Bail-Out III coming to a Congress near you?

[FoMoJo]

My point was neither you nor detractors have either context or material standing to make that call.

Detractors of what?  Current history?  It's all there to read about and it's not the fiction or conjecture of wannabe philosophers.

And let's not kid ourselves - unions killed Detroit, as they did to many other product-related industries.

There is no question that the unions pressed too hard in valuing their ownership of labour and those who represented the ownership of the facilities caved too easily.  However, it is fair to say that, in the 20th century, unions were largely responsible for elevating the working-class citizens of America into the realms of middle-class spenders which, ultimately, spurred the growth of the economy.

[dazzleman]

Detractors of what?  Current history?  It's all there to read about and it's not the fiction or conjecture of wannabe philosophers.
There is no question that the unions pressed too hard in valuing their ownership of labour and those who represented the ownership of the facilities caved too easily.  However, it is fair to say that, in the 20th century, unions were largely responsible for elevating the working-class citizens of America into the realms of middle-class spenders which, ultimately, spurred the growth of the economy.

That was true when US industrial dominance was unchallenged, but in the years since, the real wages of the middle class have eroded as many of the manufacturing jobs have gone overseas and been replaced with low-wage service jobs.  We have to figure out how to gainfully employ the share of the population that has depended upon those types of jobs.

[GoCougs]

His most interesting point, IMO, was the assertion that the focus of the bail-out inquiry and oversight has drifted beyond what the problem is and what the efforts were intended to address.

I don't think it's drift. The current administration has lassoed the bitterness, spite and jealous a healthy portion of the population has toward those that do better at life.

The $10MM a certain CEO makes is literally financially imperceptible in context of $5B, $10B or $100B in revenue a large corporation generates; from a dividend perspective, from a earnings/share perspective, or any material financial perspective for those that want to see CEO pay bucked down.

At the end of the day, many, many people simply don't like the fact that the guy in the corner office on the top floor is making 50x, 100x or 500x more money than they are, and are all too happy to see government step. It's straight out of the Das Kapital, and it is hilarity.

[Tave]

The $10MM a certain CEO makes is literally financially imperceptible in context of $5B, $10B or $100B in revenue a large corporation generates; from a dividend perspective, from a earnings/share perspective, or any material financial perspective for those that want to see CEO pay bucked down.

At the end of the day, many, many people simply don't like the fact that the guy in the corner office on the top floor is making 50x, 100x or 500x more money than they are,

Yeah, he touched on that as well.

[FoMoJo]

That was true when US industrial dominance was unchallenged, but in the years since, the real wages of the middle class have eroded as many of the manufacturing jobs have gone overseas and been replaced with low-wage service jobs.  We have to figure out how to gainfully employ the share of the population that has depended upon those types of jobs.

Absolutely.  It was a consequence that was forseeable and often discussed during the wage/price spiral.  Sooner or later it had to be an eventuallity as the service and financial sectors of the economy could not support the loss of manufacturing jobs.  Though many companies clung in as long as they could, I believe Levi was one, eventually, they had to go to overseas cheap labour to remain competitive.  

What is now being touted as the solution to the problems, not only labour but trade, is development of new technologies -- green being the keyword -- that can be used to manufacture the products of the future as well as export not only the products but the technologies.  I expect new methods of operation and trade will need to be put in place so as North American does not, once again, lose its future to cheap labour markets.

[FoMoJo]

I don't think it's drift. The current administration has lassoed the bitterness, spite and jealous a healthy portion of the population has toward those that do better at life.

The $10MM a certain CEO makes is literally financially imperceptible in context of $5B, $10B or $100B in revenue a large corporation generates; from a dividend perspective, from a earnings/share perspective, or any material financial perspective for those that want to see CEO pay bucked down.

At the end of the day, many, many people simply don't like the fact that the guy in the corner office on the top floor is making 50x, 100x or 500x more money than they are, and are all too happy to see government step. It's straight out of the Das Kapital, and it is hilarity.

Perhaps the view of some but not the majority, imo.  Most recognize that if the corner office were empty the company will continue as before; providing everone else is doing their jobs properly.  It was long held that an honest dollar for a good job done was the cornerstone to a well functioning economy.  Overt greed, as we have recently seen, is the downfall.

[GoCougs]

Perhaps the view of some but not the majority, imo.  Most recognize that if the corner office were empty the company will continue as before; providing everone else is doing their jobs properly.  It was long held that an honest dollar for a good job done was the cornerstone to a well functioning economy.  Overt greed, as we have recently seen, is the downfall.

