashflow. People don't buy cars based on increased wages, they buy it with credit extended by GMAC.
3. They have been saddled with a huge workforce they can't easily adjust due to the UAW. UAW is going to fight for the workers and GM knows this but the inability for GM to cut costs both short term and long term in regards to labor has hurt them in some capacity.
4. They screwed the fucking pooch at almost every step of the way in product design. It is completely ridiculous to have as many models and as many variants of models as GM does.
5. They've been on deathwatch for years.
6. Saving GM

GM has played 2-7 off suit for years and only stays in the game due to luck or having a huge bankroll.
AIG on the other hand went all in one time with a horrific bad beat at the turn.
Now GM is asking for help despite essentially being a stupid degenerate gambler that has had chance after chance to change.

Now here's the real problem with bailing out the american auto industry; There is no amount of money that will rescue an idiotic business that continues to make poor decisions again and again. And really, people employed by the auto industry is increasing in certain parts of america like Tennessee. Sure they aren't employed by GM but they are at least employed by a company or companies that understands the american market better than anyone.

And sure, GM is integral to a lot of america but i don't think most americans are prepared to be held hostage by a madman that GM has become. At what point golob, will you grow a backbone and stop the outright subsidization of companies that are leeches on society, government and tax payers?

Posted by Bellevue Ave | November 10, 2008 3:09 PM

6. I was going to reiterate a point that David made; you're trying to save a company based on teh workers not the value given to consumers. If this is the case simply have the united states buy out the pensions and sell off assets of GM to cover the cost.

Posted by Bellevue Ave | November 10, 2008 3:14 PM

@14 and many others, dead on. I wrote this before I saw your posts, but why not pile on?

GM and the auto industry are among the few things that have worked in the US private sector, from a social and economic point of view.

From a socialist and un-economical point of view maybe! GM and Ford have been about as successful as Ilyushin and Tupelov over the past 30 years. The only reason they still exist is that the government bails them out whenever they file for bankruptcy.

Obama is dead wrong on this one, and your uncritical paraphrasing of the Dear Leader seriously calls into question your journalistic integrity. I say government takes over the pension plans and wishes the auto industry good luck.

@13, you might be right.

Posted by John | November 10, 2008 3:16 PM

oh, golob, i've never seen you SO wrong. gm needs to die. they are not viable, have been hobbling along for years as the dinosaur of the world auto industry. let's move on.

Posted by ellarosa | November 10, 2008 3:17 PM

A smarter thing than a bailout would be purchasing new cars and trucks from GM.

Plug-in hybrids, biodiesel hybrids, and high-mpg small or light vehicles.

That would both create market forces to shift the industry over and help them at the same time.

But that would be ... prudent.

Posted by Will in Seattle | November 10, 2008 3:23 PM

One more point: filing for bankruptcy protection has a lot of consequences, but it doesn't compel the abandonment of a thriving business. If a business is viable, but for some reason has become insolvent, then it can restructure its finances under bankruptcy protection and emerge as a reorganized company. This is what happened with Johns Manville, which had a bunch of legacy asbestos liability, but which also had a profitable business selling (asbestos-free) insullation. The company went into bankruptcy, its shareholders were wiped out, and it reemerged as a reorganized company belonging mostly to the asbestos victims. That reorganized company was profitable enough that Warren Buffett eventually bought it.

If Golob is right that GM is a thriving business with great management, and that its collective bargaining agreements are sustainable, then I see no reason it couldn't go into chapter 11, wipe out its shareholders, pay its creditors in stock in the reorganized entity, and emerge with all of those great jobs intact.

So if you really think that GM has a great business model, and those union workers are really worth every penny, then you have nothing to fear from bankruptcy (except, conceivably, the pension fund getting wiped out - which could be resolved with a much more limited bailout than the ones being proposed).

You might think those are big if's, but Golob says GM has great ideas, etc. If he's right, bankruptcy is nothing to fear. If he's wrong, then what's the point of saving GM as a going business?

