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GM's return to top continues as it rejoins S&P 500

It's not that they had "zero value."

It's that during a reorganization, companies still need funding and huge amounts of credit just to keep going and to pay their suppliers. Since the private sector was unwilling and/or unable to provide that funding, the companies would have needed to liquidate just to keep the bankruptcy going. This in turn would have sunk their suppliers, who wouldn't get paid. Those suppliers also make parts for Ford. There would have been a cascade effect on the entire industry.

And yes, brands with international recognition, long histories and profitable pasts certainly can fail, brands lost or turned into shadows of their pasts. Pan Am, Lehman Brothers, Woolworth's, Polaroid, Kodak....

We'll never know for sure since the government took it into bankruptcy court with its own prepackaged deal...
 
Without the help, first from President Bush, then President Obama GM would likely be gone now.

General Motors is rejoining the club, the rarified air of the Standard & Poor's 500.

It's a dose of good news not only for GM's comeback story, but for stockholders who have seen a modest stock price bump from the milestone.

Standard & Poor's announced that GM, which reigned as the biggest company in the index from 1927 to 1958, will be back in after the close of trading on Thursday. The news is sure to buoy the mood at GM's stockholders' meeting the same day. And it will mark another milestone since GM filed for bankruptcy reorganization in 2009 and, as a result, was kicked out of the S&P 500 slot it had held since the index began in 1925.

The Detroit-based global automaker will rejoin at 130 among the 500 companies on the list ranked by the value of their shares available for trading, or float. It replaces Heinz, which is out because of its acquisition by Berkshire Hathaway. Financial services provider American International Group, which, like GM, received government assistance to stay in business during the recession, also will rejoin.

MORE: Treasury to sell 30 million shares of GM stock

GM shares closed at $34.96 Tuesday, up 1.6%. In the past year, it has ranged from $18.72 to $35.48.

"The GM team has been working very hard to earn the business of customers around the world and to win the confidence of investors, and rejoining the S&P 500 shows we're very much on track," said GM CEO Dan Akerson in a statement.

GM's return to top continues as it rejoins S&P 500

I still won't be buying one of their cars anytime soon.

When I bought my Lexus, I looked at a comparable Cadillac. It was smaller and cost $8,000 more, if I remember correctly. It also didn't have the same interior richness the Lexus had. I asked the salesman why there'd be such a difference in price between the two cars, and he said, "We have to protect the brand."

Really. Wonder how that's workin' out for them. I'll take my Lexus any day.
 
I still won't be buying one of their cars anytime soon.

When I bought my Lexus, I looked at a comparable Cadillac. It was smaller and cost $8,000 more, if I remember correctly. It also didn't have the same interior richness the Lexus had. I asked the salesman why there'd be such a difference in price between the two cars, and he said, "We have to protect the brand."

Really. Wonder how that's workin' out for them. I'll take my Lexus any day.

Good evening, Maggie. :2wave:

Today I saw my first Cadillac Escalade, and it sure was a nice looking vehicle! I still like the Corvette better! :thumbs:
 
GM and Chrysler were not going to emerge from bankruptcy. They would have been liquidated, because no one in the private sector had any interest in saving those companies. As noted, they were trying for years to arrange a rescue, and the private sector offered no help whatsoever.

The unions had already made significant recessions. And contrary to your claims, GM and Chrysler are apparently bouncing back, and hiring people, both union and non-union.

Nope, there would have been plenty of interest in investing in GM after bankruptcy. There would be a big difference between GM before bankruptcy with the UAW and all the other baggage and GM after bankruptcy shorn of all that baggage.
 
GM and Chrysler were not going to emerge from bankruptcy. They would have been liquidated, because no one in the private sector had any interest in saving those companies. As noted, they were trying for years to arrange a rescue, and the private sector offered no help whatsoever.

That's how it works in a free market. If a troubled company is worth salvaging, then it will be salvaged, one way or another. If it is not worth salvaging, then it goes out of business.

What we have here is government wastefully misusing taxpayer funds to try to salvage companies that were not worth salvaging.
 
Several people on this thread are claiming that the Big Three could have been saved by a normal private bankruptcy. It's a fantasy. If GM and Chrysler failed, all three would have ended up liquidating, tons of jobs would have been lost.

