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The Success of the Detroit Bailout

[ 208 ] February 25, 2011 |

As G.M.’s healthy profit makes clear, it’s been a striking policy success that Republicans in Congress were wrong about.

For a strikingly non-prescient column, your moment of Bobo from 2009. The giveaway is the bit about “educated buyers.” But, in fact, as I knew from having to research the purchase of a car for the first time in 2009, people who believed that GM (or Ford) were not making competitive cars were pretty much the opposite of educated (particularly when you remember that the decision to replace the Cobalt with the vastly superior Cruze had already been made.) Anybody who actually did up-to-date consumer research rather than relying on lazy received wisdom could have foreseen that the bailout would work for GM. The quality product was already there or on the way; it needed the capital to shut down redundant product lines and dealers. As Cohn says, Chrysler (where the stereotypes about American car quality were still largely applicable) is a tougher case, but bailing out one but not the other was almost certainly not viable.

Comments (208)

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  1. Jager says:

    In 2008, I bought my my first American car in over 30 years, a Corvette Z06. Those union workers in Lexington Ky build one helluva car!

  2. MPAVictoria says:

    The new Chrysler products are turning out to be very nice as well. Check out the new Jeep Cherokee or the 300.

    • Scott Lemieux says:

      I’m also hoping that the 200 will be good just because the ads are so awesome. It would be hard for it to be worse than the Sebring…

    • Jager says:

      The reviews and tests on the Cherokee are really good, better interiors, the new V-6 is much better as Car and Driver said, “an American Range Rover”

      • Anonymous says:

        “An American Range Rover” is not actually praise. Unless you are a mechanic with a degree in electrical engineering.

        • DrDick says:

          Could be worse, they could have compared it to a Jaguar. A friend (who was a sports car mechanic) once said that you could not afford a Jag unless you could afford to put a mechanic on retainer.

          • Tyto says:

            The line I heard from British car specialist was that you needed to buy two cars: one to drive while the Jag was on the rack.

          • papa zita says:

            …or become a good mechanic, as I was before electronic control took over and I got sick of cars. I had the wiring diagram of my classic British sports car memorized. I had the parts diagram of the SU carburetors nearly memorized, too.

        • Jager says:

          They were writing about its overall ride combined with its off road ability. BTW, the best Rover to buy is one about 6-7 years old, all the shit has been fixed by then,,,I’ve done it and been really happy with the Rover.

  3. elm says:

    The last American car I owned was a used 1985 Ford Tempo, which I drove in the mid 90′s. It’s been Nissan’s and Honda’s for me ever since.

    But now as I look to buy a new car for the first time in half a dozen years, I’ve narrowed it down to the Malibu and the Fusion. Never would have thought that I’d be choosing between 2 American midsize cars, but here we are. Detroit’s turnaround in terms of product the last 5 years has been remarkable.

    • Scott Lemieux says:

      I went with the Malibu, which I’ve been thrilled with, but between that and the Fusion it’s really a question of what deal you can get. They’re both excellent.

      • Jager says:

        I just bought 2 Malibus for my company cars. They are nice cars and my Corvette experience resold me on Chevrolet. Hadn’t had one since ’69!

      • None says:

        The SO’s family has had Malibus for 3 iterations now (97, 03, 08 I believe) and we ended up with an 09. It is super smooth, especially on the passenger side, even when doing 80. My only complaint is that the turning radius is quite large in the latest iteration. The 97 was great for parking in NYC. Thankfully I never have to try it in the 09 cause it would probably not work.

      • papa zita says:

        After seeing a few new Malibus, I have to say they’re remarkably good looking sedans.

    • wengler says:

      I don’t know where the Malibu is made, but the Fusions come out of a car plant in Hermosillo, Mexico.

      I opted for the Ford Focus instead because it was made by UAW in Fort Wayne, Michigan.

  4. Brad P. says:

    And they won’t even have to pay taxes on it!

    Maybe if the taxpayers sacrifice another $50B, GM could shake off that sluggish 4th quarter and actually perform as well as its its non-bailout competitor Ford.

    But then again, probably not.

    • joe from Lowell says:

      Nice goalpost moving.

      Sure, you were wrong about whether the taxpayer investment – the one that’s being repaid – could turn around GM and make it a sustainable, going concern.

      Sure, it’s now a profitable, growing company.

      But…but…but…it’s not the most profitable, fastest growing company in the world! So, take that, liberals!

      Oh, and the taxpayers haven’t sacrificed a dime. People who don’t know the difference between a gift and a loan shouldn’t hold forth on economic issues.

      • Brad P. says:

        Sure, you were wrong about whether the taxpayer investment – the one that’s being repaid – could turn around GM and make it a sustainable, going concern.

        Did you look at the reports or read the links I posted? Profits went from $2B to $500M from Q3-Q4, with Q3 leading into a IPO. There are several parts of their report that suggests GM is overstating its revenues and understating its debt expenses.

        Gas prices are rising, they actually have a dearth of new models as design expenditures had been slashed in recent years, and their stock actually dropped 4 points yesterday. Expectations were actually higher than what GM turned in. GM Europe is hemorrhaging money.

        Not quite sure enough has come in to show GM is a long-term, “sustainable, growing concern”.

        Oh, and the taxpayers haven’t sacrificed a dime. People who don’t know the difference between a gift and a loan shouldn’t hold forth on economic issues.

        Actually, the deal struck with the IRS was termed in the two articles I read about it in, including the CNN Money article used these exact words:

        Since the company shed $30 billion in debt during bankruptcy, it should have wiped out most of the tax break. GM even warned it expected to lose those tax breaks shortly before filing for Chapter 11 protection.

        Since the company shed $30 billion in debt during bankruptcy, it should have wiped out most of the tax break. GM even warned it expected to lose those tax breaks shortly before filing for Chapter 11 protection.

        But somehow, that never happened, and the automaker was able to keep most of its tax breaks, essentially receiving a $14 billion “gift” from the government.

        Furthermore, the US lost $7B dollars in the IPO GM launched in November, and stand to lose a whole lot more as the companies shares are currently trading at about 50% of what they would for the US to cut a profit.

        Plus I think they are still on the hook for like $40B in loans.

        • joe from Lowell says:

          You sound like a global warming denier. “Years-long trend of steadily improving performance? Pfft! If I only look at one quarter, or one day’s stock performance, I can pretend things are terrible!”

          • Brad P. says:

            You sound like a global warming denier. “Years-long trend of steadily improving performance? Pfft! If I only look at one quarter, or one day’s stock performance, I can pretend things are terrible!”

            This is a one year trend in profit following a 7-year trend of shit that lead to bankruptcy, and half of the profits were contained in one quarter, with the last quarter being poor.

            So one quarter of good profits, three quarters of so-so profits, and seven preceding years of losses.

            And just to point out, I listed no less than 10 reasons why I did not see this as rosily as you do, and you didn’t even actually address the only one you picked out.

            • joe from Lowell says:

              This is a one year trend in profit

              Actually, it’s a 2-year trend that began with shrinking losses, turned into breaking even, and then turned into a profit. Do you not know what a trend is? The phrase “a trend in profit” makes no sense. Your argument amounts to saying that going from 20 below to 0 to 10 degrees isn’t a warming trend, until temperatures hit 32.

              following a 7-year trend of shit that lead to bankruptcy

              You mean, before the government got involved. Yes, GM was trending downward for years before the government got involved, and has been trending upwards ever since. Thank you for making the point so explicitly that the government’s involvement reversed the trend.

