OT - Financial mess 101 ($700 billion bailout)

[Rodster]

The people saying bankruptcy is a great thing are only interested in getting UAW concessions, as if that alone will fix the long-term problems. That might make certain people feel better ideologically and politically, but it won't solve the problem by itself.

I don't know of anyone that has said bankruptcy would be "great". Better than a 6 month bailout, yes, but not great. UAW concessions would go a long way to fixing their long-term problems. It won't solve all their problems, but it is something that needs to happen in order for them to get back to being competitive. What will change if they get a bailout (or two, or three)? Nothing.

Well said Matt !

[RobVarak]

This UAW stooge/mouthpiece ought to be strung up. I haven't seen bullshit fly that fast and furious since my last Bar Association election.

[Jared]

Is it really UAW pay and benefits that is keeping the Big Three down? What is the difference in overall costs for employees at the Big Three compared to American employees at Toyota/Honda plants?

[Naples39]

Is it really UAW pay and benefits that is keeping the Big Three down? What is the difference in overall costs for employees at the Big Three compared to American employees at Toyota/Honda plants?

http://apnews.myway.com/article/20081212/D95106M80.html

Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. (TM) at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.

GM says its total hourly labor costs are now $69, including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers.

IMO, that difference is hourly cost is by far GM's single biggest obstacle to overcome here, even if it isn't the only obstacle.

The idea that capping executive compensation and corporate jets is going to make any kind of lasting difference in their profitability is ideological fantasy. I'm also not sure why congressman think they know better how to produce and design automobiles consumers desire than career auto execs, but whatever.

[wco81]

Yes those pension and health care benefits for retirees are called legacy costs.

Can the UAW change the benefits of those retirees at this point? Do the retirees have a vote when the union votes on a contract? Which party has the legal obligation, the union or the auto companies?

I don't know how realistic it is to change the terms of those benefits after the fact, unless it was in the contract that the terms can change in the future.

But the point of pensions is that they're ironclad and pays out a guaranteed sum regardless of the market.

As for health care, if you cut them off, they will just end up on Medicare and state programs for those without health care. Either way, the public pays.

[wco81]

The people saying bankruptcy is a great thing are only interested in getting UAW concessions, as if that alone will fix the long-term problems. That might make certain people feel better ideologically and politically, but it won't solve the problem by itself.

I don't know of anyone that has said bankruptcy would be "great". Better than a 6 month bailout, yes, but not great. UAW concessions would go a long way to fixing their long-term problems. It won't solve all their problems, but it is something that needs to happen in order for them to get back to being competitive. What will change if they get a bailout (or two, or three)? Nothing.

I've seen various members of Congress say it would be great, that companies would emerge better for it.

The example they often cite is Delta and other airlines, which emerged out of bankruptcy less than a year ago. They're flying still but nobody would say they're in great condition.

Some have said it would be of no consequence if these companies disappeared, because that would be the natural cycle, that less fit companies go out of business. They don't talk about the companies in the supply chain though.

This particular bill is meant to be a bridge loan, because nobody has hammered out a long-term plan. Again, the union could cave right now to whatever the Republicans want but that's not going to make those cars sell any better, because nobody is buying right now.

So in fact, even with the concessions which the GOP wants from the UAW, there's no guarantee they won't be back in 6 months or whenever.

Revenues are the bigger issue in the short-term, not costs.

[Jared]

Been reading about this the last few minutes:

Looking at things separate from retiree costs, the average UAW worker costs companies about $55/hour, versus the average worker for a Japanese company, at $45/hour.

The big gap comes from retiree benefits...but a lot of that is because, in a comparison between the two companies, UAW has substantially more retirees than Japanese car manufacturers. I think it's difficult to do a fair comparison between the two because of that. This is an interesting bit of info from an article in the New York Times:

Imagine that a Congressional bailout effectively pays for $10 an hour of the retiree benefits. That’s roughly the gap between the Big Three’s retiree costs and those of the Japanese-owned plants in this country. Imagine, also, that the U.A.W. agrees to reduce pay and benefits for current workers to $45 an hour — the same as at Honda and Toyota.

Do you know how much that would reduce the cost of producing a Big Three vehicle? Only about $800.

That’s because labor costs, for all the attention they have been receiving, make up only about 10 percent of the cost of making a vehicle. An extra $800 per vehicle would certainly help Detroit, but the Big Three already often sell their cars for about $2,500 less than equivalent cars from Japanese companies, analysts at the International Motor Vehicle Program say. Even so, many Americans no longer want to own the cars being made by General Motors, Ford and Chrysler.