Ford would have picked up the slack. We'd have more people, in better jobs, making better cars, without having wasted so much taxpayer money.
 
Ford would have picked up the slack. We'd have more people, in better jobs, making better cars, without having wasted so much taxpayer money.

Who knows, Fiat bought one, perhaps Toyoto and Honda would have bought the others. Though private equity may have stepped in and flipped them for billions in profit by now.
 
Several people on this thread are claiming that the Big Three could have been saved by a normal private bankruptcy. It's a fantasy. If GM and Chrysler failed, all three would have ended up liquidating, tons of jobs would have been lost.

Foreign money had already owned Chrysler at one time or another and there is nu reason to believe that Ford would have gone under.

I guess you don't have any interest in commercial airlines, then. :D They frequently get bailed out. The only way they could survive would be to reduce flights, slash everything to the bone and significantly increase prices. And even that might not be enough.

Right. I don't have any interest in commercial airlines as that is not the topic.

S&L's also had to get bailed out, when those *cough* private sector banks mismanaged their funds and went belly up.

And?

No, I'm pointing out that Japan and China do not let companies rise and fall on their own merits. They not only survive with massive government support, they actually thrive off of it.

Then they will eventually fail.

Because the entire US economy would suffer if the Big Three went under and their employees were unemployed.

Other auto manufacturers would have to hire more people to take up the slack. It happens all the time in business. Companies start and fail regularly and there is no bailout, except for those with political connections.

Seems screamingly obvious to me. A lot of Republicans are biased against Obama, and were before he even took office.

Well of course. It might have been his history or lack of experience, but that happens all the time in politics. No one expects to get 100% of the vote.

See what I mean? :mrgreen:
More to the point, do you see what I mean? BHO had no business experience whatsoever and yet feels qualified for the US Government to spend billions of taxpayer dollars on failed companies and then equip other start-ups with venture capital? This unequipped greenhorn has cost the taxpayers trillions of dollars and why he still gets anyone's support remains a mystery.
 
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That's how it works in a free market.
At the risk of offending your delicate sensibilities:

• We do not live in a free market economy. Never have, never will.
• Completely unfettered free markets are not a good thing anyway.
• Numerous competitors in the same industry receive massive support from their governments, especially Japanese auto manufacturers.


Ford would have picked up the slack.
Again: No, Ford would not have picked up the slack. Nor would the US auto industry spring back instantly, as though nothing happened. That's a fantasy.

• Ford didn't need a bailout, but were not in a strong position. They were just better prepared for the downturn and credit crunch.
• All the companies use the same suppliers. If GM dies, it's going to take out a huge wave of suppliers as well. That would have harmed Ford as well. And Toyota, and Honda, and....
• GM and Chrysler would have dumped their cars, which would further damage the market.
• There should be no question that Americans would collectively freak out if a Chinese company started buying up the charred remains of GM and Chrysler.

E.g. Why Asian automakers want a federal bailout of U.S. industry - Dec. 15, 2008
 
At the risk of offending your delicate sensibilities:

• We do not live in a free market economy. Never have, never will.

Everyone knows what you just typed.

He obviously wasn't being literal.

Sheesh.

Again: No, Ford would not have picked up the slack. Nor would the US auto industry spring back instantly, as though nothing happened. That's a fantasy.

• Ford didn't need a bailout, but were not in a strong position. They were just better prepared for the downturn and credit crunch.
• All the companies use the same suppliers. If GM dies, it's going to take out a huge wave of suppliers as well. That would have harmed Ford as well. And Toyota, and Honda, and....
• GM and Chrysler would have dumped their cars, which would further damage the market.
• There should be no question that Americans would collectively freak out if a Chinese company started buying up the charred remains of GM and Chrysler.

E.g. Why Asian automakers want a federal bailout of U.S. industry - Dec. 15, 2008

And he did not say the US auto market would 'spring back instantly'. Of course it would take some time.


Both Saturn and Pontiac had American buyers lined up to take over those divisions - but Government Motors turned them down...probably because they did not want the competition.

http://www.businessweek.com/bwdaily/dnflash/content/jun2009/db2009065_956038.htm

http://www.mlive.com/news/flint/index.ssf/2009/05/pontiac_not_for_sale_gm_says_d.html

Please provide links to unbiased facts/data that proves that all of GM's other divisions would not have also had American buyers lined up for them if GM had died?
 
