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February 27, 2009

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Part of the problem in all of the recent talk about General Motors is that there has been a more or less organized campaign to not tell the truth. Here is what I mean.

For many months, a core group of people have been saying that none of the Detriot Three can declare bankruptcy, undergo a bankruptcy reorganization, and survive. That core group of people include the UAW leadership (in the person of Ron Gettlefinger), GM management (in the person of Rick Wagoner) and Democrats including Governonr Granholm, Senators Levin and Stabenow.

It is not necesarily true that "a bankrupt automaker cannot survive." We know that formerly bankrupt arilines and other major corporate players have survived reorganizations. Indeed, it is probably false to say that "a Detroit automaker cannot survive bankruptcy."

There is a simple, and clear reason why the UAW, Democrats and GM management have been telling us that a bankruptcy is the equivalent of a death sentence. And that is becuase a bankruptcy would be a death sentence for the UAW's business as ususual. So much so, that the UAW and its agents, the Democrats, have said to GM, "You have to play ball with us on this one. If you try bankruptcy, we'll make it hellish. But if you will go along with the story that bankruptcy equals extinction, then we'll try to tide things over with government money."

GM is suffocating under stresses that could be substantially addressed by a bankruptcy reorganization. A bankruptcy would rip through the UAW collective bargaining agreement. It would rip through the layers upon layers of state laws on franchising and dealership protection, so that GM could reduce the number of dealers and duplicative brands. A bankruptcy would allow GM to have a sane relationship with its workers wherein, for instance, it was not obligated to pay for free legal services for UAW members.

A bankruptcy COULD put a new GM on the road to profitability. What choice is there? There is great future for a "profitable" GM. There is no future for an "unprofitable" GM.

The auto business is, or could be, a great business. There is a reason why the Germans, the Koreans, the Japanese, and now the Chinese want to compete so furiously. They think the North American car market is one of the great business opportunities in the world. We are all going to be driving cars for the rest of our lives. We will always have a need for newer, better, more advanced cars.

Let us remember, as well, that until the global recession hit us, Ford and GM ran profitable operations outside of North America. These are not incapable companies, and their managers are not incapable people. (White-collar workers and managers in the auto industry gave up bounses, big salary increases and perks long ago; as any real Detroiter knows, the auto industry is nothing like the banking and financial companies, with respect to executive compensation.)

In summary, I think that there is much false gloom about the future of General Motors, and it is coming from people who have been historically aligned with the UAW-Democrat axis; people whose last trump card was to say, wrongly, that GM cannot possibly survive a bankruptcy reorganization. People said those things just to stay on the same page of the playbook as the UAW and their political party, now in control of both houses of Congress and the White House.

Months ago, many Republicans and their philosophical leaders in places like the Editorial Page of the Wall Street Journal, had said, "Instead of throwing several more billion at GM, why not explore the possibility of a bankruptcy reorganization?" The Democrat-favoring press immediately attacked those Republicans as somehow favoring the death of the auto-maker. How wrong those attacks were. The Republicans didn't want to kill GM. They wanted GM to be profitable.

Anonymous again no one pays attention to intellectual cowards who post under"Anonymous"..

Labor costs associated with Big 3 is 15% at best so the issue has never been about the UAW it has always been about the incompetent management of the Big 3..

The GOP is a dead party and have zero credibility in the Obama Era..

The GOP has zero worth after the Bush era..

The world simply does not need 15 million units of new vehicles every year..The Big 3 needs to retool for a new market that does not involved auto's..Our nation needs the manufacturing capacity of the Big 3 not to make more cars but to redesign and recreate our nation's foundations ..We need a brand new main street that type of massive national growth is labor intensive and can trigger a GNP growth unmatched in our nation's history...

In summary we need visionary thinkers and doers not the same tired themes of Jack and his alter ego's Augustus Woodward and Anonymous..

Thrasher, how about we just consider the voices of competent, trained professionals, people who have actually worked in industry and taught advanced studies in technical fields, instead of random, malignant internet trolls?

Here's what I mean. Just today, in the Wall Street Journal, Mark Roe, a professor of law at the Harvard Law School specializing in bankruptcy law and corporate governance. Basically, he has "written the book" on modern bankruptcy procedure insofar as some of the most popular casebook materials in the nation are his.

So what did he say about a GM bankruptcy? Much the same thing that I wrote last Friday, and about which you said "no one pays attention."

Here; this will give you something to work on until you get a day job:

http://online.wsj.com/article/SB123595238770705115.html

I'll be anxious to see how you can transform "Chapter 11 bankruptcy reorganization law" into yet another one of your racial-grievance screeds.

By the way, why do you suppose that GM, a maker of cars and trucks, ought to do something other than making cars and trucks? What kinds of "foundations" do you suppose GM ought to be making? I always find it remarkable when nominally intelligent people suggest that companies that make gasoline engines should start making electric engines. That 'car-makers' should become 'train-makers.' I understand that there was a time, for example, that the Ford Motor company dabbled in aircraft production, for instance, and gave us the Ford Tri-Motor. But that didn't last, and the dedicated aircraft manufacturers eventually dominated aircraft production the way Ford dominated auto production.

I fail to understand why we should expect that oil companies would do something other than explore, extract and produce oil. Do we want Exxon to get into the wind-turbine industry? Why? Why not let profit-sseking wind-turbine companies do that? Why Exxon? We need more cheap oil, and I'd like to see Exxon produce it. And we need more competitive, profitable cars, and I'd like to see the Detroit Three produce them.

Anonymous,

Again as an intellectual coward your comments will always be discounted by me..

Clearly you have zero historical knowledge about the role of Detroit and WWII manufacturing retooling to make weapons etc..

There is a foundation to use our manufacturing capacity in other ventures..

With regard your insertion of yet another academia talking head author ( mark roe never practiced in front of a real bankruptcy judge) only reveals that you must be one of those theorical professors who operate in the margins of fiction, speculation and academic publications no one reads or cares to read..

Unlike you an intellectual coward I have zero faith in the abilities of these so called competent experts, trained experts versed in advance knowledge( now that is truly a joke given how impotent these so called experts are and the meltdown of the markets and our economy)..

Your underdeveloped thinking just confirmed how worthless your comments are..Only an idiot would put any more faith in these so called masters of the universe..Our nation is in a depression under the stewardship of yoyo's you follow and worship!!!!

Wake up you intellectual coward!!

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