The company would NOT continue as before, at least not for very long. People need to be TOLD the who/why/when/what of how to do their jobs properly.

There's no such thing as an honest dollar; phraseology perilously close to the "from each according to his ability, to each according to his need" communist battle cry.

[FoMoJo]

The company would NOT continue as before, at least not for very long. People need to be TOLD the who/why/when/what of how to do their jobs properly.

Of course the "who/why/when/what" would be irrelevent unless you told them where .

Granted, there are some, as supervisors, managers, et al, who attempt to treat those within their area of responsibility as if they were in charge of a kindergarten class.  They are a hindrance to production.  The most effective managers are those who respect and recognize the workers as the single most important aspect of the company and fulfil their role as facilitators.  Certainly, direction, and even leadership, is required of a competent manager, executive, etc. but their most important role is to see that the needs of the workers are met so that production continues unimpeded.

There's no such thing as an honest dollar; phraseology perilously close to the "from each according to his ability, to each according to his need" communist battle cry.

Perhaps one who embraces a philosophy of greed and elitism cannot understand the importance of honesty.

[dazzleman]

Of course the "who/why/when/what" would be irrelevent unless you told them where .

Granted, there are some, as supervisors, managers, et al, who attempt to treat those within their area of responsibility as if they were in charge of a kindergarten class.  They are a hindrance to production.  The most effective managers are those who respect and recognize the workers as the single most important aspect of the company and fulfil their role as facilitators.  Certainly, direction, and even leadership, is required of a competent manager, executive, etc. but their most important role is to see that the needs of the workers are met so that production continues unimpeded.
Perhaps one who embraces a philosophy of greed and elitism cannot understand the importance of honesty.

I'm afraid you're minimizing the role of the company head.  He/she sets the direction of the company and makes the big decisions.  You seem to be equating the company head with a line manager.  I'm surprised you're looking at it from such a low-level point of view...

[Rich]

REPORT: Chrysler Financial to wind down by 2011, executive pay, well, not so much

by Jonathon Ramsey (RSS feed) on Oct 25th, 2009 at 9:27AM


Cerberus submitted its plans for Chrysler Financial to the U.S. Treasury, and then in an announcement that came as a surprise to Cerberus itself, the Treasury said that Chrysler Financial would be shutting down by December 31, 2011. The lending arm paid back its $1.5 billion loan from the government's TARP program, but much of its dealer financing and loan operations were replaced by GMAC.

Even though Chrysler Financial is a far weaker business than it once was -- its loan portfolio has been more than halved -- Cerberus said that shutting it down wasn't in the long-term plan. The Treasury replied that it got the idea of closure from its talks with Cerberus and the paperwork submitted by the capital management firm. There will most likely be a lot more "They said/We said" before this is through.

What isn't in question is the fact that if you want big money in the banking biz, you should get a job or keep your job with Chrysler Financial. Severe pay reductions were announced for financial firms that hadn't paid back their loans, which means that ChrysFin is excused from those measures. As well, according to pay czar Kenneth Feinberg -- and which would appear to bolster Treasury's take on the company's future -- "the risk of employee departures must be minimized because Chrysler Financial has stated it intends to wind down its operations and will have difficulty attracting new employees."

That means that, according to government's take on Cerberus' take, the company needs to keep pay high so it can keep good people so it can close in two years. To paraphrase Captain Willard in Apocalypse Now, the BS is piling up so fast we'll need wings to stay above it. Stay tuned...

lol

[dazzleman]

If Chrysler Financial is truly winding down, then it really only needs to identify certain key people that it needs to retain until liquidiation.  It won't need people who are responsible for strategic planning and such.  The argument they're making is probably correct in a narrow sense, but not a broad one.

I happen to think that the bailed out entities should be liquidated over time.  "Too big to fail" has to end, because it gives the owners of those businesses all the profits when they win their bets, but sticks the taxpayers with the losses when they miscalculate.  That violates one of the fundamental tenets of free enterprise -- that the person taking the risk gets both the gains and the losses.

I understand that having all those banks and auto companies fail at once would have been more than the economy could take at once, and would have put us into a depression.  So on that basis, I reluctantly supported some type of bailout.  But I think the goal of the bailout should be to play for time, and wind down these failed banks/businesses in an orderly fashion so that people working for them can have time to find other jobs, and so the economy can recover in other areas in the interim.  I don't think these bailouts should be used to keep income levels artificially high for people whose businesses have failed.

