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FUTURE_OF_GM

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AIG gives bonuses, General Motors hands out pink slips


America…the land of opportunity. But not for all.

The tale of two mega-companies, AIG and GM, their rise to behemoth proportions, and their simultaneous, yet very different, roads to demise, might one day be an epic saga for the US history books. Today, however, as we live through and witness the pain of the collapse of two iconic corporations, an all-too-common picture of the middle class in America, and ironically, its painfully similar demise, is also being painted.

......

Here is why I am utterly astounded by the latest headlines surrounding these companies: AIG has been bailed out by the US government, and essentially, fellow taxpayers, four times thus far, to the total tune of over $180 billion in aid, and also posted the biggest quarterly loss in US history in the fourth quarter of last year. Worse, though, than their pitiful financial state, is that Treasury Secretary Tim Geithner and other government officials knew that bonuses were going to be given when they gave the first round of bailout funding, and they did not do a thing to stop them then, or now.

General Motors, on the other hand, begged the US Congress for a loan, not a bailout, late last fall, and was voted down. The US Treasury came to the rescue with a mere $13.5 billion bailout package, but also specified certain conditions which had to be met as part of the deal. Along with CEO Rick Wagoner accepting a downright embarrassing salary reduction, GM had to implement a massive restructuring plan, worthy of convincing Congress, who collectively cannot even define what a ‘supply chain’ is, that the plan is working. Oh, and it had to be working by the end of three months.

And now here we stand. In America, as part of a government-sponsored bailout, one company’s rich became richer, while another was mandated to put thousands of average, hard-working Americans out of work. For AIG, fully 80%-owned by US taxpayers, it was acceptable to pay $165 million of our money as bonuses, because they were contractually due. For GM, breaking the UAW contract and reducing middle-class pay is the only way they can secure more government funding, and possibly, remain afloat.

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AIG makes me want to :puke:

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AIG was the #1 contributor to Chris Dodd's political dowry- no big surprise the bonuses/ deferred compensation were not only known about, not only allowed, but specifically written in by him as being 'safe' from future action.

Typical for political 'ethics', that was soon reversed with threatened 90% tax rates.

Funny how paying employees part of their salaries is a monsterous wrongdoing, but paying politicians is fine & dandy.

Funny how there is a proposal to limit private companies executive compensation, yet self-voted pay raises for the very individuals who passed legislation that allowed this whole mess is fine & dandy. Where are politicians performance-based paychecks ?? Funny how AIG has to return $165M spread out over 75 or 100 employees, yet the ex-head of Fannie Mae, Raines is allowed to pocket $90M for JUST HIMSELF, meanwhile doctoring books and steering a fast-sinking ship to the bottom.

All depends on which side of the line you stand on.

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In the interest of "keeping it real":

1) The AIG money has given the US partial ownership. So if you want to pretend the auto loans aren't a bailout, then I suppose you could do the same thing for the AIG buyout.

2) AIG used to make money and has a good chance of making money again. GM hasn't made money for a long time and likely will never get out from under their debt.

3) A failure by AIG by all accounts that I have heard would be catastrophic. GM's failure will be hard but is a much less substantial affair.

4) The eventual cost to save GM will likely be in the 100 Billion range. I have trouble keeping up, but I believe they have already received 14 Billion + 6 Billion to GMAC + future 16 Billion + future retooling money + EREV subsidies. Also they are worth -86 Billion as of the end of 2008. Given the cost/risk as compared to AIG, AIG is where the money should go.

I will agree that the union being blamed for GM's problems is just silly and the AIG bonuses are horrible. But that is US-capitalism for you.

Edited by GXT
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AIG was the #1 contributor to Chris Dodd's political dowry- no big surprise the bonuses/ deferred compensation were not only known about, not only allowed, but specifically written in by him as being 'safe' from future action.

Typical for political 'ethics', that was soon reversed with threatened 90% tax rates.

Funny how paying employees part of their salaries is a monsterous wrongdoing, but paying politicians is fine & dandy.

Funny how there is a proposal to limit private companies executive compensation, yet self-voted pay raises for the very individuals who passed legislation that allowed this whole mess is fine & dandy. Where are politicians performance-based paychecks ?? Funny how AIG has to return $165M spread out over 75 or 100 employees, yet the ex-head of Fannie Mae, Raines is allowed to pocket $90M for JUST HIMSELF, meanwhile doctoring books and steering a fast-sinking ship to the bottom.

All depends on which side of the line you stand on.