It seems like some are trying to pin all the blame on the UAW. I do think they definitely need to make some concessions...but the bigger problem is that people aren't buying from the Big Three. (I sold my 14-year-old Honda to my brother, and it still runs great. I had American cars before that, and they weren't nearly as reliable.)

[Brando70]

I have been dubious about the auto industry bailout for many reasons, party because of things that Matt brings up: why do some industries get a bailout and others don't. The banking bailout made more sense because that industry touches every aspect of the American economy. Bankruptcy by GM or Ford will have severe ramifications for the economy, but not at the same level.

Having said that, it is despicable the way the concept of unions is being thrown under the bus as a way to justify the ineptitude of Detroit's corporate leaders. The UAW has a lot of problems, and certainly labor organizations have to stay competitive the way other organizations do. But trying to blame labor costs for the decline of American automaking when its corporate leaders have repeatedly shown no long-term strategic vision is absurd.

The leadership of American automakers has always chased the lowest hanging fruit and the quickest profit, employing a kind of strip mining approach to their markets. Their profitability for the past decade and a half was built on wildly inefficient vehicles, and it didn't take an MBA to figure out a spike in fuel costs would greatly upset the apple cart. Yet they had absolutely no back-up plan to deal with that contingency. Their solution is to exploit their own ineptitude so they can undermine the collective bargaining of their labor force. If only they showed that kind of brilliance in designing cars.

[Naples39]

I pretty much agree with what you are saying WCO, as I was mainly just trying to answer Jared's question.

Frankly I'm not sure how much congress can do here other than put a temporary band-aid on a situation that appears to be a critical injury.

The only other thing I'll offer is that the $21 difference between GM and Toyota's cost isn't just retiree benefits, but it's also other perks like the jobs bank that UAW has wrangled from GM.

[XXXIV]

Ill agree ...

To throw the blame all on one side of the equation is absurd...whichever side you throw it on.

The companies are terrible...From top to bottom...Rotten...Thats why they need to go....Bye bye garbage.

[RobVarak]

I

Having said that, it is despicable the way the concept of unions is being thrown under the bus as a way to justify the ineptitude of Detroit's corporate leaders. The UAW has a lot of problems, and certainly labor organizations have to stay competitive the way other organizations do. But trying to blame labor costs for the decline of American automaking when its corporate leaders have repeatedly shown no long-term strategic vision is absurd.

I don't see management getting a pass of any kind from Congress, the media or the general public. Throwing the concept of unions under the bus is just a tangential benefit of the crisis and long overdue.

[wco81]

Markets have turned for now, partly because the WH and Treasury spokespersons have signaled that they would do what the Senate failed to do.

WH says it would be "irresponsible" to further weaken the economy.


The Senate Republicans focused on the UAW. They may not have given management a pass but to suggest as they did that the labor contracts were the biggest factor or even as big as any other factor was completely disingenuous.

Strange thing is, why did they have Corker, a guy who was just elected in 2006 (in a close race IIRC), run point on this?

Because he's from TN where the Japanese auto makers are?

Are the more senior Republican senators concerned about possible blowback on this if there's a big backlash against this gambit?

[Brando70]

I

Having said that, it is despicable the way the concept of unions is being thrown under the bus as a way to justify the ineptitude of Detroit's corporate leaders. The UAW has a lot of problems, and certainly labor organizations have to stay competitive the way other organizations do. But trying to blame labor costs for the decline of American automaking when its corporate leaders have repeatedly shown no long-term strategic vision is absurd.

I don't see management getting a pass of any kind from Congress, the media or the general public. Throwing the concept of unions under the bus is just a tangential benefit of the crisis and long overdue.

There would be the side benefit of plenty of job opportunities for the declining Pinkerton agency. We haven't had good ol' fashioned management-sanctioned worker clubbing in quite some time.

In terms of this latest bailout collapse, it is definitely being laid at the UAW's feet, and the media is happily writing the script: bailout collapses because UAW won't cut benefits. When the reality is, the whole industry is in shambles. This crisis has more to do with the way the corporate leadership in Detroit have managed their companies and less to do with labor, although labor is certainly part of it. It's like blaming the guys in the engine room of the Titanic for hitting the iceberg.

[RobVarak]

Uselessness of unions in the modern economy aside (hell, every union wage should be termed a "legacy cost"), I don't think the narrative is as simplistic as you suggest, Brando.

