GM Gets To Dump Its Polluted Sites 336
ParticleGirl writes with this excerpt from the Detroit Free Press:
"GM's unusual, government-engineered bankruptcy allowed the Detroit automaker to emerge as a new company — and to shed billions in liabilities, including claims that governments had against GM for polluting. Environmental liabilities estimated at $530 million were left with the old GM, which has only $1.2 billion to wind down. Administrative fees and other claims will soak up that money, and state and local officials told the Free Press they fear the cleanups will be shortchanged. ... The New York Attorney General's Office, seeking to protect environmental claims for cleanup at Massena and other sites, argued that federal and state regulatory requirements should not be eliminated by a bankruptcy sale. ... But [US Bankruptcy Judge Robert Gerber] ruled otherwise."
The road to hell... (Score:4, Informative)
is paved with good intentions. Notice to government officials and their supporters: QUIT TRYING TO FIX STUFF, YOU ONLY MAKE IT WORSE.
Re:Both GM and Chrysler were handle poorly (Score:5, Informative)
It's even worse. Ford (or more accurately, CEO Alan Mulally) saw the impending doom and got ahold of as much cash and lines of credit as they could and were able to avoid bankruptcy. Car companies (especially GM!) don't make money by selling cars so much as they do by financing car sales. GMAC was also the recipient of multiple rounds of government financing and has FDIC backing and access to below-market government financing. In order to increase GM sales, GMAC lowered their standards (sound familiar?) and offers 0% loans. Meanwhile, Ford Motor Credit needs to borrow money on the open market at rates of 10% or so.
If you look at Edmund's analysis [cnn.com] of the CARS program, Ford has 4 of the top 10 (including the higher margin F150 and escape SUV). The official government figures [cnn.com], however, are broken out so that high milage (and mostly foreign) cars look more popular.
Re:Is this surprising? (Score:4, Informative)
Normally, when a company goes into bankruptcy, the assets are liquidated and the bondholders/etc get to split the cash. Sure there might not be much left to spread around, but its part of the process.
That didn't happen here, and i say it wasn't a true bankruptcy. Nor was Chryslers, with their assets being given to a foreign entity...
Re:Here is a Reason Why the Free Market Works Best (Score:2, Informative)
However, because Americans allowed Washington (and Barack Hussein Obama) to effectively nationalize GM,
Sorry but when you specifically mention Obama in a comment like that makes it sound like he had some primary responsibility in the nationalization of GM. Before Obama ever came to power, the Bush administration had donated about $15 billion to GM, becoming a major shareholder. I think that the government would have ended up nationalizing GM no matter who was president.
That aside, I completely agree that the government should have let GM go bankrupt so that another automaker could have come in and purchase the company. That would have hopefully allowed GM to get out of their ridiculous contracts with the autoworkers union and they could have become a more efficiently run organization.
Re:Is this surprising? (Score:2, Informative)
Normally, when a company goes into bankruptcy, the assets are liquidated and the bondholders/etc get to split the cash.
That's Chapter 7 [slashdot.org] - liquidation. Chapter 7 bankruptcy is very rare. GM, like most corporations going through bankruptcy, is going through Chapter 11 [slashdot.org] - restructuring. That's where the Judge makes the company pay off as much of the debt as it can, cancels the remaining debt, and compensates the creditors with stock in the new company. The theory behind it being that the restructured company will be worth more to the creditors and the public at large than selling the parts off at a fire sale.
Re:Both GM and Chrysler were handle poorly (Score:3, Informative)
What IP?
Fiat isn't a small backyard shack it was 50 years ago. Fiat owns Alfa Romeo, Lancia, Iveco, Maserati and even Ferrari.
I don't think Chrysler has got anything IP-wise Fiat doesn't have.
Re:Here is a Reason Why the Free Market Works Best (Score:4, Informative)
Unions are a necessary evil. They are needed to ensure that workers aren't run roughshod over. However, in cases where the Union gains too much power and uses it unwisely, they can destroy companies. Afterall, the purpose of unions is almost in direct opposition to the profitability of the company. Delta was my first example, they were almost certainly a contributing factor in the car companies downfall. Is there a reason that autoworkers should have their healthcare covered for the rest of the lives by a company funded health program? I can't think of a reason.