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Foreign money had already owned Chrysler at one time or another and there is nu reason to believe that Ford would have gone under.
There is every reason they would be seriously harmed, as many of their suppliers would have gone out of business; GM and Chrysler would have flooded the market with cheap cars during its death throes; confidence would be seriously shaken, etc etc.


Right. I don't have any interest in commercial airlines as that is not the topic.
Nice try. The point is that the private sector is not capable of saving critical industries every single time, and that sometimes government intervention is necessary -- and works.


Then they will eventually fail.
Toyota has been in business since 1937; Honda in 1948. Both would have outlasted GM and Chrysler without the bailout.

And what company will not "eventually fail?" How many more decades will Toyota remain one of the largest auto manufacturers in the world, before they fail and you can blame the failure on government support? :mrgreen:

The platitudes that "government interference doesn't work" is factually and historically inaccurate.


Other auto manufacturers would have to hire more people to take up the slack. It happens all the time in business.
The collapse of 2 of the largest companies certainly does not "happen all the time." And in this case, it would affect lots of other businesses that affect the entire industry.


BHO had no business experience whatsoever....
Plenty of people with "business experience" and an understanding of economics supported the bailout. McCain also did not have any "business experience."

Romney does have experience, and also ignorance. In his "Romney to Detroit: Drop Dead" editorial, he failed to recognize that the UAW had already made concessions before the bailout; he did not acknowledge that foreign competitors get huge financial backing from their governments; he simultaneously says that "management and the unions need to stop fighting," while insisting that the employees slash their wages, benefits and retirement. Nice.
 
There is every reason they would be seriously harmed, as many of their suppliers would have gone out of business; GM and Chrysler would have flooded the market with cheap cars during its death throes; confidence would be seriously shaken, etc etc.

Why would they have gone out of business? All they had to do was adapt their business to changing times, and businesses do that regularly. In fact if they don't do it they will soon be out of business anyway.

Nice try. The point is that the private sector is not capable of saving critical industries every single time, and that sometimes government intervention is necessary -- and works.
Of course not because not all businesses are worth saving. If it was profitable then of course investors would get involved. If it is losing money then the taxpayers (aka unwilling investors) have their money being used by the whims of politicians. Do you understand the precedence this creates?
Toyota has been in business since 1937; Honda in 1948. Both would have outlasted GM and Chrysler without the bailout.

If that's the case then all automobile manufacturers should be run by governments and thus be assured of success. But are you quite certain Honda and Toyota are owned and run by the Japanese government? Perhaps you are thinking of the old Skoda and Trabant. They were government owned.

And what company will not "eventually fail?" How many more decades will Toyota remain one of the largest auto manufacturers in the world, before they fail and you can blame the failure on government support? :mrgreen:
Check to see who owns Toyota. In fact you can buy shares in the company. Same with Honda.

The platitudes that "government interference doesn't work" is factually and historically inaccurate.

Not by your examples.

The collapse of 2 of the largest companies certainly does not "happen all the time." And in this case, it would affect lots of other businesses that affect the entire industry.

I did not say that the collapse of the two largest companies happens all the timer. That's why you must use quotes.

Plenty of people with "business experience" and an understanding of economics supported the bailout. McCain also did not have any "business experience."
They may have supported it from an ideological point of view but if it was a viable business it wouldn't need a 'bailout'.

Romney does have experience, and also ignorance. In his "Romney to Detroit: Drop Dead" editorial, he failed to recognize that the UAW had already made concessions before the bailout; he did not acknowledge that foreign competitors get huge financial backing from their governments; he simultaneously says that "management and the unions need to stop fighting," while insisting that the employees slash their wages, benefits and retirement. Nice.

The United States could use more "ignorant" men like Mitt Romney.,
 
Why would they have gone out of business? All they had to do was adapt their business to changing times, and businesses do that regularly. In fact if they don't do it they will soon be out of business anyway.
Are you suggesting that all GM and Chrysler had to do was offer a few models, and they would be fine? Do you not understand that they did not have sufficient cash to reorganize in that fashion, and that credit was not available?