The media hammered the 3 stooges every time they've been in front of Congress or a microphone, and the UAW is a legitimate issue. There can't be any solution, via bankruptcy or bailout, without the UAW willingly addressing both its wages and the legacy cost issue.

WCO, my experience with labor law is pretty slim and far in the past, but I do know that the structure of benefits for retirees can be different from case to case. It's all determined by the terms of the CBA at issue, which I do not know in this case. Typically though large unions retain the ability to negotiate the rights of retirees because it gives them more leverage in bargaining. Retirees often, but not always, have voting rights (albeit limited in some cases).

[Jackdog]

Been reading about this the last few minutes:

Looking at things separate from retiree costs, the average UAW worker costs companies about $55/hour, versus the average worker for a Japanese company, at $45/hour.

The big gap comes from retiree benefits...but a lot of that is because, in a comparison between the two companies, UAW has substantially more retirees than Japanese car manufacturers. I think it's difficult to do a fair comparison between the two because of that. This is an interesting bit of info from an article in the New York Times:

I heard UAW workers cost the Big Three around 73 buck an hour vs 34 for Japanese companies. I'll post some links.

Here's a start.

How Much Do UAW Workers Really Make? [Stephen Spruiell]


New York Times business columnist David Leonhardt tackles the question today and concludes that the oft-cited figure of $73 per hour is misleading:

The calculations show, accurately enough, that for every hour a unionized worker puts in, one of the Big Three really does spend about $73 on compensation. So the number isn’t made up. But it is the combination of three very different categories.

The first category is simply cash payments, which is what many people imagine when they hear the word “compensation.” It includes wages, overtime and vacation pay, and comes to about $40 an hour. (The numbers vary a bit by company and year. That’s why $73 is sometimes $70 or $77.)

The second category is fringe benefits, like health insurance and pensions. These benefits have real value, even if they don’t show up on a weekly paycheck. At the Big Three, the benefits amount to $15 an hour or so.

Add the two together, and you get the true hourly compensation of Detroit’s unionized work force: roughly $55 an hour. It’s a little more than twice as much as the typical American worker makes, benefits included. The more relevant comparison, though, is probably to Honda’s or Toyota’s (nonunionized) workers. They make in the neighborhood of $45 an hour, and most of the gap stems from their less generous benefits.

The third category is the cost of benefits for retirees. These are essentially fixed costs that have no relation to how many vehicles the companies make. But they are a real cost, so the companies add them into the mix — dividing those costs by the total hours of the current work force, to get a figure of $15 or so — and end up at roughly $70 an hour.

The crucial point, though, is this $15 isn’t mainly a reflection of how generous the retiree benefits are. It’s a reflection of how many retirees there are. [emp. added] The Big Three built up a huge pool of retirees long before Honda and Toyota opened plants in this country. You’d never know this by looking at the graphic behind Wolf Blitzer on CNN last week, contrasting the “$73/hour” pay of Detroit’s workers with the “up to $48/hour” pay of workers at the Japanese companies.

But Heritage analyst James Sherk says this just isn't true:

The hourly benefit figures the Detroit automakers report covers the cost of current and future benefits earned by actively working employees. It does not include the cost of paying health benefits and pensions to current retirees. [emp. added]

To back this up, Sherk points out that:

The Detroit automakers pay similar wages at each company despite having very different numbers of retirees to provide for... General Motors has far more retirees per active worker than Ford or Chrysler. For each active worker at GM, there were 3.8 retirees or dependants in 2006. At Chrysler this ratio was half as much: two retirees for each worker. At Ford there were only 1.6 retirees per worker. If the hourly labor costs included retiree benefits, hourly wages at GM would be much higher than at either Ford or Chrysler.

But this is not the case. General Motors did not have the highest hourly labor costs despite having more retirees. Chrysler paid $2.60 an hour more in labor costs in 2006 than GM did. Ford paid only $2.75 an hour less than GM did, despite having half as many retirees relative to workers to provide for. All three automakers had roughly the same hourly labor costs despite having very different numbers of retirees to provide for. Hourly labor costs account for the expense of providing wages and benefits to current workers but do not include legacy costs.

Sherk makes a strong case, but maybe I'm missing something. Who's right?

I found this interesting as well.

All sides seem to agree that the negotiations centered around a proposal by Sen. Bob Corker, R-Tenn., that hoped to get bondholders, labor and other stakeholders to agree to take haircuts prior to the companies receiving funding. Corker told CNBC Friday morning that negotiators were "just three words away from a deal," saying that the talks fell apart because the UAW would not agree to a firm deadline for concessions.