See also.

Posted by minderbender | November 10, 2008 3:29 PM

I wouldn't blame the UAW for even half their troubles. I don't like unions for the most part because at times they are at odds with what they purport to represent and people get really defensive of them when anyone critiques the possible downsides of unions.

I blame the UAW for only a part of their troubles because it really has decreased the liquidity in workers and retooling. But they were really doing the best they could for workers who paid their union dues, and tried even if half heartedly to accept some sort of modest compromise for the long term health of the workers.

The far bigger problem is GM hasn't had any vision for decades or at least any balls to push vision. If you want an example of private sector vision and performance and the american dream look no further than IBM. IBM, has adjusted its business to be successful over the course of several decades and got out of industries it didn't think would be the future and were right. Im sure golob was one of those clueless people lamenting the loss of an american laptop manufacturer selling to the dreaded chinese...but overall it improved the health of their company. What can GM learn from IBM in this regard?

Posted by Bellevue Ave | November 10, 2008 3:31 PM

GM, white collar grifters all. They can't sell their cars because the Japanese have far superior products. If GM wants taxpayer money, force them to make cars that get 100mi/gal. And fire white collar workers at the top. And AIG took some fancy and expensive little outtings to Europe for their top management grifters. Democrats need to put a stop to that as well.

Posted by Vince | November 10, 2008 3:31 PM

Just say "No!" to corporate welfare.

Posted by Chris | November 10, 2008 3:32 PM

GM is a rathole of crap. Dumping billions in will just keep it alive for whatever the burnrate allows. There must be economically better things to do with all those billions.

Posted by Karlheinz Arschbomber | November 10, 2008 3:38 PM

"Save the Corvette!"

Posted by elswinger | November 10, 2008 3:45 PM

the worst part of golob's thinking here is that industrial and manufacturing jobs more inherent worth based on historic security and wages of those jobs. This is an error is analyzing the basis for which those manufacturing jobs held the value and attributes they did; technology scale, labor's aptitude of integration into manufacturing jobs, transportation cost of manufactured goods, technological demand of goods, disregard for environmental impact and foreign competition in all this aspects.

in earlier times the cost and reliability of transportation, the deficient aptitude of foreign labor and infrastructure of foreign competition, the lack of technological expertise for foreign manufacturing all favored domestic labor markets for manufacturing. You tilt these factors vastly in favor of foreign countries and it's easy to see why we've lost a competitive edge in manufacturing; the cost is simply too great in many cases for the type of manufacturing taking place. Look at call centers as an example where the value of the service might be tied to the ability to communicate and you can understand why many of those jobs in india were/are coming back to the united state.

also consider the possibility that the reason we have flourished as a nation isn't because of the mythos of the worker in the 1950s living in suburbia with 2.5 children and a dog, but because we are the greatest nation to procure and implement ideas. Our intellectual capital is our greatest asset. This is what we must retain.

Posted by Bellevue Ave | November 10, 2008 3:52 PM

GM is an incompetent and utterly dysfunctional corporation. Bad, bad investment.

Rather than bailing them out, the US should seed a start up car company that is forward-thinking, green, packed with the world's top engineers, and is competently run.

Posted by seandr | November 10, 2008 3:55 PM

or just let the japanese fight it out and employ people here in the united states. it's been working south of michigan.

Posted by Bellevue Ave | November 10, 2008 4:06 PM

Jonathan, normally I'm a fan of your posts, but I'm afraid I have to disagree with you on this one.

"GM has great ideas, their manufacturing quality is on par with the Japanese manufacturers..."

Okay. You're the empiricist. What data do you have to support such a ridiculous claim. GM has been constantly loosing market share since the mid-1970s. Japanese automakers have consistently produced higher quality, more reliable cars for at least 30 years, according to every Consumer Reports I've read for decades. That has not changed. GM all but abandoned small fuel efficient cars in favor of big gas guzzlers, and now acts surprised that high gas prices have killed their market (like nobody could predict that gas prices would ever go up). They have been consistently slower to update and introduce new models than Japanese and European manufacturers. While Japanese companies have lead the field in high fuel efficient cars, American car companies have fought tooth and nail to prevent higher fuel economy rules, and have gone out of their way to dodge the nominal standards that do exist.