Of course not because not all businesses are worth saving. If it was profitable then of course investors would get involved. If it is losing money then the taxpayers (aka unwilling investors) have their money being used by the whims of politicians. Do you understand the precedence this creates?
It doesn't "create a precedent."

Again, the US has bailed out major industries before, notably airlines and rail. The government has not subsequently bailed out other businesses that were going south, such as Borders, Kodak, Polaroid or Hostess.


If that's the case then all automobile manufacturers should be run by governments and thus be assured of success. But are you quite certain Honda and Toyota are owned and run by the Japanese government? Perhaps you are thinking of the old Skoda and Trabant. They were government owned.
I think you are completely misunderstanding both what I'm saying, and the reality of the situations.

I am NOT saying that governments should own major companies on a regular basis. I am NOT saying that Honda and Toyota are "owned" by the Japanese government. The term was "massive support," not "nationalization."

I'm pointing out that the auto manufacturers around the world receive a variety of government assistance and support. Doing so has not meant their immediate doom; it's been a benefit.

To put it another way: Toyota and Honda have huge competitive advantages over US auto makers, because they have major backing from their governments. At best, this bailout levels the playing field a tiny bit.


I did not say that the collapse of the two largest companies happens all the timer. That's why you must use quotes.
Uh. You're saying that if GM and Chrysler had failed, other companies would have picked up the slack, and that this happens "all the time."

This would not be the case here, because the survivors would also be harmed. Suppliers to all auto companies would go broke, and GM and Chrysler would swamp the market for a few years with cheap cars that they hadn't sold. In addition, foreign car manufacturers would pick up a nice slice.


They may have supported it from an ideological point of view but if it was a viable business it wouldn't need a 'bailout'.
You're just as ideologically driven as anyone else. You do understand that, right? ;)
 
Are you suggesting that all GM and Chrysler had to do was offer a few models, and they would be fine? Do you not understand that they did not have sufficient cash to reorganize in that fashion, and that credit was not available?



It doesn't "create a precedent."

Again, the US has bailed out major industries before, notably airlines and rail. The government has not subsequently bailed out other businesses that were going south, such as Borders, Kodak, Polaroid or Hostess.



I think you are completely misunderstanding both what I'm saying, and the reality of the situations.

I am NOT saying that governments should own major companies on a regular basis. I am NOT saying that Honda and Toyota are "owned" by the Japanese government. The term was "massive support," not "nationalization."

I'm pointing out that the auto manufacturers around the world receive a variety of government assistance and support. Doing so has not meant their immediate doom; it's been a benefit.

To put it another way: Toyota and Honda have huge competitive advantages over US auto makers, because they have major backing from their governments. At best, this bailout levels the playing field a tiny bit.



Uh. You're saying that if GM and Chrysler had failed, other companies would have picked up the slack, and that this happens "all the time."

This would not be the case here, because the survivors would also be harmed. Suppliers to all auto companies would go broke, and GM and Chrysler would swamp the market for a few years with cheap cars that they hadn't sold. In addition, foreign car manufacturers would pick up a nice slice.



You're just as ideologically driven as anyone else. You do understand that, right? ;)

Sorry, but i've lost interest.
 
GM and Chrysler were not going to emerge from bankruptcy. They would have been liquidated, because no one in the private sector had any interest in saving those companies. As noted, they were trying for years to arrange a rescue, and the private sector offered no help whatsoever.

The unions had already made significant recessions. And contrary to your claims, GM and Chrysler are apparently bouncing back, and hiring people, both union and non-union.

Actually, lets be honest.. Chrysler had two life lines thrown to it by the Private Sector.. Daimler AG merged with Chrysler in 1998. It failed horribly. So Daimler AG sold it to Ceberus Capital Management in 2007. Both Daimler AG and Ceberus put money into the Chrysler. Daimler AG put $300 million in it's pension fund 3 days before "bankruptcy" plus another $2 billion just to get rid of it and Ceberus backed $2 billion of a $4 billion treasury loan after pumping in $5 billion into Chrysler between 2007 and 2009, Ceberus lost $7 billion and all rights to the company for the bailout.

US government lost $1.3 billion the the Chrysler bail out and sold it to Fiat in 2011. Fiat probably would have bought most of Chrysler during bankruptcy.
 
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