chrismaths Wrote: ------------------------------------------------------- > The CDS are trading with premium upfront. If > anyone is going to go bust from GM CDS, they > already have. > > (waits 10 months to be forced to eat words) What about the companies rated AAA that don’t post any collateral with the MTMs? There are others that AIG (primus PRS:NYSE, alladin capital, etc)
Aside from the obvious effect of costs due to a Union, I blame it on the CULTURE that permeates in a Union environment. A company with a strong Union Culture is generally: -Combative -Very cliquey (who cares about Local xxx and especially any salaried employee… all I care about is myself and my local) -Short-sighted (both management and workers) -Lacks any sort of flexibility (no no, we HAVE to build it here and so what if the model doesn’t sell, the CONTRACT says we HAVE TO) -No motivation for innovative excellence and efficiency What this has basically led to is a mindset that is impaired for any sort of forward looking thinking and innovation, which again is derived from immediate profit, easy profit and the next ‘Contract’. Who has time to think of the future, share ideas, co-operate when a bulk of your resources go into a Union Management culture. For every minute and $ the smart people in the suits are thinking and spending about the ‘contract’ and its negotiations, the competitors who do not have to worry about that are getting that much more ahead, to the point where there is a exponential difference in the value of output for a unit of input. No doubt there are smart people, hard workers on both sides. But… You’re always tied up on both sides based on those factors to the point where you will argue for the sake of arguing while the house burns down. On a side note, if a bailout is agreed upon, I bet you’ll see a good chunk of that go immediately towards Union interests: “now that the company is funded, we need to negotiate a better deal while we can!!”
http://www.nytimes.com/2008/11/12/opinion/12friedman.html?_r=1&pagewanted=print&oref=slogin November 12, 2008 Op-Ed Columnist How to Fix a Flat By THOMAS L. FRIEDMAN Last September, I was in a hotel room watching CNBC early one morning. They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasn’t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting? How could these companies be so bad for so long? Clearly the combination of a very un-innovative business culture, visionless management and overly generous labor contracts explains a lot of it. It led to a situation whereby General Motors could make money only by selling big, gas-guzzling S.U.V.’s and trucks. Therefore, instead of focusing on making money by innovating around fuel efficiency, productivity and design, G.M. threw way too much energy into lobbying and maneuvering to protect its gas guzzlers. This included striking special deals with Congress that allowed the Detroit automakers to count the mileage of gas guzzlers as being more than they really were — provided they made some cars flex-fuel capable for ethanol. It included special offers of $1.99-a-gallon gasoline for a year to any customer who purchased a gas guzzler. And it included endless lobbying to block Congress from raising the miles-per-gallon requirements. The result was an industry that became brain dead. Nothing typified this more than statements like those of Bob Lutz, G.M.’s vice chairman. He has been quoted as saying that hybrids like the Toyota Prius “make no economic sense.” And, in February, D Magazine of Dallas quoted him as saying that global warming “is a total crock of [expletive].” These are the guys taxpayers are being asked to bail out. And please, spare me the alligator tears about G.M.’s health care costs. Sure, they are outrageous. “But then why did G.M. refuse to lift a finger to support a national health care program when Hillary Clinton was pushing for it?” asks Dan Becker, a top environmental lobbyist. Not every automaker is at death’s door. Look at this article that ran two weeks ago on autochannel.com: “ALLISTON, Ontario, Canada — Honda of Canada Mfg. officially opened its newest investment in Canada — a state-of-the art $154 million engine plant. The new facility will produce 200,000 fuel-efficient four-cylinder engines annually for Civic production in response to growing North American demand for vehicles that provide excellent fuel economy.” The blame for this travesty not only belongs to the auto executives, but must be shared equally with the entire Michigan delegation in the House and Senate, virtually all of whom, year after year, voted however the Detroit automakers and unions instructed them to vote. That shielded General Motors, Ford and Chrysler from environmental concerns, mileage concerns and the full impact of global competition that could have forced Detroit to adapt long ago. Indeed, if and when they do have to bury Detroit, I hope that all the current and past representatives and senators from Michigan have to serve as pallbearers. And no one has earned the “honor” of chief pallbearer more than the Michigan Representative John Dingell, the chairman of the House Energy and Commerce Committee who is more responsible for protecting Detroit to death than any single legislator. O.K., now that I have all that off my chest, what do we do? I am as terrified as anyone of the domino effect on industry and workers if G.M. were to collapse. But if we are going to use taxpayer money to rescue Detroit, then it should be done along the lines proposed in The Wall Street Journal on Monday by Paul Ingrassia, a former Detroit bureau chief for that paper. “In return for any direct government aid,” he wrote, “the board and the management [of G.M.] should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp G.M. with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others and downsizing the company … Giving G.M. a blank check — which the company and the United Auto Workers union badly want, and which Washington will be tempted to grant — would be an enormous mistake.” I would add other conditions: Any car company that gets taxpayer money must demonstrate a plan for transforming every vehicle in its fleet to a hybrid-electric engine with flex-fuel capability, so its entire fleet can also run on next generation cellulosic ethanol. Lastly, somebody ought to call Steve Jobs, who doesn’t need to be bribed to do innovation, and ask him if he’d like to do national service and run a car company for a year. I’d bet it wouldn’t take him much longer than that to come up with the G.M. iCar.