It doesn't really matter though, the unions have been rewarded with an automaker to do with as they please for their troubles, and its too late for any of us to do anything about it.
Re:Sweet (Score:2, Informative)
Actually, you can deduct all of those things if they are part of your income generation and not incidental private expenses.
I don't think you realize that a corporation is nothing more then an income generator. You can write the same shit off without a corporation being present as long as it follows the same guidelines of income creation.
Re:Both GM and Chrysler were handle poorly (Score:5, Informative)
Its the same with GM, Vauxhall/Opel have some very well engineered and fuel efficent cars sure the Corsa/Brianna are probably to small for America. But the Astra and Vectra are both cars big enough to fit 5 grown men, have high safety ratings and get good mileage.
I understand American cars all have to be 20ft long for some reason but why don't Ford/GM sell their european cars in the US. They get great mileage pretty much all have 5 star NCap ratings (very safe), you can usually get all the Mod cons from GPS to Air Con. There wasn't any need for GM to sell itself to Fiat for engine technology when Vauxhall/Opel already had good engine technology.
Re:Here is a Reason Why the Free Market Works Best (Score:5, Informative)
Re:Here is a Reason Why the Free Market Works Best (Score:3, Informative)
One of the basic reasons why GM was underwater finacially was because of pension committments made as part of union contracts. Their only way out of these, legally, was to declare bankruptcy and have the government take over the pension plans. As far as I know, no other legal transfer of them was possible, other than outright sale of the entire company.
Penion plans are written in ways to as to prevent them from being shifted around or passed over to the government except in very limited circumstances. It is done this way to make it very difficult to get out of such obligations - which is a good thing. Except the problem that nearly every major employer that has existed for more than 30 years is facing is underfunded pension obligations. The basic reason behind this was some optimistic forcasting in the 1960s and 1970s by both company management and unions. The end result is a pension plan that would have been fine if the economy of 1965 continued on today. It did not. All of the companies affected have fewer employees today than they did in the 1960s and 1970s and a completely different financial picture.
What this means for retirees is that the company they retired from can't afford to continue their benefits. The rules and regulations controlling pension plans and their administration require that the company go bankrupt in order to pass the obligations over to the government pension office.
So sorry, you can't treat the union penions as creditors - that isn't how the rules operate. Besides, the total value of the pension plans for GM likely exceed the GDP of the US today. Certainly, it vastly exceeds the value of GM in 2008. Or any time in recent memory.
One of the biggest problems with the whole pension idea was that it could be a pay-as-you-go funding process. So that in 1980 the pension plan had to pay out 5 million dollars so all that had to be in the pension fund was 5 million dollars. The company then ahd to pay in the same amount, plus a little more, for 1981. The pension obligations were able to be met in that way. The problem is, the pension plans were not 100% funded for the life of every retiree from the moment of their retirement. Nor was it ever calculated on the basis of how much money was available for a person from the moment of their retirement. These were all defined-benefit plans where you got X dollars a month for the rest of your life, however long that was.
This means that as retirees began living longer and longer the total value of their pension plan just kept going up and up. As per the plan. So there is no specific dollar value that could ever be assigned to a plan - it just required more and more funding from the company. In 1970 it sounded reasonable. By 1990 most companies with defined-benefit pension plans had realized there was no way the plan could possibly continue much longer. Now we have airlines, manufacturers and just about everyone else bailing out of their pension plan somehow - and the government makes it very difficult to walk away without going bankrupt. Because the only entity that can possibly take over is the government itself.
Re:Here is a Reason Why the Free Market Works Best (Score:2, Informative)
Compare the panics and crashes of the 19th century under "unregulated capitalism" with the Great Depression.
China is not "unregulated capitalism", but insofar as capitalism is left alone in China, a large Chinese middle class is growing.
14-16 hours a week for 6 days is 84 to 96 hours per week. In fact, the average workweek for manufacturing, coal mining, railroads, building trades and postal employees was around 52 hours, according to this [census.gov] (page 48).
Highly unlikely. How many "sweatshops" do you see in places like Hong Kong and Singapore?