[GoCougs]

Of course the "who/why/when/what" would be irrelevent unless you told them where .

Granted, there are some, as supervisors, managers, et al, who attempt to treat those within their area of responsibility as if they were in charge of a kindergarten class.  They are a hindrance to production.  The most effective managers are those who respect and recognize the workers as the single most important aspect of the company and fulfil their role as facilitators.  Certainly, direction, and even leadership, is required of a competent manager, executive, etc. but their most important role is to see that the needs of the workers are met so that production continues unimpeded.

The big decisions are what makes companies successful; which products to launch or to cancel, which business units to buy or sell, which managers to promote or fire, etc. The reality is that "workers" (i.e., ground level employees) are worth relatively little and why they get paid very little (relative to a CEO).

Perhaps one who embraces a philosophy of greed and elitism cannot understand the importance of honesty.

I called you to task on the anthropomorphizing actually; it has nothing to do with greed or elitism; it's all about the free market which is the definition of honesty. Some people are worth $10MM/year. Some people are worth $20k/year. That's the breaks.
 

[sportyaccordy]

I don't know enough about these goings on to have an effective viewpoint... and that depresses me a bit... but there are only so many hours (and consequently dollars) in a day....

[SVT32V]

What is now being touted as the solution to the problems, not only labour but trade, is development of new technologies -- green being the keyword -- that can be used to manufacture the products of the future as well as export not only the products but the technologies.  I expect new methods of operation and trade will need to be put in place so as North American does not, once again, lose its future to cheap labour markets.

China has a well-educated population that makes numerous high-tech items, most likely the computer you are reading this on.  What makes you think they cannot make high-tech green products of passing quality at far cheaper rates than the US?

Why would a US company choose to build a plant to makes such products in the US when a perfectly able cheaper workforce is to be found overseas?

[FoMoJo]

I'm afraid you're minimizing the role of the company head.  He/she sets the direction of the company and makes the big decisions.  You seem to be equating the company head with a line manager.  I'm surprised you're looking at it from such a low-level point of view...

Perhaps I was mildly vexed by the notion that some think "People need to be TOLD the who/why/when/what of how to do their jobs properly."  It should be understood that a company's most valuable resource is its people; up and down the line from those who make/create the product, to those who supervise, to those who market and to those who strategize.  Certainly, those who have a higher level of responsibility should be compensated accordingly; but still, at the level of their worth. 

However, this discussion is about those who failed miserably at their responsibilities to direct companies through challenging times.  Rather than thinking long-term, they compromised the company's future by neglecting the investment in product development in order to have a bottom line that would satisfy the shareholders; a strategy guaranteed to produce failure.  The company would have been better off without them. 

[FoMoJo]

China has a well-educated population that makes numerous high-tech items, most likely the computer you are reading this on.  What makes you think they cannot make high-tech green products of passing quality at far cheaper rates than the US?

Why would a US company choose to build a plant to makes such products in the US when a perfectly able cheaper workforce is to be found overseas?

I'm not saying that it's a viable solution or that is what would work; just that it's being touted.  If the US (NA, Western nations) are to be successful, a great many attitudes and behaviour must change.

[FoMoJo]

The big decisions are what makes companies successful; which products to launch or to cancel, which business units to buy or sell, which managers to promote or fire, etc. The reality is that "workers" (i.e., ground level employees) are worth relatively little and why they get paid very little (relative to a CEO).

Not necessarily.  Although it was the failure of management which has led GM to its embarrassing fate, the success, had it been managed not as recklessly, would have been in the hands of skilled workers to design and produce vehicles that were highly desired by consumers in regards to appearance and quality.  That the majority their products are now a mishmash of rebadged imports and late to the table domestics is a result of failed strategy.  That they even have some desirable products, the Camaro for example, is due more to employee pride than executive strategy.

I called you to task on the anthropomorphizing actually; it has nothing to do with greed or elitism; it's all about the free market which is the definition of honesty. Some people are worth $10MM/year. Some people are worth $20k/year. That's the breaks.

You've lost me a bit here .  I don't recall attributing human qualities to animals; unless you thought I've implied that some CEOs are jackasses.  Rick Wagoner and Jacque Nasser come to mind in that case.