Labor costs are a red haring. None of these things is labor's fault. These are all boneheaded decisions made by upper management.

The last time I bought an American car was in 1982. I've bought 6 new cars since then. I could have chosen an American car each of those times, but I didn't. Labor costs had nothing to do with it. Each time, I could have bought an American car for the same or less money than the cars I bought. Cost wasn't the issue. The problem was that other companies had better quality, more reliable, more fuel efficient cars each time, regardless of price.

If we bail them out, they'll continue to build sub-par, poor mileage cars like they've been doing for over 30 years, and blame their failures on labor costs. Without a significant shift in their long term business strategy, a bailout would only delay the inevitable. I would only support a government bailout if they forced GM to toss out most of their upper management, and install people with a mandated goal to improve quality and produce higher milage vehicles.

Posted by Reverse Polarity | November 10, 2008 4:07 PM

"Beloved?" Have you been dipping into Dom's stash?

Posted by Big Sven | November 10, 2008 4:07 PM

@26 - "Rather than bailing them out, the US should seed a start up car company that is forward-thinking, green, packed with the world's top engineers, and is competently run. "

No, the US should not. There is no need as those companies already exist. They are called Honda and Toyota. And no US subsidy is required and their products are superior and more affordable to the American consumer than domestic alternatives. And that's okay. That's good, in fact.

Posted by Lionel Hutz | November 10, 2008 4:09 PM

Nationalize GM and get them started making Tatas, I say.

Posted by Greg | November 10, 2008 4:09 PM

@28 long term labor costs aren't a red herring. it is merely a minor factor in the problems they are having. The fact that capital is tied to labor where unions are present means that the ability to liquidate capital and adjust labor is hampered by union efforts. would this save GM? no. but it would at least allow them to maneuver out of obvious failing areas.

Posted by Bellevue Ave | November 10, 2008 4:14 PM


Click the it, damnit. CLICK IT!

Posted by Original Monique | November 10, 2008 4:18 PM

I could have bought GM, but I ended up buying Ford, as I doubted GM could fix their problems.

That said, the Wall Street Journal had a long article this Saturday on why the Honda Fit is such a good car.

Bailouts are generally bad ideas. Especially when Detroit's involved.

I still say, prepay to buy fleet vehicles from GM and Ford for the US government, and give the new cars the volume purchases that will make them sell well.

But no SUVs - hyrid or not, just a bad bad idea.

Posted by Will in Seattle | November 10, 2008 4:30 PM

This is the best piece I've seen so far on what next for our economy:

...we need a green public-investment stimulus. It would defend state-level health and education projects against budget cuts; finance long-delayed upgrades for our roads, bridges, railroads and water management systems; and underwrite investments in energy efficiency--including building retrofits and public transportation--as well as new wind, solar, geothermal and biomass technologies.

This kind of stimulus would generate many more jobs--eighteen per $1 million in spending--than would programs to increase spending on the military and the oil industry (i.e., new military surges in Iraq or Afghanistan combined with "Drill, baby, drill"), which would generate only about 7.5 jobs for every $1 million spent.

Posted by Trevor | November 10, 2008 4:39 PM

GM doesn't need to die, it needs to be busted up. Keep Chevrolet, Pontiac, and Cadillac. Dump the rest. Focus on the Volt.

Posted by laterite | November 10, 2008 4:53 PM

BA @14, your poker analogy was perfect. AIG's situation sounds like the way too many of my games end. Someone always has the ace to my king. :)

Posted by laterite | November 10, 2008 4:56 PM

Has Slog gone insane? Now one of the smartest people on Slog goes and makes about the most idiotic argument I've seen in a while.