Re:Both GM and Chrysler were handle poorly (Score:4, Informative)
Ford is weird like that. They make some wonderful cars for the EU market, and then utterly fail to bring them to the US. This happened with the Ford Focus a few years back, where the Euro Focus was being hailed as an amazing car, while in the US they flat out refused to import the platform, citing the "expenses" of bringing over the car. Meanwhile Mazda took the exact same platform and produced the smash hit Mazda 3 & 5. Only recently was it announced that the 2010 US versions of the Focus would use their international platform as an "experiment" that might actually convince them to do what they should have done years ago.
Also, to add insult to injury Ford has never considered releasing the Focus RS in north america, the best they've ever done is the SVT which was soundly crushed virtually every other sporty compact on the market.
As far as Opel/Vauxhall cars go, you can buy some of them in North America but not too many. The Opel Astra is simply the Saturn Astra, which is a great little car. The Opel GT has been doing quite well as the Saturn Sky and Pontiac Solstice too, though personally after driving one I must say I was not impressed. The Vectra (now Insignia) isn't itself sold in NA but the platform itself is hugely popular, being shared with the Chevy Malibu, Pontiac G6, and Saab 9-3.
Oh and one last point, GM isn't selling itself to Fiat, Chrysler is.
Corporatism: the coruption of capitalism (Score:3, Informative)
This is a classic example of externalities being dumped onto the community. No matter what happens the taxpayer will bare the burden of cleaning the toxicity of GM's effluent be it a federal or state government. What's worse is I doubt there are any obligations on the "new GM" to improve their practices to avoid the exact same scenario in the future.
Clearly our (international) systems of corporate governance is so outdated that requires significant review and improvement to bring it into the 21st century.
This is not capitalism any more it's corporatism, if it was capitalism you wouldn't hear phrases "Too big to fail" you would be hearing "You should have managed your business better". What I don't understand is why individual welfare that mitigates social problems such as preventing people from falling into crime is discouraged and corporate welfare that encourages white collar crime is applauded(???).
For there to be future sustainable business models they must go beyond environmental sustainability, which is the entry point. We are going to have to see business models emerge that are fiscally sustainable, socially sustainable and have agencies with enough teeth to re-write or revoke corporate charters if business does not behave like a good corporate citizen. I don't just mean the veneer of 'corporate responsibility' but measurable responsibility as in 'how much waste was re-processed' and liability that reaches right back into those who made and funded the type of decisions that leave communities hundreds of millions of dollars of externalities to contend with. In essence that is converting taxpayer money into shareholder dividends by forcing those externalities onto the taxpayer.
If we don't we are going to find ourselves in a real depression when the real costs of these externalities are realised, capitalism a spent economic force and corporatism too big to sustain.
Re:Both GM and Chrysler were handle poorly (Score:3, Informative)
You should learn about the costs of employment verses the average salary. They are not the same and yes, there is a hell of a lot more costs to employment then healthcare. There are pension programs, employment taxes, FICA contributions, unemployment insurance and tons of other costs.
Now I'm going to ask you to use your fucking brain for at least once in your life. Learn about employment costs.
When I worked in the insurance industry we used to have a spreadsheet template that we would take to benefit fairs/employee meetings. We would punch in the employees annual salary and family situation (single/married/kids) and it would spit out the actual amount of money that the employer was paying out. This would include the salary itself, the employer portion of FICA, health insurance, disability insurance, unemployment insurance, employer contributions to 401(k)s and 403(b)s, employer matching on annuities/other investments, etc, etc, etc.
Imagine the surprise on the employees face when he learned that for every $1 he is paid in salary he actually costs the company anywhere from $1.40 to $1.60 depending on his benefits package, number of dependents, etc. Once they saw that figure it was usually enough to end the grumbling about not being paid enough.
Health insurance was the largest single post-salary expense for the employer but it was almost always less than 50% of the total. The only time I saw it exceed 50% was for expensive groups (i.e: lots of employees with health issues) and even at that it only exceeded 50% for those with families. Given this I'm somewhat skeptical that moving the burden of paying for health care to the government instead of the employers is going to make that much of a difference for the competitiveness of American industry in the global economy. Particularly when one of the ideas the Democrats are floating for financing health care "reform" is yet another tax on employers.