[sportyaccordy]

Not necessarily.  Although it was the failure of management which has led GM to its embarrassing fate, the success, had it been managed not as recklessly, would have been in the hands of skilled workers to design and produce vehicles that were highly desired by consumers in regards to appearance and quality.  That the majority their products are now a mishmash of rebadged imports and late to the table domestics is a result of failed strategy.  That they even have some desirable products, the Camaro for example, is due more to employee pride than executive strategy.

No cars get the green light without the blessing of the executives. They are def more responsible for the products than anyone else in the company.

[GoCougs]

Perhaps I was mildly vexed by the notion that some think "People need to be TOLD the who/why/when/what of how to do their jobs properly."  It should be understood that a company's most valuable resource is its people; up and down the line from those who make/create the product, to those who supervise, to those who market and to those who strategize.  Certainly, those who have a higher level of responsibility should be compensated accordingly; but still, at the level of their worth. 

If line workers were the most important asset they'd be making CEO money. They don't. They're not the important because they are relatively easy to replace.

My point is, you do not understand market value. For example, Allan Mulally was worth every cent of the $7.5MM signing bonus he received before every setting foot onto Ford property, even if he had torpedoed the company in six months. EVERY CENT.

However, this discussion is about those who failed miserably at their responsibilities to direct companies through challenging times.  Rather than thinking long-term, they compromised the company's future by neglecting the investment in product development in order to have a bottom line that would satisfy the shareholders; a strategy guaranteed to produce failure.  The company would have been better off without them. 

If we're talking about Detroit, not true. The deals with the UAW were etched in blood by Detroit execs decades ago, and that is what primarily sunk the show; too long product cycles, inferior manufacturing technology, excessive blue collar compensation, government protectionism, and plenty other facets.

[GoCougs]

Not necessarily.  Although it was the failure of management which has led GM to its embarrassing fate, the success, had it been managed not as recklessly, would have been in the hands of skilled workers to design and produce vehicles that were highly desired by consumers in regards to appearance and quality.  That the majority their products are now a mishmash of rebadged imports and late to the table domestics is a result of failed strategy.  That they even have some desirable products, the Camaro for example, is due more to employee pride than executive strategy.

Sorry, it was the UAW that killed the golden goose (see previous post).

You can't let engineers and designers have fee reign; they'll spend too much and take too long to get product to market. They need to be given deadlines and budgets from people that have the authority to do so (i.e., to fire them - the execs).

The rebadge strategy was as a result of constraints placed on the company. Sure Saturn would have like to design their own cars, but it just wasn't in the financial cards, and GM had contractual obligations in the billions already on the books with their dealers.

You've lost me a bit here .  I don't recall attributing human qualities to animals; unless you thought I've implied that some CEOs are jackasses.  Rick Wagoner and Jacque Nasser come to mind in that case.

Um, "honest" dollar? No such thing.

[giant_mtb]

Strange.  Not a week ago, I attended and listened to Bill Ford give a speech/Q&A session.  Somebody asked about the UAW's role in Ford's past demise and future prospering, and Mr. Ford went on a rant about how he gets angry when people blame the union for what happened to Ford.  He doesn't agree with you, Cougs.

[Tave]

Allan Mulally was worth every cent of the $7.5MM signing bonus he received before every setting foot onto Ford property, even if he had torpedoed the company in six months. EVERY CENT.

No investment is 100% guaranteed. Overall, I agree with you that the market is (by far) the most efficient way to allocate resources.

[GoCougs]

Strange.  Not a week ago, I attended and listened to Bill Ford give a speech/Q&A session.  Somebody asked about the UAW's role in Ford's past demise and future prospering, and Mr. Ford went on a rant about how he gets angry when people blame the union for what happened to Ford.  He doesn't agree with you, Cougs.

LOL - what is gods' name would be the UAW's reaction should if Bill FORD publicly blame it for the demise of Detroit???

OF COURSE he can't say that - he'd torpedo the company.

[giant_mtb]

Hm.  You sound like a conspiracy theorist.  It comes to the fact that the management agreed to give the UAW what it wanted.  That's their fault, not the UAW's.  Unless my moral system is backward.



And, in a couple weeks' time, the Pres. of the UAW will be speaking at the same club which I attended this past Tuesday.  I won't be in attendance, but I'm sure many people like you will be.

[sportyaccordy]

Hm.  You sound like a conspiracy theorist.  It comes to the fact that the management agreed to give the UAW what it wanted.  That's their fault, not the UAW's.  Unless my moral system is backward.



