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Thread: The Bailout That Worked

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    The Bailout That Worked

    [B]The Bailout That Worked, Cont'd
    [/B]
    Jonathan Cohn
    May 5, 2011 | 10:57 am

    Will the voters ever give President Obama credit for rescuing the American auto industry? I have no idea. But it looks more and more like they should.

    On Thursday General Motors announced that, for the fifth consecutive quarter, it had made a profit. And not just a measly one, either. The $3.2 billion was higher than experts had predicted and more than three times the profit of the same quarter in 2010, when the company was still struggling to emerge from its bankruptcy.

    GM sales in North America were up 25 percent over that period. That reflects the recovery, obviously, but the increase in GM sales was still larger than the industry average. Even if GM can't keep up that pace, it's an sign of increasing health.

    Still, the most interesting part of the news is not the profit itself. It's how GM made it. From the New York Times:

    The company has benefited from a better lineup of fuel-efficient cars and crossover vehicles in an environment where the national average for gasoline is almost $4 a gallon.

    The new Chevrolet Cruze, for example, has been G.M.s most successful entry in the compact car segment in years. G.M. has also transitioned away from large, seven-passenger S.U.V.s to smaller crossovers like the Chevrolet Equinox. ...

    The automaker has also reduced excess capacity in its assembly plants, and cut tens of thousands of jobs through buyouts and early retirements. Its break-even point in the United States has been lowered to about two million vehicles, a sales goal that it should achieve easily this year.

    Excess capacity and an inability to produce competitive fuel-efficient cars were major factors in GM's crisis. This suggests the company is well on its way to addressing both issues.

    None of which is to say it's all good news for GM. The company is still relying too heavily on incentives to lure sales, according to various media reports, and the highly touted Chevy Volt got a decidedly lackluster review from Consumer Reports.

    It's also worth remembering that "reducing excess capacity" is a Wall Street euphemism for eliminating jobs. A lot of people suffered, and still are suffering, because they lost their livelihoods.

    Still, if not for the Obama Administration's intervention, the entire American auto industry might very well have collapsed and taken the Midwest with it. Instead, the industry is on the rebound, at least for now.

    That's not bad for government work. Not bad at all.

    [url]http://www.tnr.com/blog/jonathan-cohn/87946/gm-profit-detroit-obama-auto-industry-rescue[/url]
    Last edited by drunk kid catholic; 05-05-2011 at 11:22 PM.

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    [QUOTE=drunk kid catholic;4022645][B]The Bailout That Worked, Cont'd
    [/B]
    Jonathan Cohn
    May 5, 2011 | 10:57 am

    Will the voters ever give President Obama credit for rescuing the American auto industry? I have no idea. But it looks more and more like they should.

    On Thursday General Motors announced that, for the fifth consecutive quarter, it had made a profit. And not just a measly one, either. The $3.2 billion was higher than experts had predicted and more than three times the profit of the same quarter in 2010, when the company was still struggling to emerge from its bankruptcy.

    GM sales in North America were up 25 percent over that period. That reflects the recovery, obviously, but the increase in GM sales was still larger than the industry average. Even if GM can't keep up that pace, it's an sign of increasing health.

    Still, the most interesting part of the news is not the profit itself. It's how GM made it. From the New York Times:

    The company has benefited from a better lineup of fuel-efficient cars and crossover vehicles in an environment where the national average for gasoline is almost $4 a gallon.

    The new Chevrolet Cruze, for example, has been G.M.s most successful entry in the compact car segment in years. G.M. has also transitioned away from large, seven-passenger S.U.V.s to smaller crossovers like the Chevrolet Equinox. ...

    The automaker has also reduced excess capacity in its assembly plants, and cut tens of thousands of jobs through buyouts and early retirements. Its break-even point in the United States has been lowered to about two million vehicles, a sales goal that it should achieve easily this year.

    Excess capacity and an inability to produce competitive fuel-efficient cars were major factors in GM's crisis. This suggests the company is well on its way to addressing both issues.