The union must believe either, a) the jobs aren't worth saving at lower pay and reduced benefits, or b) the President will authorize money from the $700 billion TARP fund to avert a financial crisis.

Under the Corker plan,

the UAW would have had to accept lower wages more in line with what foreign automakers pay at U.S. factories.
Layed off UAW workers would have stopped getting supplemental unemployment benefits.
The plan also would have required the UAW accept automaker stock as opposed to cash payments to a retiree health care trust.
And, bondholders would have to accept 30 cents on the dollar for automaker debt.
Failure to get the concessions by March 15 (the Ides of March), would trigger bankruptcy.
Local Ford retirees I spoke with on Wednesday were convinced that anti-union politicians, namely Republicans, were using the automaker crisis as an opportunity to cripple organized labor. Republicans, meanwhile, aren't alone in their discontent over how the financial market bailout has been managed, and they were loathe to pour good money after bad this time.

With the GOP on its heels and struggling to define itself after losing seats in both houses and the Presidency, Senate Minority Leader Mitch McConnell of Louisville appears to have been swayed by the conservatives in his party that demanded that Republicans stand for something Republican.

McConnell

WASHINGTON, DC - U.S. Senate Republican Leader Mitch McConnell made the following statement on the Senate floor on Thursday evening regarding the state of auto legislation:

"This has been a challenging exercise for everyone involved on both sides.

"We all remember, just a couple of months ago, we were called upon to rescue the American financial system. At the end of the day, after a few fits and starts, 74 out of 99 senators present thought it was a good idea to do that.

"It was a vote that we all proudly cast from our individual seats, and most of us supported it. It was a broad bipartisan vote supported by the two Presidential candidates as well.

"Now we've moved into a very tricky and challenging area and that is a sort of industry by industry rescue. And we've had before us the whole question of the viability of the American automobile manufacturers.

"None of us want to see them go down but very few of us had anything to do with the dilemma that they've created for themselves.

"And so the question was: is there a way out?

"The Administration negotiated in good faith with the Democratic Majority a proposal that was simply unacceptable to the vast majority of our side because we thought it, frankly, wouldn't work.

"Into this breach stepped the Junior Senator from Tennessee who, I must say, has made an extraordinary impact in a very small amount of time. I'm hard-pressed to think of another member who's been here such a short period of time who's made such an impression on colleagues on both sides of the aisle by mastering an extraordinarily complicated subject and being able to explain it in a way that is understandable.

"And he has diligently pursued an agreement that could pass, that could enjoy broad support on both sides. And he has made great progress in that direction.

"The sticking point that we are left with is the question of whether the UAW is willing to agree to a parity pay structure with other manufacturers in this country by a date certain. And I understand their reluctance to do that.

"So far in the discussions that Sen. Corker and Sen. Dodd and others have had, they have not been willing to give a date specific by which parity could be achieved.

"It is upon that issue that we've reached an impasse for the moment."

Bunning

In a statement, Sen. Jim Bunning (R-KY) says the "Democrats and the UAW walked away from bipartisan negotiations."
"I am disappointed tonight that the United States Senate was not able to reach agreement on a suitable solution to help get our nation's auto industry back on track. I had hoped an agreement could be reached on a proposal offered by Senator Bob Corker that would have required significant reduction of costs and debt as a condition of the federal assistance these manufacturers are asking for. As I have said many times, simply throwing money at the problem is not the answer. Serious changes need to be made in the way the industry does business. Unfortunately, the United Auto Workers were unwilling to make any significant concessions. Republicans were serious about finding a real solution, but the union and the Democrats walked away unwilling to give any ground."

Both Indiana Senators Richard Lugar (R) and Evan Bayh (D) voted for the bailout. Interestingly, Senate Majority Leader Harry Reid (D-NV) voted against it.

[Naples39]

I don't agree with everything in this article, but I may be coming around to its conclusion.

CNN: So you are against the bailout?

No. But the reasons the CEOs of Ford, GM and Chrysler present -- that they will restructure, they are still competitive, they will change -- are bogus; they won't. The best argument for the bailout is that it is the most cost-effective jobs program that the government can run in the short term.

