Good thing taxpayers have stakes in GM and Chrysler!

Chrysler’s near-term prospects are bad enough, according to this AP article. But you have to read several paragraphs of the article before you see exactly why spending tens of billions of dollars last year to bail out the United Auto Workers — I mean, Chrysler and GM — was such a bad idea:

Speaking to the Automotive News World Congress in Detroit, [Fiat and Chrysler Group CEO Sergio] Marchionne said the global auto industry must reduce factory capacity in order to survive, especially in Europe.

World automakers can build 94 million cars and trucks a year, but that’s 30 million more than it can sell, he said. (emphasis added)

So, one-third of the vehicles being made right now cannot be sold. One-third! Yes, Marchionne said much of the over-capacity was in Europe. But this is no solace to GM and Chrysler shareholders American taxpayers, unless European governments suddenly get tired of subsidizing over-production. Fat chance.

The problem, then, is not just that GM and Chrysler are making cars that too few people wanted to buy. There are too few buyers for cars of any kind — at least, too few buyers relative to the number of producers. And that’s despite the fact that GM, for one, cut production by 30 percent between 2007 and 2009

The market is totally off-kilter, and Washington has only made matters worse by propping up two auto makers.

46 comments Add your comment

Ragnar Danneskjöld

January 14th, 2010
3:37 pm

Well argued. In a more intelligent world, the bankruptcy courts would have resolved this without government input.

Horrible Horrace

January 14th, 2010
3:39 pm

Washington always makes things worse.

GM, Chrysler and Ford should have been merged into 2 entities and perhaps even one. They produces pieces of garbage and deserve to go under.

Ron Mexico

January 14th, 2010
3:46 pm

Ford refused the bailouts if I am not mistaken. The government should have let GM and Chrysler go bankrupt like airlines do all the time.

BS Aplenty

January 14th, 2010
3:47 pm

Ford is the only automaker that has my respect. Mulally has then moving in the right direction and if the UAW doesn’t torpedo his efforts, Ford will emerge stronger and more profitable in 2011.

I feel for union workers. The necessity of the union is vastly diminished but it’s harm to employment levels is enormous. How many more auto and related jobs, good paying jobs, would be created IF the UAW would go away. No, the outsized benefits currently enjoyed by union employees would be gone, BUT a solid middle-class wage would be enjoyed by many, many more workers.

Sara Palin

January 14th, 2010
3:57 pm

Your darn tootin’, u can’t skin a water-buffalo with a tennis racket….


January 14th, 2010
3:57 pm

I wonder why Obo is not hitting GM and Chrysler with the same TARP tax as he is the banks. It seems as though the bankers are paying it back faster than Chrysler is.


January 14th, 2010
4:56 pm

The only reason GM and Chrysler were propped up by taxpayer money is because liberals need the Union vote. It is the same reason the Unions are going to get away without paying taxes on their health care benefits while the rest of us do. If it were up to Obobo every business would be unionized. Reminds me of the old IBM ad where people were just following the crowd off the cliff. Government has no business interfering in business. When it does we are moving toward socialism big time. If they can’t make a product people want make them go bankrupt. People in the old days seemed to have more intelligence. Think buggy whip factories.


January 14th, 2010
5:23 pm

Joan, Bush a Republican gave GM and Chrysler the first wave of bailout money in 2008 when he was still President to the tune of 17 Billion and bypassed congress altogether by using money from when he also bailed out AIG, which by the way is not even close to paying back any money. It is funny (peculiar, not HA-Ha) that Republicans have such selective memory.


January 14th, 2010
5:23 pm

so, let me get this straight. the writer is saying since european countries arent willing to let there auto plants close we should allow ours to close so they can keep there jobs and we can lose ours ! COUNTRY FIRST MY BUTT !

Kyle Wingfield

January 14th, 2010
5:44 pm

The idea that bankruptcy would have meant mass closings of GM and Chrysler plants is a fallacy. Plenty of companies stay in business during and after bankruptcy. But they would have had to make far more dramatic changes — which would have left them (and us) better off in the long run.

Not to mention that, for three years running, GM has made more vehicles outside the U.S. than inside it.