    None of which is to say it's all good news for GM. The company is still relying too heavily on incentives to lure sales, according to various media reports, and the highly touted Chevy Volt got a decidedly lackluster review from Consumer Reports.

    It's also worth remembering that "reducing excess capacity" is a Wall Street euphemism for eliminating jobs. A lot of people suffered, and still are suffering, because they lost their livelihoods.

    Still, if not for the Obama Administration's intervention, the entire American auto industry might very well have collapsed and taken the Midwest with it. Instead, the industry is on the rebound, at least for now.

    That's not bad for government work. Not bad at all.

    [url]http://www.tnr.com/blog/jonathan-cohn/87946/gm-profit-detroit-obama-auto-industry-rescue[/url][/QUOTE]

    Such a clueless piece.

    How many years has it been since GM had a "successful entry in the compact car segment"? What is it, since the redesigned Cavalier a decade or so ago? Or is it because GM introduced the Cruze to replace the Cavalier during an advantageous time (high fuel prices)?

    As for their transitioning "away from large, seven-passenger S.U.V.s to smaller crossovers like the Chevrolet Equinox"? That's just laughable. The Equinox has been around for the better part of 8 years and got a facelift this year. GM eliminated the Trailblazer/Envoy (which was 5 passenger for the past 5 years, no 7 passenger option), which has cost them many customers, myself and my father included (we went to Jeep and Honda respectively). But that isn't all, GM replaced that with the larger 7 passenger Lambda CUV (Traverse/Acadia/Outlook/Enclave). Of course, the full-size Tahoe/Escalade/Yukon, their extended variants as well as the Avalanche/Cadillac EXT are all still being produced. Oh, and they went and reintroduced a previously defunct, bonafide pony car in the Camaro. Guess none of that lined-up nicely with the writer's wish to paint as rosy a picture as possible. At least he conceded that the heavily subsidized (pre-bailout) Volt is basically a failure. And he really played down the incentive-laden marketing strategy GM continues to lean much too heavily upon.

    Cutting the workforce is/was the best strategy for GM to gain sustained profitability. We'll see if that takes hold.

    EDIT- The bailout saved the auto industry? ROFL!!! It did what it was meant to do, save GMs bacon. Ford basically refused a bailout and is doing quite well. Chrysler/Dodge/Jeep was snatched up by Fiat, saving it from the horrible marriage to Cerberus Group. Sorry I missed that this was an agenda-driven "Obama is teh win" puff-piece instead of a thoughtful commentary on the GM bailout.
    Last edited by Jetworks; 05-06-2011 at 09:48 AM.

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    If profits are so much higher then experts predicted how come it's not reflected in the price of its stock 1/3 of which is owned by the government.

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    Bump for the Kelly of the Politics forum~~~

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    Why no Federal Tax.

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    [quote]
    Oh, and they went and reintroduced a previously defunct, bonafide pony car in the Camaro[/quote]

    say what you want about federal bailouts... the new camaro is a badass.

    [IMG]http://www.chevroletcamaro.info/images/new-camaro.jpg[/IMG]

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    [QUOTE=bitonti;4025977]say what you want about federal bailouts... the new camaro is a badass.

    [IMG]http://www.chevroletcamaro.info/images/new-camaro.jpg[/IMG][/QUOTE]

    To bad those 40 something wealthy dads will be paying higher tax rates and won't be able to afford both the prep school and the Camaro for Jr.:P

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    [QUOTE=Winstonbiggs;4025979]To bad those 40 something wealthy dads will be paying higher tax rates and won't be able to afford both the prep school and the Camaro for Jr.:P[/QUOTE]

    we all gotta make decisions. Public school for junior! :D

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    If Obama was involved then it must suck that the auto industry is recovering.

    I guess.

    You're all sheep. Warblegorble. Hypocrisy.