Spending on infrastructure to create jobs will take months, maybe years. However, keeping the Big Three afloat will keep hundreds of thousands of jobs in place quickly and easily. It's true the companies will eventually go bankrupt but by then hopefully the economy can withstand it.

http://www.cnn.com/2008/WORLD/americas/ ... index.html

[Jackdog]

Mismanagement at the Big Three

December 9, 2008 11:42 AM by Ralph Reiland | Other posts by Ralph Reiland | Comments (29)

It was a dead heat. General Motors sold 9.37 million vehicles worldwide in 2007 and lost $38.7 billion. Toyota sold 9.37 million vehicles in 2007 and made $17.1 billion.

That was the second best sales total in GM's 100-year history and the biggest loss ever for any automaker in the world.

For Toyota, that was roughly $1,800 in profit for every vehicle sold. For GM, it was an average loss of $4,100 for every vehicle sold.

Collectively, Detroit's Big Three automakers are currently losing about $5 billion per month, with Ford, General Motors and Chrysler, respectively, burning through $2 billion, $2 billion and $1 billion in cash every 30 days.

Tin cups in hand again during their recent testimony in Congress, leaving their corporate jets at home this time and promising to cut their paychecks to $1 per year, the CEOs from the Big Three came to Washington in even worse shape than during their Congressional appearance in November, upping their money appeal by $9 billion, from $25 billion to $34 billion. That's on top of the $25 billion in already authorized money to retool their plants.

General Motors and Chrysler added a "rush" to their latest bailout request, telling D.C.'s lawmakers that they need, respectively, an immediate $4 billion and $7 billion to ensure minimum liquidity levels, paid prior to the end of December. GM, as well, asked for an additional $4 billion for January and a third handout of $2 billion in the February/March time frame to forestall a financial calamity, plus a $6 billion line of credit from the federal government to ensure ample liquidity.

All told, GM says it needs an $18 billion taxpayer bailout, some 50 percent more than it said it needed just three weeks ago to turn things around.

With its hourly workforce already down 52 percent since 2000, from 133,000 to 64,000, and its executive ranks and salaried employees down, respectively, by 45 percent and 32 percent in the same period, General Motors now says it can get back on its feet by getting rid of its Saturn, Hummer and Saab lines and putting Pontiac on an endangered-brand list.

Also in GM's proposal for survival, and for paying back the money by 2011, is the elimination of 1,750 dealerships, the closing of four of its 47 plants, an additional 31,500 job cuts, and a new age of "full labor competitiveness" with foreign manufacturers in the U.S. within the next three years.


Currently, UAW workers at Ford, GM and Chrysler earn an average of $28 per hour, plus benefits. At the Toyota and Honda non-union plants in the United States, the hourly rate, excluding benefits, is $26 and $24, respectively.

Add the cost of benefits for the current workforce and the cost of pensions and health care for retirees (benefit-collecting retirees outnumber current workers by three-to-one at GM, Ford and Chrysler) and the difference in labor cost between a Toyota plant in the US. and the plants of Detroit's automakers jumps to $29 per hour.

More specifically, the hourly compensation cost for labor, including benefits and retirees' costs, at the Big Three is $73 per hour, compared with $44 per hour at a Toyota factory with American workers in the U.S.

Further, it takes fewer hours of labor to produce a car in Toyota's U.S. plants than at the plants of Detroit's automakers.

With more flexible work rules, GM says it could save hundreds of dollars per vehicle. The company maintains, for instance, that a company-wide use on non-union janitors, earning $12 per hour, would cut costs and increase competitiveness by up to $500 million a year.

Similarly, health care costs at GM for active workers and retirees account for more than a quarter of total labor compensation, adding approximately $1,000 in cost to every GM vehicle, compared to $215 in health care costs in each Toyota produced in U.S. plants.

Under UAW contracts, additionally, laid off workers are transferred to a jobs bank and receive 95 percent of their full pay and benefits to not work. This year, the cost to the Big Three will be an estimated $478 million, about $70 million less than Honda spent to build a brand new factory in Indiana.

Somewhere along the line, both management and labor in Detroit forgot the good economic advice of UAW head Walter Reuter: "Getting more and more pay for less and less work is a dead end street."

Management and labor unions ate the profits up.
GM spends more on insurance for current employees and retirees than it does on steel. That being said they will sadly get the bailout.

[fsquid]

Unions are simply a cult nowadays. They serve no purpose anymore.

[bdoughty]

http://business.theglobeandmail.com/ser ... _mostemail

Mr. Lewenza's plea came amid further signs of distress in the industry, as General Motors Corp. said Friday that it will cut 250,000 vehicles from its first-quarter production schedule by temporarily closing 21 factories across North America.