And, in a couple weeks' time, the Pres. of the UAW will be speaking at the same club which I attended this past Tuesday.  I won't be in attendance, but I'm sure many people like you will be.

The fallout of not playing by the UAW's rules would be too huge. It's kind of like berating someone for giving a mugger all their stuff. It was either that, or be physically attacked. The political & other implications are huge. The UAW has too much of a stronghold on Detroit.

[FoMoJo]

No cars get the green light without the blessing of the executives. They are def more responsible for the products than anyone else in the company.

Of course executives sign off on a product but I expect it has as much, or more, to do with market analysis, design, technological research, innovative tool development, financial analysis and work ethic.  Anyone can say "I want to build a nice car that people will buy" but after that, it's in the hands of the workers.

[FoMoJo]

If line workers were the most important asset they'd be making CEO money. They don't. They're not the important because they are relatively easy to replace.

Did I say that?  I said that most CEOs are overrated and they cater to the shareholders rather than the needs of the company.  As well, I said that a company's most valuable resource is its employees; including the executive team and even the CEO.

My point is, you do not understand market value. For example, Allan Mulally was worth every cent of the $7.5MM signing bonus he received before every setting foot onto Ford property, even if he had torpedoed the company in six months. EVERY CENT.

So far Allan Mulally has proven to be an exceptional manager.  Ford has many others.  However, Mulally's value was as much related to intangibles -- to impress Wall Street, et al -- as his business acumen.  As previous noted, "The Way Forward" was in place before he arrived.  I expect that his mandate is to enact this business plan with whatever variations are needed in sresponse to the current economical situation.  I, also, expect he will be told what these are.

If we're talking about Detroit, not true. The deals with the UAW were etched in blood by Detroit execs decades ago, and that is what primarily sunk the show; too long product cycles, inferior manufacturing technology, excessive blue collar compensation, government protectionism, and plenty other facets.

The wage/price spirals, especially of the '60s and '70s, had much to do with the failure of NA industry and manufacturing.  Economists (some) were warning of the consequences but were ignored by both sides.  It was just as easy, likely easier, to raise prices of the product to ensure profitablility -- for the shareholders -- than to engage in responsible labour pricing.  Essentially, the union execs did a better job than the manufacturing execs.

[FoMoJo]

The fallout of not playing by the UAW's rules would be too huge. It's kind of like berating someone for giving a mugger all their stuff. It was either that, or be physically attacked. The political & other implications are huge. The UAW has too much of a stronghold on Detroit.

There's a long history of conflict between unions and manufacturers in the past century.  Usually, it was the union supporters who were attacked.  As well, there is the connection between (some) unions and the mob; the Teamsters come to mind.  It's been a long ugly process and both sides have behaved badly.  The consequence is what we see now.  Through unreasonable demands and, equally, unreasonble reactions, the golden goose of American industry has lost its lustre; and most of its feathers.  NA industry is dying because of unwarrented greed and short term solutions. 

[FoMoJo]

No investment is 100% guaranteed. Overall, I agree with you that the market is (by far) the most efficient way to allocate resources.

There is no substitute for free market practice; unless someone puts their thumb on the scale.  There needs to be rules.  It has been said by some that the quintessential form of free market enterprise is in agriculture; the farmers' market, in case.  The exchange is valued on a number of variables including quantity, quality and demand.

[GoCougs]

Hm.  You sound like a conspiracy theorist.  It comes to the fact that the management agreed to give the UAW what it wanted.  That's their fault, not the UAW's.  Unless my moral system is backward.



And, in a couple weeks' time, the Pres. of the UAW will be speaking at the same club which I attended this past Tuesday.  I won't be in attendance, but I'm sure many people like you will be.

There is a classic Harvard Business Review case that reviews the entire design process between Toyota and Ford. As we all know, Detroit's product cycles are a 50-100% longer than the Japanese; a principal factor in Detroit's demise. Archaic manufacturing technologies, union protectionism both at the automaker and suppliers is a principal factor in the length of these cycles. I also point you in the general direction of Ford's most automated plant in the world. In Brazil. Why Brazil? Take a guess.

I have also worked in strong union shops, and have been personally "written up" (i.e., a grievance filed against me) because I "stole someone's labor" in that I moved some boxes on the factor floor that were in the way of my project. I "stole" because a union member should have been asked to move the boxes.

In short, as get along further in your education, your career and life in general you'll see what I mean. There is no conspiracy.