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    [QUOTE=bitonti;4025980]we all gotta make decisions. Public school for junior! :D[/QUOTE]

    Hell Yes!:D

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    Personally, I hate bail-outs and "too-big-to-fail." Even if occasionally a company reconstitutes and becomes profitable. A couple of major failures would be a worthwhile antidote for companies who fail to manage themselves effectively and realize no one will step in to save them but themselves. Harsh, I know, but hey, we liberals don't take prisoners.

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    [QUOTE=long island leprechaun;4026000]Personally, I hate bail-outs and "too-big-to-fail." Even if occasionally a company reconstitutes and becomes profitable. A couple of major failures would be a worthwhile antidote for companies who fail to manage themselves effectively and realize no one will step in to save them but themselves. Harsh, I know, but hey, we liberals don't take prisoners.[/QUOTE]

    Holy $hit...I agree 100 percent with the Leprechaun.


    Perhaps I shall try to part the red sea this afternoon.

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    [QUOTE=southparkcpa;4026003]Holy $hit...I agree 100 percent with the Leprechaun.


    Perhaps I shall try to part the red sea this afternoon.[/QUOTE]

    And I think the same is true for the Federal government. Each agency should be required to balance its budget within an overall plan to wind down the deficit. The first step? Wind down the undeclared wars and trim defense by 30%. Watch the hogs in the defense-dependency culture squeal about "national security," when we all know it's about lining their pockets.

    Where we may disagree: priorities for government spending, both federal and state. How about a plan to convert our entire college loan program to scholarship and remove means tests but require that students meet minimum academic standards for approval. And increase the program several times over. I don't care if it's state run or federal. We gripe about how much the wealthy have to pay in extra taxes. How about how much somebody with an income of $150K has to pay toward college tuition because they don't qualify for most student aid? That's a tax to end all taxes... to the tune of 30-40K per year.

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    [QUOTE=bitonti;4025977]say what you want about federal bailouts... the new camaro is a badass.

    [IMG]http://www.chevroletcamaro.info/images/new-camaro.jpg[/IMG][/QUOTE]

    Oh, I don't get me wrong, I love the car.

    BTW, that's a mock-up, not the real thing. The real car is even cooler-looking.

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    [QUOTE=long island leprechaun;4026019]And I think the same is true for the Federal government. Each agency should be required to balance its budget within an overall plan to wind down the deficit. The first step? Wind down the undeclared wars and trim defense by 30%. Watch the hogs in the defense-dependency culture squeal about "national security," when we all know it's about lining their pockets.

    Where we may disagree: priorities for government spending, both federal and state. How about a plan to convert our entire college loan program to scholarship and remove means tests but require that students meet minimum academic standards for approval. And increase the program several times over. I don't care if it's state run or federal. We gripe about how much the wealthy have to pay in extra taxes. How about how much somebody with an income of $150K has to pay toward college tuition because they don't qualify for most student aid? That's a tax to end all taxes... to the tune of 30-40K per year.[/QUOTE]


    I am NOT opposed to higher tax rates for the wealthy, I am though in favor of ALL americans paying a tax. That is, there should a a number (say $250) PRE PRINTED on the 1040 that is the lowest the tax can be. We live in a great country and through political manueveres, we make voters out of people by lowering their tax. Thus reducing the perceived value of living here.

    Interestingly, IMO, a person earning 150K , self employed, is much worse off than a government worker earning 100K. So the 150 number, while it seems high, isn't really if you pay your own insurance, pension etc...

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    [QUOTE=Jetworks;4026096]Oh, I don't get me wrong, I love the car.

    BTW, that's a mock-up, not the real thing. The real car is even cooler-looking.[/QUOTE]

    fair enough

    [IMG]http://image.carcraft.com/f/9259679/hrdp_2007_sema2_13_z+new_camaro+side_view.jpg[/IMG]

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    [QUOTE=bitonti;4026112]fair enough

    [IMG]http://image.carcraft.com/f/9259679/hrdp_2007_sema2_13_z+new_camaro+side_view.jpg[/IMG][/QUOTE]

    :drool::drool::drool:

    I'll take navy with white rally stripes.:yes: Or even better, hopefully they will bring the old emerald green back, that would rule!!!