        • Malaclypse says:

          Okay, from your next link:

          5. Accounts payable increased 14.8%. Sure, when you’re increasing sales (and COGS) its not unreasonable to see accounts payable rise as well, if the trend continues, especially at a greater rate than COGS, then management is probably taking longer to pay suppliers, i.e. understating expenses and overstating net income.

          Okay, if you are taking longer to pay suppliers, that would increase AP, and would preserve cash. However, if you were in fact understating expenses, then your AP would not be rising. AP is recognized, but unpaid, expense. This is really basic. Anybody who would write that last sentence is trying to bullshit people. Full stop. There is no other possible explanation.

          • elm says:

            Anybody who would write that last sentence is trying to bullshit people. Full stop. There is no other possible explanation.

            I think you’re wrong here: the writer could also be stupid or ignorant.

            • Malaclypse says:

              I think you’re wrong here: the writer could also be stupid or ignorant.

              Brad is ignorant, but not stupid, nor lying. Zero Hedge is neither stupid not ignorant. He’s lying.

              • Brad P. says:

                I have completed a couple of 300 level accounting courses. I at least understand the difference between a balance sheet and an income statement.

                And I also know that a brief glance at GM’s balance sheet doesn’t reveal how much in government loans cause I looked there.

              • Malaclypse says:

                I have completed a couple of 300 level accounting courses. I at least understand the difference between a balance sheet and an income statement.

                Did you pass? Because you are asking questions about how AP works that imply you really don’t understand financials.

                And I also know that a brief glance at GM’s balance sheet doesn’t reveal how much in government loans cause I looked there.

                And yet you felt confident throwing out that 40 billion number…

                Now, when I look, I see total liabilities of about 102B. 21B of that is short-term trade AP. 30B is pension-related. 13B is taxes not yet due, but recognizable. So there is absolutely no way your figure could be right. Actual loans is either 4.5B or 12B, depending on how you want to treat GM Financial liabilities. So it is an open question whether you were wrong by a factor of 3, or of 9.

              • Brad P. says:

                And yet you felt confident throwing out that 40 billion number…

                The most recent thing I could find on the repayment of the TARP loans was before the IPO, so I don’t know how much has been paid back since that.

                Since the last figure I saw was in the area of 40B, but there has been a significant change in the financials since then, so I said I think that they still owe about 40B.

              • Malaclypse says:

                The most recent thing I could find on the repayment of the TARP loans was before the IPO, so I don’t know how much has been paid back since that.

                Well, you discussed the financials today, once the balance sheet was released. So you made up a bullshit number, and got called on it.

                Beyond that, GM’s TARP loan was 8.4B, which has been, as discussed, repaid. It was never, ever, ever 40B.

                Please, for the love of Cthulhu, stop digging.

              • Brad P. says:

                Well, you discussed the financials today, once the balance sheet was released. So you made up a bullshit number, and got called on it.

                Beyond that, GM’s TARP loan was 8.4B, which has been, as discussed, repaid. It was never, ever, ever 40B.

                Please, for the love of Cthulhu, stop digging.

                Yes, the source I read was including the cost of the government stock purchase as something that GM owed the government. I misread it, or he mislead me.

                Of course that is not owed back, that is just going to be a straight up investment loss by our government.

                And yes, they did payback the TARP funds with other TARP funds held in escrow.

              • Malaclypse says:

                I misread it, or he mislead me.

                Which will lead you to revising opinions, of course, right?

                Of course that is not owed back, that is just going to be a straight up investment loss by our government.

                Or maybe not.

                Seriously, you’ve been completely wrong about everything you discussed in this thread, and that wrongness is a matter of provable fact, not opinion. Have you learned anything from this, beyond the fact that I am an insufferable prick?

              • Malaclypse says:

                Of course that is not owed back, that is just going to be a straight up investment loss by our government.

                Because I bothered to look:

                a href=”http://www.kansascity.com/2011/02/23/2677388/earnings-preview-general-WHY IT MATTERS: Strong GM profits mean the U.S. government will get more of its bailout money back. The government sold GM shares in the IPO and now has been repaid $23 billion. But it needs $26.4 billion more to recoup its whole investment. The government still owns 500 million shares of GM common stock, which would have to sell for roughly $53 per share to get all the money back.

                Current stock price is 33.25. So if they sold everything today, exclusive of already realized dividends earnings, they would lose about 25% of their investment.

                For perspective, during 2009, Harvard’s wide pool of investments lost 30%.

          • Brad P. says:

            Okay, if you are taking longer to pay suppliers, that would increase AP, and would preserve cash. However, if you were in fact understating expenses, then your AP would not be rising. AP is recognized, but unpaid, expense. This is really basic. Anybody who would write that last sentence is trying to bullshit people. Full stop. There is no other possible explanation.

            Does accounts payable actually show up in an income statement?

            If indeed accounts payable is growing more rapidly than COGS, then wouldn’t it naturally overstate income, even if the balance was reported elsewhere?

            • Malaclypse says:

              Does accounts payable actually show up in an income statement?

              No. If you need to ask that question, you have no competence to be commenting on financials.

              If indeed accounts payable is growing more rapidly than COGS, then wouldn’t it naturally overstate income, even if the balance was reported elsewhere?

              You don’t even understand enough to be wrong, Brad. I’m sorry if this is snark, but you are commenting on a technical report, in an area where you literally have no competence.

              Look, for AP (on the balance sheet, first line of liabilities) to rise, then there must have been an expense recognized on the income statement. Debits always equal credits. Always.

              Now the interesting question is, now that I demonstrated that your source lied (and I have, beyond any question, showed that), will you question any conclusions?

              • Brad P. says:

                No. If you need to ask that question, you have no competence to be commenting on financials.

                That is why I posted links.

                You don’t even understand enough to be wrong, Brad. I’m sorry if this is snark, but you are commenting on a technical report, in an area where you literally have no competence.

                I’m pretty sure that isn’t snark.

                Look, for AP (on the balance sheet, first line of liabilities) to rise, then there must have been an expense recognized on the income statement. Debits always equal credits. Always.

                So a loan that is taken out but not repaid counts as an expense on an income statement.

                Now the interesting question is, now that I demonstrated that your source lied (and I have, beyond any question, showed that), will you question any conclusions?

                Well, there are other signs that maybe the company isn’t as strong as being proposed on here.

                And you did say that looking at profit as a judge of company health is for amateurs.

                So how about I just say that I will wait and see.

              • Malaclypse says:

                That is why I posted links.

                Which were to really, really bad analyses.

                I’m pretty sure that isn’t snark.

                Fair enough. It was an open statement that you don’t understand the statements that you are making.

                So a loan that is taken out but not repaid counts as an expense on an income statement.

                Dear Christ, no. A loan is receiving cash, an asset, in exchange for a note, or liability. A loan has absolutely no P/L impact. Are you sure you took accounting courses? Were you stoned at the time?

                And you did say that looking at profit as a judge of company health is for amateurs.

                Yes, I did, which is why I focused on your analyst making misrepresentations about how balance sheets worked, as well as your bullshitting of a 40B debt number.

              • Brad P. says:

                Dear Christ, no. A loan is receiving cash, an asset, in exchange for a note, or liability. A loan has absolutely no P/L impact. Are you sure you took accounting courses? Were you stoned at the time?

                I understand that, I am just trying to figure out how the relevant expenses end up on the income statement.

              • Malaclypse says:

                I understand that,

                It seems clear you do not, or you would not have used that example. In trying to understand a P&L, you picked an example that only has any impact on the Balance Sheet.

                I am just trying to figure out how the relevant expenses end up on the income statement.

                Okay, let us say you purchase a part for $100, payable N30.

                DR Parts $100.00
                CR AP $100.00

                Parts is (in my example) an expense on the income statement. AP is a liability on the Balance Sheet. I can make this a whole lot more complicated by discussing how to treat Inventory, but I really don’t think that will help at this point.