January 14th, 2010
5:45 pm

This bailout should have never happened. The banks were a must, but GM and Chrysler were not. This was purely a Union payback. This became clear when bondholders took the hit for billions, and the unions, who were not stakeholders, maintained their benefits. This has become even more clear now that it looks as though unions will be exempted from the extra taxes on rich insurance programs. Unions, who are less than 9% of the workforce get special consideration, while the other 92% of America’s employees get no consideration.

This guy is shameless.


January 14th, 2010
6:15 pm

Just read Jay’s column. He is pleased that now Obama has negotiated a deal with the labor unions, the health care bill can move forward.

Since when did US presidents have to negotiate with Labor Unions in order to pass any bill?


January 14th, 2010
6:27 pm

So why do we tolerate these unions of Republicans and Democrats? Kill the parties !!!

Road Scholar

January 14th, 2010
7:00 pm

Kyle, when GM is in bankruptcy, what would happen to their suppliers?

Chris Broe

January 14th, 2010
7:06 pm

“The problem, then, is not just that GM and Chrysler are making cars that too few people wanted to buy. There are too few buyers for cars of any kind — at least, too few buyers relative to the number of producers.”

Kyle, can’t U just say that the world makes more cars than it can sell? I realize that you’re a sophisticate and a gourmand, but can’t you dumb-it-down for people like me who never got through middle school because my IQ is a piece of crap? Sometimes, when I’m alone late at nite, I have to slap the back of my head to get through your blog. Abah. Ah-bibby-bah! Ahbibbybaha! SLAP! (I’m good)


January 14th, 2010
7:47 pm

Road, the same thing that happens to the suppliers of every other company that goes bankrupt.

Hillbilly Deluxe

January 14th, 2010
8:11 pm

No, the outsized benefits currently enjoyed by union employees would be gone, BUT a solid middle-class wage would be enjoyed by many, many more workers.

Or wages would trend downward as they have for quite some time in real dollars. Real wages have gone down while worker productivity has gone up. Sort of seems to go against the laws of economics.


January 14th, 2010
8:45 pm

Where were the complaints the first six months of last year when Toyota lost more money than GM and Ford COMBINED? And who has had more recalls than any car maker out there? Yup that would be Toyota. I gather from the “America makes junk crowd” that this is hard to swallow. And guess who went begging to their respective government for bailouts last year when the going got tough. Right again, the ENTIRE Japanese auto industry. And don’t forget Japanese automakers as well as South Korean and German automakers are heavily subsidized not only by their own governments but by local government entities in the United States through more than generous tax breaks. If not for these tax breaks these automakers would not be able to sell their many substandard products in the United States. I recommend that many of these posters get an education and do some research. Either that or take your payouts from foreign multinational corporations and leave this country for good before real Americans assist you. Have a great day.