GM has made about every wrong decision a company can make for several decades straight now, and if we save it, it will be an albatross around the neck of our economy for decades more. Where did they go wrong?

Making low-quality cars (see the reliability thing above).

Switching to SUVs, which were only profitable (and possible) because of extensive lobbying of the government to exempt them from the rules governing cars (like CAFE).

Mismanaging their pensions to the point that they are criminally underfunded and just supporting their promised obligations would essentially bankrupt the company.

Trying to salvage their crappy auto business by getting into the finance game (GMAC is a huge portion of their business) and getting screwed by the problems there.

If they were a horse, we'd have shot them already.

Posted by F | November 10, 2008 4:59 PM

Fuck 'em, Fuck 'em, FUCK 'EM.

Should have had the foresight earlier to quit making those goddamned SUV's.

Posted by Fuck GM | November 10, 2008 5:06 PM
40're probably next.

Posted by Fuck GM | November 10, 2008 5:09 PM

@38, I've come around to the idea that many if not most of our problems have occurred because of a 20-30 year credit bubble that has boiled for the past 10 years... we have replaced wages with credit and it isn't working out too brilliantly for us right now.

Posted by Bellevue Ave | November 10, 2008 5:14 PM

when you driving a small car do ypu feel comfortable?

Posted by busby seo test | November 10, 2008 5:55 PM

their manufacturing quality is on par with the Japanese manufacturers

This is satire, right?

Posted by Doctor Memory | November 10, 2008 6:00 PM

GM, like Ford, has proven itself incapable of producing cars that people want to buy...AT A PROFITABLE PRICE FOR THE MANUFACTURER. The GM and Chrysler cars I've owned have been junky, so I won't buy from in the future. The Fords have surprisingly held up, and the Hondas have been good as gold.

What percentage of auto-workers living in the US are actually working for "foreign" auto manufacturers (Toyota, VW, etc.) at this point?

Posted by Tiktok | November 10, 2008 6:24 PM

As a Michigander, I would strongly support something like this. People are losing auto-industry jobs faster than you can ask for early retirement. It's desolate there. If the government can provide a bailout with stipulations to manufacture modern, eco-friendly, affordable vehicles - go for it. Give Michigan some jobs back, damnit.

Posted by scotlanded | November 10, 2008 6:40 PM


They shouldn't have killed the electric car.

Other than the electric car--when is the last time they had a good idea?

Posted by Concerned Canuck | November 10, 2008 7:18 PM


Exactly right. Real wages have been stagnant for 30 years, but credit kept increasing. It's the only thing that kept the consumer buying things, and hence, kept the economy alive.

Posted by F | November 10, 2008 7:33 PM


You have *no* idea what you're talking about. Stay way, way away from economics if you want to be relevant.

Posted by John | November 10, 2008 9:47 PM

Wow. Seriously, none of you have any idea what it's like to be living in Michigan right now. If you aren't afraid that you're going to lose your job or that people in your family are going to lose their job (and I mean this on a daily thing, there's really no such thing as job security in Michigan anymore) then you're afraid that the auto-industry is going to collapse and, essentially, collapse the threadbare economy that we currently have.

It's plenty easy to say "fuck you GM!" try telling that to the auto workers who are going to lose their jobs. It's plenty easy to say "If we had said this to farmers, we wouldn't have industry" because the farmers were able to pack up their tools and start working in factories. Michigan jobs are constantly being shipped elsewhere. Blue-collar, white-collar, doesn't matter. Where are they going to work? There's no jobs!

So fuck you all, seriously. These aren't major corporations you're talking about fucking over. These are average people with average lives who just want to be able to keep working so that they can feed their families. Did the Big Three fuck up? Definitely. Should the middle class have to pay for the mistakes of a few upper class idiots? I can't *believe* you're all saying "yes".

Posted by scotlanded | November 10, 2008 10:52 PM

Comparable-quality manufacturing? Great ideas? GM? Is this The Onion or The Stranger?