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    [QUOTE=bitonti;4025977]say what you want about federal bailouts... the new camaro is a badass.

    [IMG]http://www.chevroletcamaro.info/images/new-camaro.jpg[/IMG][/QUOTE]

    That's not the new Camaro; could be a Photoshop.


    ooops - I'm late :O

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    [QUOTE=Jetworks;4022792]Such a clueless piece.

    How many years has it been since GM had a "successful entry in the compact car segment"? What is it, since the redesigned Cavalier a decade or so ago? Or is it because GM introduced the Cruze to replace the Cavalier during an advantageous time (high fuel prices)?

    As for their transitioning "away from large, seven-passenger S.U.V.s to smaller crossovers like the Chevrolet Equinox"? That's just laughable. The Equinox has been around for the better part of 8 years and got a facelift this year. GM eliminated the Trailblazer/Envoy (which was 5 passenger for the past 5 years, no 7 passenger option), which has cost them many customers, myself and my father included (we went to Jeep and Honda respectively). But that isn't all, GM replaced that with the larger 7 passenger Lambda CUV (Traverse/Acadia/Outlook/Enclave). Of course, the full-size Tahoe/Escalade/Yukon, their extended variants as well as the Avalanche/Cadillac EXT are all still being produced. Oh, and they went and reintroduced a previously defunct, bonafide pony car in the Camaro. Guess none of that lined-up nicely with the writer's wish to paint as rosy a picture as possible. At least he conceded that the heavily subsidized (pre-bailout) Volt is basically a failure. And he really played down the incentive-laden marketing strategy GM continues to lean much too heavily upon.

    Cutting the workforce is/was the best strategy for GM to gain sustained profitability. We'll see if that takes hold.

    EDIT- The bailout saved the auto industry? ROFL!!! It did what it was meant to do, save GMs bacon. Ford basically refused a bailout and is doing quite well. Chrysler/Dodge/Jeep was snatched up by Fiat, saving it from the horrible marriage to Cerberus Group. Sorry I missed that this was an agenda-driven "Obama is teh win" puff-piece instead of a thoughtful commentary on the GM bailout.[/QUOTE]


    WOW, I suppose the drunk catholic kid won't have a retort to this thrashing of the article he offered to us...

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    [QUOTE=southparkcpa;4026107]I am NOT opposed to higher tax rates for the wealthy, I am though in favor of ALL americans paying a tax. That is, there should a a number (say $250) PRE PRINTED on the 1040 that is the lowest the tax can be. We live in a great country and through political manueveres, we make voters out of people by lowering their tax. Thus reducing the perceived value of living here.

    Interestingly, IMO, a person earning 150K , self employed, is much worse off than a government worker earning 100K. So the 150 number, while it seems high, isn't really if you pay your own insurance, pension etc...[/QUOTE]

    You're the CPA, but why not get rid of dependent exemptions and equalize the tax without distinguishing between married filed jointly/separately and singles? Get rid of childcare credits. That alone would probably allow a lower overall tax while requiring anybody with earned income to pay something. The tax code currently rewards people for having more children and being married... why would the government be interested in doing that, unless of course it's a family-values issue.... ;)

    P.S. The federal government spent about $30 billion last year in aid to higher education, the vast majority in loan programs. The government spent about $115 billion in Iraq and Afghanistan (which probably does not include arms production costs) during the same period. That's not money loaned, but flushed down the toilet, to a tune of over a $1 trillion since 2001. Meanwhile, families can't afford to send their kids to college, students assume massive debts equivalent to a house mortgage before they even get their first job, and we have to bring in brain-help from places like India to compensate our failing skills... Education is, to my mind, one of the highest priorities we should have as a nation. That goes all the way back to Jefferson, who wanted a national college system, despite his anti-federalist views. Screw these wasteful wars that get us nothing and fund corrupt politicians in places that will turn on us. Start building a smart, educated generation to reclaim dominance in the world economy, which we are fast losing.
    Last edited by long island leprechaun; 05-11-2011 at 02:06 PM.

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