January 14th, 2010
11:02 pm

Ford is the only American car I will buy…


January 15th, 2010
12:08 am

this article appears to blame the current disaster in the auto industry on [1] gm and Chrysler [2] Washington [3] Obama [4] the UAW [5] the workers [6] American workers who desire good pay and benefits . and the author of this article seems to take pride in his disdain of both Obama and the auto workers . but i think this author is blind to the problem . gm and Chrysler are no different than all the others !!
we have had the wall street disaster , the banking disaster , the housing disaster , the credit and the credit card disaster and the employment or better said the unemployment disaster !!
if i can confuse the author with facts ? we had all these disasters before Obama ! and the UAW does not have members in all these industries !
but since this article was about the auto industry let me remind the author that the workers at gm and Chrysler are only a fraction of the industry . every part in a new car or truck is made by a related business . i am part of the auto industry , i have a 39 year relation with Goodyear .
the Goodyear story is just a snap shot of all of corporate America . back in 1996 the USA today money section said that Goodyear was one of the 10 best managed corporations in America . Goodyear was no.1 in sales in the world , and Goodyear had more cash reserves than all it competitors combined .
now Goodyear is no.3 in sales and billions in debt . since 2000 Goodyear has sold or closed most of it’s facilities in America and retired or laid off thousands of employees .
Goodyear like all of America is hurting , now that the economy is bad .but what caused Goodyear to fail when the economy was good ? simple , … Goodyear changed from a market based business model to a wall street model .
a market based business will make profit if it can sell the quantities and the quality that the market demands . but in contrast a wall street model makes profit by constantly finding ways to manipulate the system . or perhaps i should have said that Goodyear decided to play the system ! they played their employees , their customers they even played their financial statements to the SEC .
from 2000 – 2003 , Goodyear went through a refiling period with the IRS and SEC before all issues were resolved . you or i would have gone to jail . but corporations like Goodyear can get 3 years to file accurate tax and income statements .
and a few years ago it was reveled that Goodyear executives were gaining larger bonuses by moving tires from one ware house to another . these inter company moves were reported as sales and so worthy of bonuses .
and the last Goodyear chairman to retire [ samir f gibara ] . after 6 years at the helm of Goodyear retired at $660 k per year for life , plus 100% of his and his families medical for life .
during Mr gibara’s term Goodyear went from no.1 to no.3 in the world . Goodyear went from billions of cash on hand to being billions in debt .
and as Goodyear dug it self deeper and deeper in debt with it’s new business model , instead of correcting it’s bad decisions , Goodyear tried to balance it’s books on the backs and pay checks of the Goodyear employees . pay cuts , benefits cuts , pension cuts , layoffs , longer hours , increased work load .
now stand back and every place i used Goodyear in my story , insert the name of the company that you work for . my Goodyear is no better or no worse than your company . this is the way that they all play the game . it may be our jobs and our savings and our retirement .
but it’s their game ! if they gamble and win they get richer . and if they gamble and lose they stay rich , but we the workers lose .
so Mr kyle wingfield , your news paper has given you the opportunity to share your views with the American public . so don’t waste it ! make an effort to use research , back ground information and substantiated facts in all your columns .
in time you will be a better reporter for it .
the late Paul Harvey was not satisfied with a quick glance at the human condition . he believed that the american people deserved the rest of the story !
and so should you .


January 15th, 2010
8:00 am



January 15th, 2010
8:14 am

The fact that the UAW is refusing to make the same concessions to Ford that they have made for GM and Chrysler tells me all I need to know. The UAW leadership wants to bring Ford to it’s knees so that Obama will steal that company from it’s rightful owners to give to the UAW as well.

It’s a sick, cynical game the UAW and Obama are playing, and millions upon millions of people are going to be hurt as a result of it.

F-105 Thunderchief

January 15th, 2010
8:19 am

GM and Chrysler should have been allowed to fail, if that’s what the market held for them. Taxpayers will never get that money back. Oh, and Howie Long DOES have cop hair.

Kick Me

January 15th, 2010
8:27 am

Kyle, We were told GM and Chrysler (and AIG, BofA, Citi, etc) were “too big to fail”. Are you suggesting that is not the case?


January 15th, 2010
9:26 am

Personally I will never buy a Chrysler product, and the only GM car I would consider buying would be a Corvette. Chrysler’s reliability record is abysmal – look at any Consumer Reports car-buying guide from any year. (The data comes from cars’ owners.)

GM has a glimmer of hope…some of their cars have decent reliability.

New Yorker

January 15th, 2010
9:32 am

Chrysler & GM were too big to fail; they were only called that by people who should have known better. They had been failing for years.

Let’s not confuse the bailouts of a manufacturer with the bailout of a financial institution. In a market driven economy where banking and credit are paramount to money flow, a special relationship between government and financial institutions is common, and sometimes necessary. There exists no “special need” as it relates to a large manufacturer. We The People flushed billions of dollars that Bush allowed to be invested into C & GM on a pre-petition basis, and Obama then greased the union with even more value (especially in Chrysler) post-petition, while ruthlessly slandering anyone who opposed a transaction that clearly didn’t pass the smell test.

Now Obama is giving special treatment to union health plans. What a joke. I’m not sure any of our politicians are worthy of walking upright anymore – we’d be better at spotting them if they slithered on the ground where they belong.

“Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.” TJ

Stop The Lies

January 15th, 2010
9:44 am

If my memory serves me correctly, didn’t we bail out Chrysler when Reagan was president? Crying Obo and whatever doesn’t change a thing. Recent history is all too often ignored by both parties and their cheerleaders(partisan hacks masquerading as journalists)trying to score political points.