The only way GM can possibly succeed long-term is by failing now. This is their chance to become a business again.

A bailout would doom the industry to another untenable decade.

Posted by Troy | November 10, 2008 11:12 PM

There may be no good economic justification, but for political reasons its looking increasingly likely. Since Obama is going to back this, all you partisans better get in line behind Jonathan and start finding some reasons that it's really a great idea.

Posted by David Wright | November 10, 2008 11:33 PM

GM has many great products down the road and with the workers wages cut in half, they have an excellent chance of doing well....if only they can survive the next two years.
If we lose the auto industry to foreign countries, we as an industrial base are through in this country. We can not allow this to happen. No other government in the world would allow that to happen. But, with such a dumb government like we have, this could easily happen.

Posted by jack | November 11, 2008 4:49 AM

@49: GM has been fucking Michigan for the past 25 years, and you want to blame US for its failure? You need to get your priorities straight.

Posted by Greg | November 11, 2008 10:03 AM

This is, seriously, the most incoherent item I've ever read in the Slog.

We are supposed to bail out GM on the grounds that "GM and the auto industry are among the few things that have worked in the US private sector, from a social and economic point of view." For a minute there, I couldn't figure out in what sense the author believed GM "worked". Then it hit me. The author thinks GM works because it offered its retirees pensions and health care that the company cannot possibly afford, while remaining a going concern. So the government, outside the context of providing universal health care, should step in and finance GM's improvidently assumed obligations ("improvident" here defined as an obligation you couldn't possibly make in a billion years).

I am a liberal, my friend. Not a Marxist. Fuck this.

Posted by Quintus Slide | November 11, 2008 10:28 AM

GM is worth saving for one reason: Cadillacs rule. The CTS is the raddest car I've ever owned and I want a new one in a few years and I'd totally cry if they were no more.

Posted by Queen_of_Sleaze | November 11, 2008 11:15 AM

And the prize goes to #28 who has bought six foreign cars since 1982 "because they're higher quality".

Better than my mom's 1992 Buick? If they were that great, you would only have bought one of them.

My car was made in 1980. I figure it's good for another 15-20 years. It ain't no damn Toyota.

Posted by serial catowner | November 11, 2008 11:38 AM

#14 and #47 are spot on. Lets think about this everyone: you're going to pump billions of dollars into a company that produces a product no one wants (or can afford now that the credit bubble has burst). The harsh reality is that no amount of government cash or loans can turn this around at this point. Someone, somewhere, has to start buying their products. With people losing their jobs, the credit crunch stopping the 'drive new every two' gravy train, and the fact that GM products are lower quality than Honda or Toyota, its over. Let's assume the government comes to the rescue and dumps billions of dollars on them -- are they going to keep running the factories when sales have totally fallen off a cliff? GM just reported its worse sales month since 1945! Anyone want to bet that it was just the weather keeping people off the dealership lots?

I feel bad for all the workers not only at GM, but in all the supporting businesses and suppliers who will lose their jobs. Unfortunately, like housing, financial stocks, and playing the lotto: they bet on a company and lost. GM has squandered opportunity after opportunity most notably building giant, gas-guzzling SUVs after the 1970s oil crisis and dismantling the electric car program.

Giving the same management team piles of cash will only prolong the inevitable. Overall demand for vehicles has tanked. Most consumers can't afford a new car without extraordinary financing. Honda and Toyota have better products. Someone has to go down and according to good, old-fashioned capitalism, its the weak businesses that should fail. Pay off their pension obligations (We will anyways since the Pension Guarantee Corporation is almost insolvent -- thanks to other failed corporations -- and will likely need a bailout of its own), sell their factories and tangible assets and intellectual property to someone who knows how to use them, and walk away. In the current economic storm, someone is going down and this time, the drain is big enough to accommodate GM.

Posted by radix_point | November 11, 2008 2:09 PM

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