                The relevant point is that each and every debit on the income statement has a corresponding credit on the balance sheet.

                Seriously, you claimed to have taken advanced accounting courses, and you don’t know this? How the fuck is that possible? If you passed the course, but don’t know this, you need to sue the school. I’m not joking, you should sue. You never, ever get to mock my education ever again, because I will link to this each and every time you do it. 300-level accounting courses, and you don’t understand how a simple credit purchase gets recorded? What school, so I can make sure my kid never goes there?

              • Brad P. says:

                It seems clear you do not, or you would not have used that example. In trying to understand a P&L, you picked an example that only has any impact on the Balance Sheet.

                Hence my confusion over how the relevant flow to AP’s balance is reported on an income statement.

                That link came from Business Insider and was posted by a financial analysis group, so it was your word against his, and I figure there may be a link between AP and the way in which COGS is calculated that may have the effect he mentioned. I do know that our company is in the precarious position of having our larger buyers on N60, yet having N30 for our smaller suppliers, and I thought pressure on suppliers to accept longer terms, or a greater reliance on longer credit payments could cause it.

                I did receive a response when I asked him to explain his assertion, and just like you he explained that it is basic accounting:

                Its basic accounting my friend. COGS are funded (ceteris paribus) via cash on hand and supplier credit (accounts payable) and cash increases when net income and AR increase. If COGS are increasing, AP is increasing, and cash/short-term investments are not increasing at the same rate…

                I figured the key to understanding this was in inventory calculations, so at this point both of you make sense, and I am bowing out for being too ignorant to know which one of you is correct.

              • Malaclypse says:

                Hence my confusion over how the relevant flow to AP’s balance is reported on an income statement.

                For the last time, AP is not on an income statement. AP is (normally) the first line item under liabilities in the Balance Sheet.

                I figured the key to understanding this was in inventory calculations,

                Inventory is genuinely complicated as a concept, and is a good place to look for shenanigans. It is also a very hard place to find shenanigans if there are any.

                so at this point both of you make sense,

                Except he started off making a highly deceptive statement which he is now backing away from, which I did not.

              • Brad P. says:

                For the last time, AP is not on an income statement. AP is (normally) the first line item under liabilities in the Balance Sheet.

                I know. Hence why I referred to the relative flows to the AP’s balance.

                Except he started off making a highly deceptive statement which he is now backing away from, which I did not.

                Here is where we are at:

                COGS is paid for by cash on hand, accounts payable, and cash from increased income.

                So he is saying that, since AP is rising faster than COGS, GM is likely bearing more and more expenses on credit, when their profits would imply that they had cash on hand.

                That would seem to imply that they are either taking on higher levels of debt or indeed their actual profits are lower than they are reporting.

                Am I wrong factually, and am I wrong in my interpretation of what he said?

              • Malaclypse says:

                So he is saying that, since AP is rising faster than COGS, GM is likely bearing more and more expenses on credit, when their profits would imply that they had cash on hand.

                Preserving cash is not a strange business decision.

                That would seem to imply that they are either taking on higher levels of debt or indeed their actual profits are lower than they are reporting.

                Yes, Brad, AP is debt. That it why it is a liability. It is right there is the name – Accounts Payable. There is nothing nefarious here. An educated reader of the Balance Sheet can see exactly what is going on. Someone who thought, even for a minute, that there was 40B in TARP debt is not that educated reader.

                I’ve tried, patiently, to explain this, going so far as to show you with individual Journal Entries how this works. However, you are so convinced what you already think you know that there is no explaining even the basics to you. I’m done.

              • djw says:

                Mal: I’ve actually learned a great deal about accounting basics from the education you’ve tried to give Brad here, and I doubt I’m the only one, so even if you understandably feel engaging Brad has been a futile waste of time, rest assured there have been positive externalities to your efforts, even as the main target remained elusive.

              • Malaclypse says:

                djw: Thank you. Right now I’ve been flogging the same dead horse so long I felt as though I was trolling, especially given the inherent dullness of the topic. So knowing that someone found it useful makes me feel better. Thank you.

              • Brad P. says:

                Preserving cash is not a strange business decision.

                Going through the same release that started all of this, you can see that Cash and Cash Equivalents fell by about 5% from EOY 2009 to EOY 2010.

                So they aren’t preserving cash.

                I’ve tried, patiently, to explain this, going so far as to show you with individual Journal Entries how this works. However, you are so convinced what you already think you know that there is no explaining even the basics to you. I’m done.

                So now that I can point out that Cash and Cash Equivalents and all Current Assets fell over the period that AP and COGS went up, and that would imply that profits are overstated on the income statement because AP rose faster than COGS, you are giving up?

                So since this is still at a basic level, my question should not be difficult:

                If GM is indeed experiencing a good margin on its COGS to the extent that they can show 4.7B in profits, and if GM is indeed financing a larger portion of the operations through liabilities, then where is that cash going?

              • Malaclypse says:

                Dear Cthulhu, Brad, please let me stop proving you wrong.

                1) Cash not falling does not actually imply that people are not taking actions to preserve cash. Beyond that, see point 2, which is rather germane:

                Going through the same release that started all of this, you can see that Cash and Cash Equivalents fell by about 5% from EOY 2009 to EOY 2010.

                2) Contrary to what you said, Cash and Cash Equivalents went from 22.8B to 26.6, an increase of 3.8B (see Consol Balance Sheet, page 8, here). Restricted Cash did fall, yes. That usually related to debt payoff (see point 4), but I’m honestly unable to say I am sure about this, as opposed to simple suspecting the reason, based on familiarity with how these things tend to work. Please note that “Restricted Cash” does not even get described as cash on the balance sheet, because it works differently than cash, and is used for different purposes. You don’t get to lump them together just because you want to. This is not ‘Nam. This is accounting. There are rules.

                3) Total Assets are not falling. Total Assets went up by $3B. The purchase of those assets is what is known as a Use of Cash.

                4) Total Liabilities fell by $6B. Paying off liabilities is, coincidentally enough, also a Use of Cash.

                I’m becoming embarrassed doing this to you over and again, Brad. Please let me stop.

              • Brad P. says:

                2) Contrary to what you said, Cash and Cash Equivalents went from 22.8B to 26.6, an increase of 3.8B (see Consol Balance Sheet, page 8, here). Restricted Cash did fall, yes. That usually related to debt payoff (see point 4), but I’m honestly unable to say I am sure about this, as opposed to simple suspecting the reason, based on familiarity with how these things tend to work. Please note that “Restricted Cash” does not even get described as cash on the balance sheet, because it works differently than cash, and is used for different purposes. You don’t get to lump them together just because you want to. This is not ‘Nam. This is accounting. There are rules.

                No, cash and cash equivalents dropped by 1.5B. Marketable securities went from nothing to 5.5B. I’m not sure why that happened, but there was a 12B drop in restricted marketable securities that may have something to do with it.

                3) Total Assets are not falling. Total Assets went up by $3B. The purchase of those assets is what is known as a Use of Cash.

                No, its called an 8.3B increase in receivables.

                Current automotive assets and non-current automotive assets,

                4) Total Liabilities fell by $6B. Paying off liabilities is, coincidentally enough, also a Use of Cash.

                Of which it appears that 5.3B seems to be shirked pension payments.

              • Malaclypse says:

                No, cash and cash equivalents dropped by 1.5B. Marketable securities went from nothing to 5.5B. I’m not sure why that happened, but there was a 12B drop in restricted marketable securities that may have something to do with it.