Maybe all the politicians should work for $1 a year until the federal deficit is gone. Now they voted to approve a tax on AIG's bonuses that they allowed to go through in the first place, except the bill they voted to approve violates the constitution. Not only that, but it's not limited to AIG. They are trying to tax bonuses from banks who did not ask for, nor want money from the government, but were forced to take it so the weaker banks wouldn't look weaker. Those banks also had to put up with rules put in place after they were forced to take the money, such as not being able to sponsor sporting events, or hearing outcry from politicians for company rewards meetings. Those banks even made a profit for the year last year, and will most likely make a profit for the year this year as well. What is America coming to?

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In the interest of "keeping it real":

1) The AIG money has given the US partial ownership. So if you want to pretend the auto loans aren't a bailout, then I suppose you could do the same thing for the AIG buyout.

2) AIG used to make money and has a good chance of making money again. GM hasn't made money for a long time and likely will never get out from under their debt.

3) A failure by AIG by all accounts that I have heard would be catastrophic. GM's failure will be hard but is a much less substantial affair.

4) The eventual cost to save GM will likely be in the 100 Billion range. I have trouble keeping up, but I believe they have already received 14 Billion + 6 Billion to GMAC + future 16 Billion + future retooling money + EREV subsidies. Also they are worth -86 Billion as of the end of 2008. Given the cost/risk as compared to AIG, AIG is where the money should go.

I will agree that the union being blamed for GM's problems is just silly and the AIG bonuses are horrible. But that is US-capitalism for you.

1) We paid $180b to own 80% of a company with a market cap of $3.3b and that has outstanding liabilities of $807b. For comparison, with $180b, the Feds could have purchased the entire liabilities side of GM's balance sheet and had about $3b in change.

2 a.) AIG has a poor chance at making money again. Their name is permanently tarnished. They've had to take down their sign on their NYC headquarters. They have about as much chance of making money again as Enron does. BTW, I also use the term "making money" very loosely. AIG never "made" money....... they "made up" money sure... but most of the money "made" by them was imaginary.

2 b.) If by a "long time" you mean two years... then sure. GM had a quarterly profit of $891 million dollars in 2Q 2007. Net income, excluding one-time items, was $1.4 billion.

3 a.) Catastrophic to whom? DeutcheBank? Royal Bank of Scotland? Barclays UK? That's where the bailout money went. Of the 15 banks that AIG made payouts to, only 4 were US based. All of which already received TARP funds.

3 b.)General Motors, it's dealers, suppliers, and affiliates employ millions of people. The hit on employment in this country and others would be catastrophic. Not even Toyota wants to see GM liquidated because in the process it would take out suppliers that Toyota relies on. The quickest way to kill Ford and Chrysler would be through an uncontrolled G.M. bankruptcy. You don't think that would be catastrophic?

4.) If $180b were to be extended to GM as a long term, low interest loan. The government would get it's money back, with interest, Iaccoca style. We are getting a grand total of $0 back from AIG... because they weren't loans.

So sure.... I'm all for "keeping it real"

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Hey... Wait a minute. :confused0071:

Someone edited my post to include content...

:ninja:

("Freakin' ninjas, and your... and your... sex parties!" -- Peter Griffin adaptation)

Edited by FUTURE_OF_GM
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1) We paid $180b to own 80% of a company with a market cap of $3.3b and that has outstanding liabilities of $807b. For comparison, with $180b, the Feds could have purchased the entire liabilities side of GM's balance sheet and had about $3b in change.

2 a.) AIG has a poor chance at making money again. Their name is permanently tarnished. They've had to take down their sign on their NYC headquarters. They have about as much chance of making money again as Enron does. BTW, I also use the term "making money" very loosely. AIG never "made" money....... they "made up" money sure... but most of the money "made" by them was imaginary.

2 b.) If by a "long time" you mean two years... then sure. GM had a quarterly profit of $891 million dollars in 2Q 2007. Net income, excluding one-time items, was $1.4 billion.

3 a.) Catastrophic to whom? DeutcheBank? Royal Bank of Scotland? Barclays UK? That's where the bailout money went. Of the 15 banks that AIG made payouts to, only 4 were US based. All of which already received TARP funds.

3 b.)General Motors, it's dealers, suppliers, and affiliates employ millions of people. The hit on employment in this country and others would be catastrophic. Not even Toyota wants to see GM liquidated because in the process it would take out suppliers that Toyota relies on. The quickest way to kill Ford and Chrysler would be through an uncontrolled G.M. bankruptcy. You don't think that would be catastrophic?

4.) If $180b were to be extended to GM as a long term, low interest loan. The government would get it's money back, with interest, Iaccoca style. We are getting a grand total of $0 back from AIG... because they weren't loans.

So sure.... I'm all for "keeping it real"

Politicians employ some odd logic, and suspect priorities.

Hmmm... sounds like GXT!

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