Churchill's MOM

January 15th, 2010
10:15 am

Yesterday I offended someone by calling Ragnar Danneskjöld, Rag Head. I am truly sorry that this offended you and it was not my intent to be racist, hence forth Ragnar Danneskjöld will be known as Rag Man, please let me know if this offends anyone.

Churchill's MOM

January 15th, 2010
10:18 am

Wing Boy, I know you were not here but both of our RINO Senators voted for TARP and Johnny along with Reid & Pelosi worked out a deal to throw away another $24 BILLION on housing. Georgia needs Republican Senators Johnny needs to go.

New Yorker

January 15th, 2010
10:26 am

If memory serves me correct, the prior bailout of Chrysler was structured in a way that We got our money back for the financial risk that We took. This time around is much more of a mixed bag: the money injected into Chrysler on a third lien pre-petition basis is gone – it was flushed in the sale of assets to “New Chrysler”, and then we provided more cash to sponsor what is effectively a Fiat/UAW-led LBO of the company. Chrysler was purchased for $2B and then leveraged with over $10B of debt ($6B owed to Treasury and $4.6B owed to the UAW VEBA). The equity split to the UAW was 55% out of the gate, with Fiat getting around 30%. We got 8%, and the Canadian gov’t got another 2%, with a few % points left to sprinkle around to others. It remains to be seen if we will be repaid on the debt provided to New Chrysler since it is widely acknowledged that Chrysler is the most precariously positioned of the Big Three. This is to say nothing of the “questionable” capitalization of the company post-sale where an unsecured creditor (the UAW) with political ties to those that control Treasury received so much of the future economic value of the company when secured creditors took such huge haircuts.


January 15th, 2010
1:06 pm

All of you people as well as the writer do not even have a clue about this. First If the auto companies were to have gone under, There would have been another 3 to 8 million people unemployeed in the USA, and were not talking just auto workers. You are all comfortable with that? So now you are paying for peoples unemployment rather then them keeping jobs and paying taxes? Also we all hate the UAW right? well as I do not agree with some of there practices, but if it were not for them you would not have the 40 hour work week. medical, dental, vacation pay, holiday pay. You know they fought for that for all of us. They paid dues to get everyone these perks. Do you really think companies WANT to give you this? If they had a choice you would get nothing but a paycheck. and if you didnt show up everyday, you would be gone and replaced. If you say well there are laws now that stop companies from doing that you are right. But these laws were created because of the UAW. SO instead of bashing them for everything and anything. Just think about what you do have at your job and just how bad it would have been without them working for you.

Brian Z Jones

January 15th, 2010
1:21 pm

The auto-bail out gets way more heat than it deserves. I believe it was a UAW buy-off. But look at the reality of the situation:

$700B for banks
< $60B for autos

Banks caused their own mess, in less than 2 yrs – they single-handedly ruined the WORLD economy by making known bad investments.

Autos have been slowly sinking, but have actually started making good global inroads, before Govt intervention – too little too late, perhaps, but not the same impact as the idiot bankers. They contribute $500B (1/2-trillion dollars) to the US GDP, btw).

And don't forget – all other govts are bailing out their banks & auto companies – Europe actually beat us to the punch on this point. Most other countries – especially Japan, our biggest auto competitor – protect & support their auto industries way more than we do.



January 15th, 2010
2:29 pm

Yes the money will be paid back!Yes Gm and Chrysler will survive.And hpoefully the congressional hearings about to start will finally address the unfair trade practices in the auto industry.Japan and Korea have been dumping autos into our market for years.Combined last year 26.3 billion imported to USA. USA to their markets 397 million.Years of no manufacturing policies have killed our domestic manufactures.This should not take the form of protectionism but should level the playing field in some way.If thats how they want to play then HARDBALL IT IS.