                Brad, read all the words I wrote:

                Please note that “Restricted Cash” does not even get described as cash on the balance sheet, because it works differently than cash, and is used for different purposes. You don’t get to lump them together just because you want to. This is not ‘Nam. This is accounting. There are rules.

                Cash and Cash Equivalents went from 22.8B to 26.6B. This is an increase of 3.8B. Even McMegan’s calculator will yield the same answer. These numbers are right there on lines 1-3 of the Balance Sheet. This is a simple statement of fact, and you are simply, and embarrassingly, wrong.

                In what universe is 26.6 billion dollars a smaller number than 22.8 billion? Why are you picking the stupidest possible hill to die on? As annoying as I often find you, I really am embarrassed for you right now, and I genuinely wish you would stop making demonstrably stupid factual errors.

              • Brad P. says:

                Cash and Cash Equivalents went from 22.8B to 26.6B. This is an increase of 3.8B.

                I am looking at it and I see cash and cash equivalents decreased from 22.7B to 21.06. Its in the first damned line.

                You are including marketable securities with your figures. That may be justified, but I don’t know why it is. I am not using restricted cash and marketable securities, even though they fell off a cliff.

              • Malaclypse says:

                Wait, are you actually finding nefarious purpose behind the fact that GM, like many companies, owns securities, and are ignoring the rather clear fact that they go together on line 3? You are claiming that, when stock prices started rising again, and GM made the reasonable decision to move to a less conservative investment portfolio, is evidence of shenanigans?

                Okay, I think I now know how you are making this mistake. It is still pretty embarrassing, but I at least understand what part of the financials you are misreading.

                Companies hold stock in other companies to gain investment returns, rather than hold idle cash. It is normal, and the stock is liquid enough that it goes along with cash and cash equivalents, although it is indeed disclosed separately. But they all go together on line 3, in a way that restricted cash does not.

              • Malaclypse says:

                Its in the first damned line.

                We cross-posted, but you need to look at line 3.

              • Malaclypse says:

                Oh, one last thing. According to you, your trusted source wrote:

                COGS are funded (ceteris paribus) via cash on hand and supplier credit (accounts payable) and cash increases when net income and AR increase.

                Except, ceteris paribus, cash will decrease, not increase, when AR increases. AR, as an asset, works differently than AP, a liability.

                Your analyst really sucks, dude. Really, really sucks.

        • Malaclypse says:

          Plus I think they are still on the hook for like $40B in loans.

          Well, your links brought you to their financial statements, which actually answer that question. Since you are now an expert in reading financials, you could look it up, and be sure.

          As a helpful hint, you want the Balance Sheet, not the Income Statement. Zero Hedge made one correct implication – if you want to judge the health of a company, reading income statements is for amateurs.

      • Malaclypse says:

        Speaking as an accountant, I cannot tell you how fascinating the treatment of NOL carryforwards during bankruptcy really is.

        Oh, and the taxpayers haven’t sacrificed a dime. People who don’t know the difference between a gift and a loan shouldn’t hold forth on economic issues.

        If Brad is indeed correct about preferential treatment of NOL carryforwards, they have. However, it is not at all clear that Brad is correct. From the article he linked:

        Officials with the Treasury Department and GM insist that the tax break was not special treatment, and that any company going through bankruptcy could have gotten the same breaks.

        When NOLs get forfeited is a highly technical question, so of course Brad is an instant expert. I’ve been an accountant for over a decade, and know enough to know that I do not in fact know the answer.

        Now, for goalpost moving, watch his next claim that the fact that the tax code is highly technical is itself evidence that there are no real rules, and that the solution is less government.

        • wsn says:

          I, for one, am willing to give Brad P. all the benefit of the doubt to his accounting analysis he has earned from his legal and economic analysis.

          • Malaclypse says:

            I for one, am kind of enjoying watching the hole Brad is digging on technical accounting questions, the kind that have actual, unambiguous answers.

            If he wanted to argue about revenue recognition of leased vehicles, okay, there are arguments to be had here. But arguing that rising accounts payable means unrecognized expenses and overstated income is the sort of wrong that only an accounting nerd could find genuinely funny. Doubling down with “I took Accounting 300!” is the icing on my shadenfreude pie.

            I know that makes me a jerk, and a nerd, but I can live with that.

        • joe from Lowell says:

          If Brad is indeed correct about preferential treatment of NOL carryforwards, they have.

          His ‘sacrifice’ statement was about the $50 billion bailout.

          • Brad P. says:

            His ’sacrifice’ statement was about the $50 billion bailout.

            No, they have already paid off a sizeable portion of that, and the bailout was actually more like $60B as Canada chipped in too.

            I am referring to the portion that hasn’t been paid back, the loss on the IPO, and the value of the tax exempt status afforded to them.

            The number of people who feel themselves qualified to speak for me on here is astounding.

            • Hogan says:

              the loss on the IPO

              It’s not a loss (or gain) until the feds sell the stock. Have they done that?

              • Brad Potts says:

                I don’t know if the government shed some of its shares during the IPO in November or not.

                Assuming the government still owns all of its shares, and that GMs profits are a result of good business (and not tax deals and access to low cost government loans when credit is slim), then the government has turned GM into a company that has turned a profit at a net value loss of somewhere about $10B.

                If GM reverses its recent trend of stock price decline and gains about 70% of its stock value by the time the government wants out, and the company remains viable, you can pat yourself on the back.

                Do it quick though, because as soon as you have saved this giant corporate parasite, you will have to start fighting it as it constantly petitions our new “business friendly” government for countless privileges in getting financing, subsidies, and powers over their labor force. And it will use your own crisis rhetoric against you.

                But I guess you progressives live off of the challenge.

              • Malaclypse says:

                I don’t know if the government shed some of its shares during the IPO in November or not.

                Answered upthread. They sold about half. I even computed the potential loss on the remaining shares.

                Assuming the government still owns all of its shares, and that GMs profits are a result of good business (and not tax deals and access to low cost government loans when credit is slim),

                They are not. This is why they have deferred tax liabilities on their balance sheet, clearly labelled. I even discussed erred taxes when I was using simple addition to show that your 40B TARP loan number was bullshit.

                If/since you don’t know what a deferred tax liability is, I would, once again, suggest you stop opining on matters where you are clearly, factually, in error.

                If GM reverses its recent trend of stock price decline and gains about 70% of its stock value by the time the government wants out,

                Stock gain needs to be about 35%, not 70%. Again, this is simple math you keep getting demonstrably wrong.

              • Brad P. says:

                Answered upthread. They sold about half. I even computed the potential loss on the remaining shares.

                Is it approximately the $10B I mentioned in the comment you quoted?

                If/since you don’t know what a deferred tax liability is, I would, once again, suggest you stop opining on matters where you are clearly, factually, in error.

                Is it, or is it not a favorable tax position, even if GM is not unusual in receiving it?

                And everything I read about it seems to imply that it is indeed a special break issues specifically for GM by the Treasury Department.

                If you are going to argue that any company who received such a bailout would receive an exemption from the rules of tax liabilities during the resulting change of ownership, then I would agree. It is still a cost of the bailout, however.

                Stock gain needs to be about 35%, not 70%. Again, this is simple math you keep getting demonstrably wrong.

                Current price = $33
                Needed price = $53

                Percentage change to reach necessary prices:

                (53-33)/33*100= 61%

                So I was closer in my guess than you.

              • Malaclypse says:

                Is it approximately the $10B I mentioned in the comment you quoted?

                No.

                Is it, or is it not a favorable tax position, even if GM is not unusual in receiving it?

                No Brad, a liability is a Bad Thing. Assets are Good Things. A deferred tax liability is a Bad Thing.

