Does Successful IPO Justify Auto Bailout?

The people who owned shares in 'old GM' were screwed BIG TIME by the bailout, which was done mainly to help the unions (who, by the way, profited tremendously from the new IPO). My wife inherited about 400 shares of GM stock from her grandfather (who once worked for GM and was a union man at the time), and a few years ago this stock was worth about $20,000. Admittedly, that's not a lot of money, but it's not chump change either. It's gone. That 'old GM' stock is now completely worthless.

Would the stock have been worthless even without the 'bailout'? Maybe so, but if 'normal' market forces had been allowed to act, GM might have been broken up and/or bought by one or more other automakers and the old stock might have eventually regained some value.

To the topic... a successful IPO in no way justifies the bailout (this is an ends justifying the means). Just as the guest above points out as well as the article itself, the "too big to fail" is a fallacy that bilked alot of people out of alot of money. Allowing it to fail didn't necessarily mean losing the 1.4 million jobs. Again guest above points out what often happens... a business starts losing money and begins selling off assets until GM is now Honda or Nissan or whatever and those 1.4 million people just make a different car.

Everyone wants to blame the big bad unions. How about the CEO's who run the companies into the ground losing billions and giving themselves millions in bonuse's every year. Last I checked the banking industries that went belly up (Bear Stearns, Washington Mutual), and many others were not union run. Fact of the matter is If it was not for unions, you would have people working 80 hours a week making next to nothing in unsafe, sweat shops with very little concern for the enviroment, (China, Indonesia, Vietnam, etc.)

Proud USW member

There is definitely plenty of blame to go around. Regardless of who's fault it is, if they are not able to turn things around and maintain profitability, the end result will be the same.

Remember too, when people speak of unions, it's not the card carrying, working members that they have a beef with. It's the all too powerful union leaders, that often times push for things that end up ultimately hurting the members and the companies they work for.

Management shares the guilt, they gave in, because if they kept the strike on, the other automakers would make cars (due to the pattern method, strike one and assure that pressure)

In fact the big three should have had a full lockout policy. Striking one is striking all.

Yes, the sweatshop argument, now the sweatshops are gone, the unions should also go, or we will see the decline carry on.

Now, proud union man, what if we all got the same wages you got? Would you be happy? Would it help?

Of course not, the economy works best when work of a similar type gets similar wages. Skilled workers get more, diggers get less. And free trade only works if the countries have similar wages. What we have now is de-facto dumping by China.

Carried to the extreme, all jobs will leave the USA except jobs you perform in place, like cutting grass or building houses....a great future.

Well put Jason. GA

Nice balance. I think that unions have made important contributions to society in the past, and most of us are better off for it. Most of those improvements, which were initially contained in the bargaining agreements are now enshrined in law and embedded in the our way of life. The company town and company store are now historical oddities. Most people now accept the forty hour work week, and that the risk of death or dismemberment are not just part of the job. I think we all owe a debt to the unions and union workers who fought long and hard (and sometimes to the death) to make this a reality.

But having won the battle against very long odds, the unions in many cases then abused their new power to gain not just decent wages, but pretty damn cushy wages. I think the UAW is a poster child for this abuse. But it is hardly the only major factor in GM's demise. As you say 'management always was and should always be on the side of the people with ideas'. But rather than adopt the new ideas about efficient high quality manufacturing, the new 'ideas' they adopted seem to have been centered on more chrome, more horsepower, etc. It was not a shortage of good ideas so much as bad management judgement about which new ideas to implement. There's plenty of blame to go around. Hell we should even put some of the blame on the customers who made it all possible by buying their products. GM's successful IPO is an encouraging sign, but this story is not over yet so I'd say it's too soon to tell.

You correctly point out that the people who come up with the good new ideas are few in number. I think we often make a mistake in thinking that these folks are motivated by hopes of economic gain. Often truly creative people come up with new ideas because it's what they do for fun. I don't mean to suggest that they are unaware of the potential rewards, or that because they are having fun they shouldn't get paid for what they do. I just mean that one of the differences that sets them apart is that they are more interested in how things work and how things could work better, and less concerned with what's in it for them. Just an opinion. I've included a complete list of my patents below...

Where are your patents?

GM is a prime example of a company that got so large that it became unmanageable. The execs, fearing hits to their stock options, gave into the unions and kicked the can continually down the road. The union leaders, more interested in feathering their own nests, stop representing the health and welfare of its membership and got into bed with the politicians. Middle management thought they were titans of industry and treated anyone not aboard the GM liner as subhuman. Just ask their suppliers how they liked getting the "red headed stepchild" treatment.

Now, instead of letting the corpse die and be buried, the feds got in the muck and shot it full of our tax dollars and now FrankenGMstien is on the prowel. Will we ever learn?

In my opinion. the GM IPO wasn't an IPO, certainly not in the classic capitalist sense.

It was an invitation only IPO. "Little people" like you and me weren't invited, and from what I've found, those who were invited were mostly banks, investment houses and foreign gov'ts, including Kuwait and China.

Why did the Obama gov't (the principal owner) allow this to happen in this manner? Guess we'll have to follow the money over time.

Hooker

First just let me say that it was not the government's money to give away. We citizens allow them to do this by being gutless wonders seeking eternal parentage from government.

Nuff said on politics. The future for manufacturing in first world countries lies not in mass production (with the exception perhaps of raw material excavation and processing), but in custom production. When the Big 3 can learn how to build cars specified by customer's orders, perhaps by allowing customers to mix and match between components listed in a master catalog of sorts, they can then retain pricing power. The old business model of trying to guess how many mass produced cars per year the public will buy with salesmen and engineers trying to guess which modification for the year a customer will want and sending the cars out to dealerships is a model that worked well for awhile, but bury it now. Who really likes the car buying experience with the high pressure salespeople (internet salespeople are no exception) and the pricing differences between region and dealerships?

The auto manufacturer that can learn to take orders from the customers and give them what they want in a timely fashion, with quality of course, is the one that will be able to provide the jobs of the future. Competing with emerging market countries in mass production is a race to the bottom.

The bailout is the first stem of many to follow towards happy era of fast approaching communism predicted by K. Marks! Americans, if you want be free of totalitarianism prevent the next steps. Marxism is not Healthy for you!