The move affects some plants in the U.S., Canada and Mexico. Some will be shut down for the whole month of January. Spokesman Tony Sapienza said normal production would be around 750,000 cars and trucks for the quarter.

[jondiehl]

Forget size looks and fuel economy....Lets talk quality...Compared to Japan and Germany its just not there.

There is a reason that the quality of the cars is less. That the cars just dont last.

Its natural selection. s*** companies go out of business.

+1

Over the past 20yrs, my wife and I have owned 3 Toyota's, 1 Honda, 3 BMW's, 1 VW, 2 Caddy's, and 1 Jeep/Chrysler.

The quality of these cars are not even close. My 1st car, an '86 Toyota Celica was better built and more reliable than than the '02 and '04 Cadillac's that I owned (which were, thankfully, under full warranty when I owned them).

Our extended family (parents, sibliings, cousins, etc) have owned Ford, GM, Chrysler's and without fail they've all fallen apart and needed major repairs after 3-5 years and/or 30-60k miles. The Benz/Bimmer/Toyota/Nissan/Honda's, etc... better than ever.

I'll never buy a domestic car again, ever. Period. Not until their quality comes within sniffing distance of german or jap cars. My BMW's have been rock solid and have held their value over the 3yrs that I usually own them then get another, near 65-70% of new retail purchase price after 45k miles and 3yrs of driving. You just can't find that with domestic cars.

[fsquid]

WHy do so many think it will be mass chaos if 1 or 2 of the "big 3" file for bankruptcy? People will still buy cars, just not their cars. Parts stores and manufacturers, dealerships, and auto mechanics will still be around.

First of all, the big 3 aren't going to close up shop--not even if they file bankruptcy. If they filed Chapter 11 tomorrow, they'd probably make as many cars next week as they did last week. It would mostly be a continuation of business while they worked things out. The rumors about millions of people losing their jobs are hugely exaggerated--probably in an effort to scare us into bailing them out. Yes, some people would lose their jobs, but the vast majority of those millions would keep their jobs--and things would be put in motion to reorganize things so that most of those people could keep their jobs. As long as the big 3 cost structure is not competitive with their potential competitors, they are not going to be able to compete.

[bdoughty]

Let's switch gears here for a sec.

http://www.cnbc.com/id/28182873

Bernard Madoff Arrested Over Alleged $50 Billion Fraud

Bernard Madoff, a longtime fixture on Wall Street, was arrested and charged Thursday with allegedly running a $50 billion Ponzi scheme, U.S. authorities said.

The former chairman of the Nasdaq Stock Market who remains a member of Nasdaq OMX Group's nominating committee, is best known as the founder of Bernard L. Madoff Investment Securities, the closely-held market-making firm he founded in 1960.

Prosecutors charged Madoff, 70, with a single count of securities fraud. They said he faces up to 5 years in prison and a fine of up to $5 million.




5 years in prison? Probably one of those fancy white collar prisons? Out in a couple years for good behavior? Maybe, just maybe, we should consider making white collar crime come with a little more punishment, for those who get caught.

A sentence that actually fits the crime -

One year for every million you wrangle out of someone.
Mandatory work on the outside, picking up trash etc.
Sharing a cell with someone just as despicable, like a murderer or pedophile.

[wco81]

WHy do so many think it will be mass chaos if 1 or 2 of the "big 3" file for bankruptcy? People will still buy cars, just not their cars. Parts stores and manufacturers, dealerships, and auto mechanics will still be around.

First of all, the big 3 aren't going to close up shop--not even if they file bankruptcy. If they filed Chapter 11 tomorrow, they'd probably make as many cars next week as they did last week. It would mostly be a continuation of business while they worked things out. The rumors about millions of people losing their jobs are hugely exaggerated--probably in an effort to scare us into bailing them out. Yes, some people would lose their jobs, but the vast majority of those millions would keep their jobs--and things would be put in motion to reorganize things so that most of those people could keep their jobs. As long as the big 3 cost structure is not competitive with their potential competitors, they are not going to be able to compete.

They won't go out of business the next day.

Question is whether they would be in better shape for recovery over the long term.

People think the only problems they have is that union workers make too much.

But cutting their pay isn't going to make those cars sell any better.

[fsquid]

The 5 million is just the criminal fine. I'm sure there will be a civil case filed by the SEC shortly.

[fsquid]

I thought GM sold the most cars worldwide every year until last year. I might have misread that.