                Look, you arguing incessantly about how basic accounting works was kind of funny at first, but this is getting silly. Pick up an Accounting 101 book, since your 300-level courses served you so poorly.

              • Brad P. says:

                No.

                Then I am confused cause I thought you were saying that they would lose 25% of the 40B they laid out for the GM stock purchases.

                No Brad, a liability is a Bad Thing. Assets are Good Things. A deferred tax liability is a Bad Thing.

                Look, you arguing incessantly about how basic accounting works was kind of funny at first, but this is getting silly. Pick up an Accounting 101 book, since your 300-level courses served you so poorly.

                I don’t need any textbook to know that a deferred liability is better than a present one.

              • Malaclypse says:

                I don’t need any textbook to know that a deferred liability is better than a present one.

                A deferred tax liability, or a deferred tax asset, arises out of differences between GAAP profit and tax profit. The usual reason for this is due to accelerated depreciation available to all corporations under IRS rules, but not allowed under GAAP.

                This is not something having anything to do with GM specifically. Reasonable people can differ about the effect of accelerated depreciation. I would say that it is one of the very few ideas favored by conservatives that is not straight-up stupid, but I doubt anyone wants a lecture on book vs. tax depreciation at this point in the thread.

        • Brad P. says:

          When NOLs get forfeited is a highly technical question, so of course Brad is an instant expert. I’ve been an accountant for over a decade, and know enough to know that I do not in fact know the answer.

          I said nothing on my own. I only linked to articles that seemed to be written by experts.

          • Malaclypse says:

            I said nothing on my own.

            Brad, the article you linked to said:

            Officials with the Treasury Department and GM insist that the tax break was not special treatment, and that any company going through bankruptcy could have gotten the same breaks.

            You used that link to imply that they got preferential tax treatment, when the article merely says that “some people” make that claim.

            • Brad P. says:

              You used that link to imply that they got preferential tax treatment, when the article merely says that “some people” make that claim.

              Any other scenario where a corporation receives the deal, and you would be as suspicious as me, and denials from “Officials with the Treasury Department” wouldn’t be worth a shit.

              But I will admit, this could be a situation where a corporation and the government just happened to actually have a relationship similar to the relationship government has with everybody else.

              It still adds to the cost of making GM a profitable company (which implies none of the following: strong, sustainable, or beneficial to society).

              • Malaclypse says:

                NOL carryforwards are a long-standing way in which corporations that lose money can recover. It is really pretty basic, although when they can get forfeited is complicated.

                The reason the complications exist was that, at one point, large companies would buy large bankrupt companies is order to get their hands on the NOLs.

              • Brad P. says:

                The reason the complications exist was that, at one point, large companies would buy large bankrupt companies is order to get their hands on the NOLs.

                Of course this had nothing to do with GM.

              • Malaclypse says:

                Of course this had nothing to do with GM.

                Since eliminating simple purchase of NOLs was done under Section 382 in 1986, it seems rather clear that it did not.

                Brad, you are in a deep, deep hole. Admit you were wrong and, for the love of Cthulhu, stop digging.

    • joe from Lowell says:

      So, let me get this straight:

      Ford, without a bailout, improved its performance a little as the economy came out of recession..

      GM, with a bailout, went from being a money-losing basket case that was about to go out of business, to being a highly-profitable, going concern, with a bailout.

      Thus proving that bailouts don’t work.

      Similarly, the 20-year-old marathon runner’s stress-test results were much better than those of the 60-year-old who needed bypass surgery last year, and who has now returned to work and can jog around the block…thus proving, by libertarian “reasoning,” the uselessness of bypass surgery.

      • Brad P. says:

        GM, with a bailout, went from being a money-losing basket case that was about to go out of business, to being a highly-profitable, going concern, with a bailout.

        Except for it didn’t.

        • joe from Lowell says:

          Except it did.

          Just so you know: I’m going to mock you just as much in a year for this little batch of bitterness, and I did today for your oh-so-certain denunciation of the auto bailout.

          • Brad P. says:

            I will be waiting.

            • Malaclypse says:

              Similarly, I eagerly await your answers to the several technical questions raised by your analysis of their financials.

              • papa zita says:

                I thought Brad was the resident doctrinaire Libertarian Concern Troll, but didn’t think him ignorant/uninformed, with his knowledge second-hand.

                Ouch, was I naive. Even I who have had only a few accounting classes could see some of the errors. Interesting how that confident tone and pedantic demeanor of his can cover up for a lot.

        • Malaclypse says:

          Except for it didn’t.

          Except for it did.

      • wengler says:

        We’re out of recession?

        • joe from Lowell says:

          We’ve been out of recession since July 2009.

          • wengler says:

            That economy must be expanding for the rich, but not around here.

            • joe from Lowell says:

              I don’t know where you are, so it’s possible you’re in a region that hasn’t seen GDP growth.

              But “the economy is expanding for the rich” is a political statement, not an economic one.

              The national GDP has been growing since Q3 2009.

              Not every problem with the economy indicated a recession.

    • snoey says:

      Of course, if GM hadn’t been bailed out, Ford would have gone too when the supply chain collapsed.

    • Tom M says:

      If those are your go to analyses, you will have some tax losses to shelter your own income with. Increased payables overstates income? WTF? That’s not Stone Street that’s Stoned Street. The guy’s an idiot.

      (MBA with 30 years in banking)

    • Jeremy says:

      I don’t know about Brad, but I definitely learned something from this discussion.

  5. patrick II says:

    I rarely click on links to Bobo, but this time I did, and I wasn’t disappointed, in the sense that I was disappointed but I expected that so I wasn’t disappointed in my expectation.
    Anyway, Bobo gives his six reasons why Obama’s plan could not possibly help GM. And as it turned out, completely wrong. But then he summarizes with:
    We’ve seen this before, albeit in different context: An overconfident government throws itself into a dysfunctional culture it doesn’t really understand. The result is quagmire. The costs escalate. There is no exit strategy.

    So, Bobo is seeing commonalities to entanglement in foreign wars, implicitly Irag, and expects a government induced quagmire. This might make some sense except he was a supporter of the war in Iraq and did not recognize overconfidence, dysfuntion and quagmire where they actually existed, but then projects it upon a circumstance in which they don’t.
    There actually is a common thread here, but it isn’t Bobo’s premise of the inability of government to manage problems. the common thread is that Bobo pretty much always gets which problems the government can manage backwards.

  6. Murc says:

    I was against the auto industry bailouts; I took the view that these companies had been periodically running themselves into the ground and then coming hat in hand to the federales since before I was born, using the ‘we’re broke’ excuse to bust their unions by inches over a similar time period, and then during the good times failing to properly fund pensions and other retiree obligations while paying their executives exorbitant amounts of money. I took the attitude that they were pathologically impaired and should die or, at the very least, be broken apart.

    I will freely admit that I was dead wrong about the bailouts and, crucially, about the restructuring that would come with them; I was SURE this would be a case identical to the insurance industry where they were given a huge pile of cash and then allowed to continue business as usual. It is good to see that this didn’t happen. I don’t often like being wrong; this is a case in which I’m thrilled to have been.

    Of course, now that GM is back on its feet, and their workers have been given a little taste, its time to talk about making sure that GM doesn’t try and fuck them over in future downturns by not adequately preparing for them… right?

    • joe from Lowell says:

      I was reassured at the time by the administration’s forthright acknowledgment that there were going to be job losses, plant closings, and a general shrinking of the company as part of the bailout.

  7. wengler says:

    The rightwingers hated this bailout most of all because it allowed GM and Chrysler to go through bankruptcy with their unions intact. That is all. They wanted to break UAW. They hate workers having any sort of say in the future of their companies.