I'm thinking that the grandparent needs someone to come into his office and patiently explain to him that health care costs and salary are not the only items that his employer is paying to keep him on the books. He might be in for a surprise.
He might also want to look at what the real long term problem with health care is -- rising costs -- and ask himself why the current bills that the Democrats are talking about don't do a damn thing to address that problem. I'm not a particularly big fan of the idea of the government taking over even a part of the health care system but you might convince me to get behind it if the package is also going to address health care inflation. If it doesn't address that then it's not worth doing. Putting millions of more people into an entitlement program that's going to face 8%-10% annual increases in cost is simply not sustainable over the long run.
Re:Here is a Reason Why the Free Market Works Best (Score:2, Informative)
Yeah, we're going to have to look for another example, where the regulatory authority has all of the necessary power. I know! Hugo Chavez. There you go. He's just found that another 34 radio stations needed to be regulated off the air because they weren't towing his line, and dared to question some of his policies. He's just indicated that any reporters questioning the government's actions will be jailed. There, some nice, solid, uncompromising requlatary power in action.
Let's see... oh, I've another one! Joseph Stalin, hard at work centrally regulating the eeevil market place. He had a few rough spots to work out early on though, so a few million people had to die. But after that, that centrally managed economy just worked wonders, didn't it? Fantastic.
Re:Both GM and Chrysler were handle poorly (Score:3, Informative)
Wow, your post is so fucking wrong it's amazing. You're one of these guys who thinks that capitalism has some kind of magic fucking pixie dust that makes everything wonderful. Guess what, it doesn't. The system is gamed in every fucking way imaginable to make sure the playing fields are anything but level and that the so called "invisble hand" does nothing but stroke very specific benefactors.
And guess who gamed the wall street system. What gets blamed for the mess according to everyone. Oh wait ... "regulations". The government in other words. Of course the fix for "wrong", "too much", "ill-conceived", ... regulations is ... more regulations. You know, because this set of congresscritters is so much less self-involved and so much more flexible and smart than the last batch.
What do I hear ? Nancy Pelosi not exactly Maria Theresa ? Not exactly Einstein either ? Well ... what could possibly go wrong ?
Obviously those more regulations are done in the same way as last time : without knowing their effects beforehand ... by people who refuse to change tactics when proven wrong ...
Any 2-year-old can tell you what the new regulations will do : new loopholes. New loopholes will lead to new bubbles, which are actually positive feedback mechanisms (like writing out more bad loans has been designed to be such a loophole : you get to write money in the books twice, and if you lose it the government pays it back to you. Every kid can figure out how to create money that way : just loan to every I-need-a-new-520-inch-tv unemployed non-english-speaker in New York. Of course what that will do to the economy in a few years ... is very clear indeed). New bubbles will lead to ... more regulations.
This principle of constant government interference is somehow more stable than not gaming the system.
As for your "Good decisions get rewarded, bad decisions punished" crapola, are you fucking kidding me? The fucking dickwads on Wall Street are already circle jerking the shit out of themselves with bonuses while millions more lose their jobs, retirement, and houses. So please spare me the broken windows fallacy bullshit. Power corrupts and warps anything it touches including your god, Capitalism.
I have a God, thank you very much, and it's not capitalism. I do not seek to replace him either.
Again the only reason those "wall street dickwads" can pay for those bonuses in the first place is government interference. Without such they'd have been out of a job.
So I fail to see why capitalism, which would have blocked these bonuses if allowed to run it's course, instead of the government (a little bit Bush, a lot Obama), who really paid for it, out of our pocket.
FYI...I'm actually a capitalist but I'm realistic about what it is and isn't. Adam Smith was definitely on to the right idea but he didn't get it quite right. Friedman took Smith's ideas and made them far far worse.
You know who took (I agree ... mostly) right ideas and screwed them up beyond recognition ? Keynes.
He invented merely a whole new form of socialism that deceived just about everyone, and made good-sounding capitalist arguments in favor of it. They look good, they sound good, and they're flat out wrong.