January 15th, 2010
3:35 pm

wow herlon, you are a bitter, bitter ex-employee even though you end your comments with the caveat “fill in your company name here because they are all alike.” like most bitter ex-employees your facts are convenient to your belief in a number of areas but not facts at all. even the timing of some of your accusations are convenient untruths. most specifically your assertion that the company changed from a market back model to a wall street model post 1996. why do you think the company was named one of the best managed companies in 1996? because it was managed FOR wall street prioir to that. the stock price was driven to unsustainable levels. where was the product investment in that era? it was being plowed into financial results. where was the future factory investment? it was being plowed into financial results. what the next chairman inherited was a bare cupboard and no future. we can debate whether he did a great job. he probably didn’t. we can also debate whether he had the tools to be successful. he absolutely did not. your claim that the system was manipulated post ‘96 is pure bunk. but you can go along and believe yourself if it makes you feel better. or you can think about what really happened. that’s your choice.


January 15th, 2010
5:24 pm

dear amazed , the things you call pure bunk , are all public record and were covered in the wall street journal , during the period these events actually occurred . when Goodyear got caught cooking the books by the SEC .
Goodyear filed and refiled for 3 years before the SEC and the IRS would accept Goodyear’s books as accurate .
and only fines for Goodyear . no one went to jail .
very few corporate criminals are caught and punished . and even less ever spend even one day in jail .
and sir , that is no bunk , that is an American fact .

Michael Smith

January 15th, 2010
6:17 pm

I totally agree with everyone….to an extent. America is losing all of our buisness to forigen countries. Soon there will be no American cars….no more American products. What would make this America at that point. This country is losing everything. All though I am a fan of BMW, Audi, Mitsubishi, ect. I love my american cars. I drive a 2006 Dodge Ram and a 2009 Dodge challenger SRT8. I would’nt trade my cars for anything else. To sum this up, I feel with all the “American” companies were losing lets not lose our cars.


January 15th, 2010
9:52 pm

congratulations Michael smith . first you are still able to live the American dream . in my garage a challenger of any year would be a cherished possession .
unfortunately in the last few years i know to many friends that have trouble buying just new tires .
and also congratulations on seeing that America is loosing all our business [ i hope you meant loosing all our jobs ] .
but i do disagree with you on just one point . we are not loosing our jobs to foreign countries .
before every one gets mad , please let me explain.
there is a term in business simply called [ relocation of production ] .
let me recall a few examples of this business tool .
back when gm was the largest corporation in America , it relocated first parts plants to other countries . and later moved most of its car and truck plants outside the united states .
later ford and Chrysler did exactly the same thing .
if you go to any new car dealer selling ford , gm or Chrysler vehicles 1/4 – 1/3 will be made outside the USA . no matter what American name plate has been put on it .
back when RCA was no.1 in sales , Texas instrument was no.1 and dell computer was no.1 .all three of these corporations made the decision to move the majority of their production outside the USA .
when Goodyear tire was no.1 in sales in the world , they chose to move most of its American production off shore .
and my all time favorite , when Levi Strauss was no.1 in the entire world with a 100% American made product , the company chose to shut down 100% of its American work force .
so Micheal ,we have nothing to fear from foreign competition . fair competition is healthy for both sides .
most American corporations have turned from manufacturing and are now importers .
yes Micheal , most foreign goods do not come from foreign business .
most foreign made goods are brought to America by the same American corporations that laid off their American work force so that they could bring foreign goods to America to start with !!


January 16th, 2010
1:26 am


January 16th, 2010
3:04 am

Screw the labor unions. We should all have to work for crap wages.


January 16th, 2010
9:23 am

herlon, check your facts, sir, and show me this “fine” that was paid. there was no fine and the sec closed its investigation. that, like your other delusions stated as fact, are american bunk, sir.


January 16th, 2010
4:38 pm


January 16th, 2010
5:17 pm


January 16th, 2010
5:32 pm


January 16th, 2010
5:42 pm
madoff passed [ 3 ] SEC investigations , how good can the SEC be ??


January 16th, 2010
5:52 pm


January 17th, 2010
10:13 am

Sorry. Still no facts and no fines. Wells notice was dropped with no finding of wrongdoing. The only thing ever covered by the media is the allegation and the fine – if there is one – which there wasn’t. Will agree that Accounting wasn’t good then. Sounds like you might have been on that team.