    Also, don’t worry Brad P. That 700 billion dollar bailout of Wall Street has worked out horribly for the American people. The criminals at the top were given cash that they then used to stomp on everyone below them. The consequences of this is what is bringing this country to crisis.

    • Brad P. says:

      Also, don’t worry Brad P. That 700 billion dollar bailout of Wall Street has worked out horribly for the American people. The criminals at the top were given cash that they then used to stomp on everyone below them. The consequences of this is what is bringing this country to crisis.

      I don’t understand why this is directed at me.

  8. joe from Lowell says:

    Looking at all of these wingnut comments – comments based on a certain moral argument – is really is striking how hollow and corrupt their souls are.

    What’s the great moral concern surrounding the near collapse, salvation, and turnaround of the auto industry? Is it the million+ people who would have been pauperized by the industry’s collapse? Is it the well-being of Americans?

    Why, no, silly! Obviously, the most important moral consideration here is that markets not be interfered with. Ohnoes, “picking winners and losers!” Dammit, The Invisible Hand decided that those people should be pauperized, and it’s wrong to interfere with that!

  9. olexicon says:

    “LAYOFFS HAPPEN. People get fired. Wages get cut. That’s life. Get over it. MOVE ON”

    Good, so when you get laid off for being “redundant” when your company is purchased you won;t collect unemployment, rather you will move into the nearest refrigerator box in a low traffic alley

  10. olexicon says:

    So, maybe if you were unionized you wouldn’t get laid off and those “union thugs” would be there to protect your workers rights

    • joe from Lowell says:

      People use the term “union thugs” when the sight of people with work boots and calluses makes their lacy-pink hearts skip a beat.

      Such ruffians they are! No breeding.

  11. olexicon says:

    Is Reality Check named for ironic purposes because “Discredited Right Wing Shill” was too on the nose?

    • Murc says:

      I have to say, if he’s a troll, he’s a really, really good one. Excellent sense of when to engage and when to disengage. He could be a little bit more subtle (less ‘LOL!’) but the art of the subtle troll is very nearly a lost one, so I forgive him.

      He could also be real, I suppose.

      • hv says:

        He will back-slide.

        Losing arguments doesn’t fit his grand narrative of fighting them evil libruls, so the offensiveness comes out pretty quick. The more he fails, the faster he ratchets up.

  12. Rayl says:

    It will be a sad day when reality wakes up to the fact that there are many young people in India and China who are able and willing to work their asses off for a lot less than reality is. Not very difficult to transmit their output to the US and elsewhere either.

    • Holden Pattern says:

      I suspect that RC/Big Wrongful Jim is not actually a programmer. I think that he thinks that “programmer” is a useful “hard work” job that he can claim in this kind of trolling.

    • Davis X. Machina says:

      There’s a guy studying at IIT in Bangalore, — his name is Pradip — with Reality Check’s picture pinned up in his carrel, who will work harder, and better, for a fifth of what RC gets, just waiting, waiting….

      Blessed be the Market, the righteous Judge.

  13. Aaron says:

    I feel better about the GM bailout than that of Chrysler, as GM was a publicly traded company. With Chrysler, taxpayers effectively bailed out well-connected, wealthy corporate raiders (Cerberus Capital Management, L.P.) who privatized the company and proceeded to run a struggling company into the ground. They appeared interested in making a quick buck, not in investment in R&D. Chrysler’s present difficulty appears to be making the most of the limited product it had under development while seeking to leverage Fiat’s technology for future vehicles.

    It’s not that I wanted to see Chrysler go under – not at all. And a takeover was probably the only way to keep the company alive. But I would have liked to see the folks at Cerberus have to take a loss based upon their incompetence rather than effectively profiting (like so many other incompetents of the late Bush era) at the hands of the taxpayer.

  14. Brad P. says:

    Mal, if you are interested, I’m BKP in the comments. I didn’t get the chance to pester him like I pester you.

    For your information, and anyone who wants to feel smug, you are correct: there is nothing in the GM financial release that would suggest profits are overstated

    • Malaclypse says:

      Manfully conceded, sir.

      • Malaclypse says:

        And, having read your comment there, I will add more: both rising inventories and the fact that AR is rising without a proportional increase in reserve for bad debt might be real problems. Somewhere, in a link I have not seen, are Notes to the financials, which should explain those matters.

        To oversimplify: a good shortcut to look for dodginess in financials is 1) Inventory, 2) Prepaid Expenses, 3) Reserve for Bad Debt, and 4) Other Accrued Expenses. On complex entities like GM, you need to read Notes about off-balance-sheet items. The headline link does not give enough info to discuss these items for GM, but when dodginess exists, that is almost always where it is. Numbers, without Notes, should not be taken as giving a complete picture.

        • Brad Potts says:

          And, having read your comment there, I will add more: both rising inventories and the fact that AR is rising without a proportional increase in reserve for bad debt might be real problems. Somewhere, in a link I have not seen, are Notes to the financials, which should explain those matters.

          Yes, I had read also that rising inventories and the sluggish 4Q were kind of a double whammy of sorts.

          Manfully conceded, sir.

          Sexist.

          Don’t expect me to backdown a bit in the future, though. My MO tends to be to play the devil’s advocate up to and past the point where I begin to feel like I’m wrong.

  15. Malaclypse says:

    Just a mention that certain libertarian’s predictions of an imminent demise have proven to be false.

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  19. Malaclypse says:

    Huge props for working both “union thugs” and “Chicoms” into your rant.

  20. wengler says:

    Is “chicorn” some archaic racist term I don’t know about?

  21. shabadoo says:

    China is now GM’s biggest market.

    Wait, now it’s bad when Chinese people buy American products?

  22. Brad P. says:

    P.S.: the Chinese are already well on the way to owning GM lock stock and barrell. SAIC already owns 1%, and China is now GM’s biggest market. Obama used taxpayer money to rehabilitate a company that will be owned by the Chicoms sooner rather than later.

    It seems that GMs good performance in China would actually lead to a good price if somehow Chinese investors did manage to purchase GM.

    The government could actually eke out a profit on the shares they sold, and the Chinese will be taking over a company that has a fairly poor track record and is still fairly overweight.

    I say that would be a win.

    Although you are right that GM mainly recovered because the government gave them the ability to renege on a bunch of agreements. But the union didn’t exactly make out like bandits.

  23. John says:

    Oh no! Not the bondholders!

  24. joe from Lowell says:

    Mmm! Mmm!

    Your tears are so yummy and sweet!

    A million Americans didn’t lose their jobs in the midst of a deep recession, and you wish they did, because they dare to bargain collectively.

    Do you hate all American workers, or just the ones that stand up for themselves?

  25. Scott Lemieux says:

    violated the Constitution

    These kinds of arguments are generally improved by citing the specific constitutional provision that was violated.

  26. Matt T. says:

    Wait, now it’s bad when Chinese people buy American products?

    Only if a Democrat’s in the White House.

  27. Hogan says:

    Short for “Chinese Communists.” A practice that, like so many, the wingers learned from the Soviets (Politburo, Comintern, etc.).

  28. Murc says:

    Chicom started out as military slang, didn’t it, to distinguish PRC forces from ROC (Taiwanese) forces?

  29. rhino says:

    It reminds me of that Star Trek episode with the comes and the yangs, for some reason…

  30. Murc says:

    By that logic almost nothing is an American-made product. I build my own computers, but the parts almost universally come from overseas, so I guess they don’t count?

    Hell, Kansas corn is fertilized with petroleum-based fertilizers, which were likely made with oil from the mideast. So I guess they aren’t American-grown, right?

  31. hv says:

    …which liberals all hate and demonize.

    As the kids say these days, link or STFU.

  32. Corey says:

    Volt: designed and engineered largely by Saab in Sweden, when it was owned by GM

    Take it from someone involved in the Volt project: this is emphatically untrue. It shares the Delta II platform with the Saab 9-3 but that’s where the connections end. The Volt was designed in Warren, MI not Sweden.

    The rest is true, although painfully simplified. I’m not sure why incorporating knowledge back from foreign markets is now the sign of some nefarious plan, rather than a company making smart use of its global resources…

  33. Brad P. says:

    This is true. GM’s profits are largely due to low-mileage SUVs and trucks.

  34. C.S. says:

    Well, I’ll agree to the extent that the people who complain about British food and American cars probably haven’t tried either in the last 20 years, and therefore don’t realize that they’re both pretty damn tasty.

  35. hv says:

    inquiry != advocacy

  36. Malaclypse says:

    So, that’s raaaaciiiiiist now?

    No, just kind of outdated. I got the reference, but I’m, well, old.

  37. joe from Lowell says:

    conservative – n – a person who is reflexively hostile to concern about racism

  38. Malaclypse says:

    Because cramdowns never happen in bankruptcy.

  39. joe from Lowell says:

    There’s a right to keep getting paid when your debtor goes bankrupt?

    I did not know that.

  40. joe from Lowell says:

    Who stood up for the non-union workers on assembly lines in Alabama, Tennessee, Mississippi, and Texas?

    They unions who are trying to organize them.

    Anyway, I don’t see what that has to do with this discussion. Nobody did a thing to those workers, and their employers are still in business, stronger than ever.

    Why did the government subsidize one of their competitors?

    I find it incredibly illustrative that not only do you not care about keeping 1,000,000 Americans from being thrown out of work, but the matter is so unimportant to you that you can’t even remember that it happened. The government bailed out the auto industry to keep it from collapsing, to keep their employees from being thrown out in the street, and to keep millions of other people from losing their jobs as a result of that base industry’s disappearance. You might remember this; it was widely reported.

    Is it fair for the government to pick winners and losers?

    Do you have a question that has content beyond being a platform for a favored bit of jargon?

    Is it authorized under the Constitution?

    I’m pretty sure the auto industry is interstate.

  41. hv says:

    joe from Lowell says:
    Do you hate all American workers, or just the ones that stand up for themselves?

    Wrongful Death replies:
    Who stood up for the non-union workers on assembly lines in Alabama, Tennessee, Mississippi, and Texas?

    To me, this has perfectly captured the unionization debate.

    Liberals have proposed a model for protecting workers, called unionization. That protection worked; in a time of crisis, the collective bargaining power was useful and much greater than their individual capabilities.

    Conservatives have proposed a model for protecting workers, called “at will” employment. That protection failed. Individuals had no leverage. It turned out to be no protection at all. And conservatives didn’t shed a tear over what they had wrought; the only time you hear about the workers who fell for their schemes is when conservative trolls are trying to make liberals feel guilty. For not protecting those who followed conservative advice.

  42. Hogan says:

    Eh. I like my story better.

    (The earliest citation in the OED is a 1966 issue of The New Statesman, for whatever that proves.)

  43. Hogan says:

    And “Chicago-style” down below. Dude is serious about his crazy. You have to respect that.

  44. joe from Lowell says:

    “didn’t follow normal market procedure” = “decisions were made in the public interest instead of the interest of the wealthiest”

    Hold me, mommy!

  45. Holden Pattern says:

    Not just an ordinary bankruptcy cramdown, but a tasty, deep-dish, Chicago-style cramdown!

  46. joe from Lowell says:

    I think everyone already understands that you think it’s awesome for American workers to be harmed.

    You don’t have to keep repeating yourself.

  47. joe from Lowell says:

    So, joe believes that government should pick winners and losers.

    That term would have to have some sort of meaning, beyond being a favored bit of jargon, for me to have an opinion about it.

    I favor the government acting in the public interest. If the hallowed market that you put ahead of the well-being of your fellow human beings would produce results that are harmful, then the government should act to alter the outcomes.

    So should we have bailed our Circuit City when it went bankrupt? Why didn’t we bail out Apple in the ’90s when it had financial troubles? How about AMC, they went bankrupt in the 70s, why didn’t the government rescue them!

    Since the collapse of those companies at those times wouldn’t have brought down entire industries, just shifted economic activity within them, I say no, we shouldn’t. There was not public interest goal that would have been advanced by bailing them out, that would have been worth the cost.

    Unlike the auto industry rescue.

    THINK OF TEH WORKERS!!!!!

    I am. The overall well-being of those industry’s workers would not have been advanced by merely shifting economic activity among firms.

    I love it when people who live in a bubble get deluded into thinking that a softball is a devastating conversation-ender.

  48. Hogan says:

    AMC went bankrupt in the ’70s? I don’t think so.

  49. Malaclypse says:

    So should we have bailed our Circuit City when it went bankrupt?

    They went bankrupt because they made the incredibly stupid decision to lay off all sales people, and start from scatch with all new, minimum-wage hires. So no, they did not deserve a bailout.

    Also, are you actually so stupid that you don’t see the difference between manufacturing and retail? How do you remember to breathe?

  50. Hogan says:

    And now the Russian government has stopped doing that. (It’s the other way around, actually.) And it seems to be going badly.

  51. joe from Lowell says:

    Ah, the free market rant.

    Of course, if the free market rant wasn’t complete bullshit, GM’s financial statement would have proven you to be so completely, utterly wrong about the ability of the government to turnaround the company.

    Something the hallowed free market couldn’t do, the government did.

    And since you can’t possibly hope to deny that, you’re left with this sad little display of sour grapes. “Yeah, well, having an auto industry and avoiding 1,000,000+ more unemployed people is actually a bad thing. Here, let me search around for some talking points so I can pretend I’m not just bitter about being so utterly, completely discredited.”

  52. Jeremy says:

    Or ask the airline industry. It’s not like we’ve never bailed out anything, ever.

  53. joe from Lowell says:

    You’ve yet to demonstrate that anyone’s property rights were violated.

    Instead, you’ve found it necessary to jump up and down and use loaded language.

    This is not the behavior of someone confident in the merits of his position.

  54. joe from Lowell says:

    There’s no such thing as “public interest”

    And that is why your opinion on whether a particular policy is, or is not, in the public interest is so utterly worthless.

  55. Murc says:

    I will baldly and unapologetically assert that someone with an IQ of 90 who graduated high school with a D average and is willing to get out there and bust his ass is just as deserving of a ‘good paying job’ as someone with an IQ of 140 and a graduate degree.

    I take it you worked your way through college? Got a full ride scholarship and/or paid for your tuition 100% out of pocket, right? No Pell Grants, no government subsidized loans at all, yeah? Because the government would be picking you to be a winner that way, and that’s just NOT allowed.

  56. NonyNony says:

    I’m a programmer

    Oh Grod this explains so much.

  57. joe from Lowell says:

    I love the way the conservatives have utterly ceded the “elitist” argument that they rely on so much.

    I can’t wait until 2012.

  58. bph says:

    Given what most blue collar union types make, if you are getting paid that little as a programmer, you must not be very good.

    I have a grad degree, too. I make way more than my family members made who worked for GM or Ford. And I make < half what my friends make who work for companies in the Valley.

  59. Furious Jorge says:

    why should some moron who barely graduated high school get to make as much as I do because his union thug bosses use government force to distort the marketplace?

    Because, as some asshole in this thread pointed out,

    Life owes you NOTHING! NOTHING!

  60. joe from Lowell says:

    Rising above the negative outcomes that would come about in a state of nature is why human beings live in societies.

    Measles happen.

    Typhus happens.

    Hypothermia happens.

    To those of us with a moral foundation, avoiding those things is a worthwhile endeavor.

  61. Michael H Schneider says:

    LAYOFFS HAPPEN

    Yep, that’s true. And sometimes asteroids happen, and wipe out most of life on earth. And cholera happens, and sometimes hordes of short swarthy people with bows come riding over the steppes.

    It’s immoral for government to interfere in peoples’ lives, and deprive them of their liberty, just to prevent such things as plagues.

    I mean really. Cholera? Just get over it.

  62. joe from Lowell says:

    Now, if allowing the market outcomes to come to pass advances the public interest more than a particular intervention would – a circumstance that I believe happens a great deal more often than a lot of people believe – then that’s what should be done.

    But there is absolutely no reason to simply assume that to be the case in any given circumstance, and there is certainly no rational justification for assuming it to be true by definition.

  63. Davis X. Machina says:

    Blessed be the Market, the righteous Judge.

  64. joe from Lowell says:

    A negotiation between a corporation and a workforce that bargains collectively IS a market outcome.

  65. joe from Lowell says:

    Life owes you NOTHING! NOTHING!

    Unless, apparently, you’re a bondholder.

  66. Malaclypse says:

    Does life owe you a CAPS LOCK key?

  67. Murc says:

    Now you’re just confusing me.

    Part of your assertion as to the justification of your being well-compensated was that you worked your ass off, and then worked your ass off some more (your words) and that for said ass-working you deserved to be paid. You also assert that you believe in ‘hard work.’

    As it happens, I agree with that.

    But then in-between those assertions you say that your compensation should be based solely upon the value the market places on your labor, which has absolutely nothing to do whatsoever with the amount of hard work your put in. The market could give a damn how hard you work. Someone digging ditches twelve hours a day is probably working a hell of a lot harder than a middle manager who has been promoted to his level of incompetence.

    So, confusion.

  68. Malaclypse says:

    Dude is serious about his crazy. You have to respect that.

    Well, it beats making easily refutable technical claims about financial statements.

  69. Davis X. Machina says:

    An art form at once as rigorous, yet as flexible, as the 12-bar blues. Ageless, and ever new — ‘Chicago-style’ from the 20′s and 30′s. ‘Chicoms’ from the 50′s.

    Screwing ‘the bondholders’ (most of whom, I dunno, are what, banks, insurance companies) to perform a ‘corporate bailout’ — a crime.

    Unless the bondholders are all universities and union pension plans, and the like — in which case screwing them over is suddenly a bad thing.

    A craftsman.

  70. Holden Pattern says:

    Also, he hacked his way through private property, buying easements, of course, all the way to college and did the same back until he created a private toll road — none of them gummint roads for him. And his college wasn’t one of them there fancy land-grant gummint colleges. It was a purely private college, one so private that it’s not even organized as a non-profit to get extry tax benefits relative to glorious private industry. Same for his education before college. All private for-profit schools, built on privately held than that was purchased for a fair price from the Native Americans, not all stole from them private landholders by the gummint like the rest of the country.

  71. joe from Lowell says:

    for turning a wrench for 20 years with a high school diploma.

    You wouldn’t last ten minutes in a real job, sweatheart.

    Have another Mountain Dew and take a long lunch.

  72. Murc says:

    Shouldn’t you love trial lawyers? They’re highly educated and work long hours in order to get to elite positions within their organizations, and make a ton of cash providing a much sought-after service.

  73. Jager says:

    So, when the company you “program” for, finds a programmer in India (who is just as hardworking and just as smart as you are)for alot less money and gives him (or her)your job, Give me a call,I’ve got a couple of high school graduates who will teach how to use a wrench (and other tools,too)and put you right to work. BTW, I know a shitload of liberals who don’t hate American SUV’s or pick ups.

  74. joe from Lowell says:

    Yes, Democratic presidents do things much more effectively than Republican presidents.

    I’m glad we’ve been able to reach some common ground.

  75. Murc says:

    Eh? Okay, you’re confusing me again.

    Unless they’re actually literally stealing money from people (that is, wrestling them to the ground and taking their wallets) the value of their labor is determined by the market, isn’t it? I mean, you’ve asserted repeatedly that ones compensation should be determined by the market, and the implication has always been (and please, forgive me if I’m wrong) that our personal moral judgments as to market outcomes shouldn’t enter into that.

    I’m also confused by your use of the word parasite. They do work, right? I mean, they do something other people are willing to actually pay money for? That’s pretty non-parasitical behavior. Hell, making partner at a law firm is incredibly hard; you sacrifice marriage, friendships, sometimes health. You approve of hard work, right?

  76. C.S. says:

    And this is where I come to believe that Reality Check is, in reality, a performance art project.

  77. joe from Lowell says:

    In case you haven’t noticed, your side is losing.

  78. joe from Lowell says:

    I’ve been laid off before, and I found another job. That’s what happens.

    Well, unless you get laid off towards the end of a Republican presidency.

    Then you might as well look for water to run uphill and expect there to be jobs to find.

  79. Tom M says:

    That’s right unreality. Those union thugs literally held management’s hand over a charcoal brazier (union made) until they signed the contract granting those rights.

    Your conception of contract negotiations needs to be reprogrammed. Ask Walker to hit you with his baseball bat.

  80. hv says:

    I vote for joe from Lowell for winning the thread. (Was this thread the debut of the newest sock-puppet? Might be a valuable collector’s item.)

  81. Holden Pattern says:

    I too think that Reality Check is the new Big Wrongful Jim sockpuppet.

    But this time with extra drunk-at-end-of-bar crazy sauce!

  82. Malaclypse says:

    I too think that Reality Check is the new Big Wrongful Jim sockpuppet.

    Not enough obsession with gays.

  83. hv says:

    Mal, that gay obsession only arises after the string of losing arguments jeopardizes the narrative of crusading against libruls; the bemused, effortless dismissals that greet his best sallies ratchet up his desire to be offensive, just to prove he can get some kind of reaction.

    I blame his parents, the crossed a wire in his need to get attention, even if it is negative.

  84. hv says:

    Plus, he has a fingerprint of stupidity.

    A “dumbprint” if you will.

  85. Malaclypse says:

    You may be right, hv. Hard for me to care either way. No matter what, he’s a troll.

  86. hv says:

    I prefer thin crust cramdowns.

  87. joe from Lowell says:

    Pro tip: leading off with “LOL” like that just makes you look like you’re trying to hard to look confident.

    Walker isn’t budging one bit.

    Neither are the Democrats. You wanna play chicken with the unions? Good luck with that.

    And Obama can’t win without Wisconsin

    And Walker is making sure it will go blue next time. I should send that guy flowers and a thank-you note for this unforced error.

    scary for you that a supposedly “blue” state he won so heavily in in 2008 is now a battleground, eh joe?

    Was a battleground. It’s not 2010 anymore.

    I am enjoying your imitation of Walter Mondale circa 1983, though.

  88. joe from Lowell says:

    Yes, he approves of people who work really hard. Like computer programmers, or bond traders. Or heirs.

    It’s those lazy cops, teachers, and industrial laborers he can’t stand.

  89. Holden Pattern says:

    I always wonder what morons like Reality Check think should be done to properly compensate those who are harmed by others and disincentivize (I can haz managespeak!) further bad actions by repeat players.

    Being both anti-regulation AND anti-lawsuit means that you’re basically just saying that the market should transfer money directly to the worst market players (those who take the most shortcuts, do the shittiest work and provide the most unsafe products) from (a) injured individuals and (b) market players who try to provide a better service.

    Cue “perfect market” argument here, in which our brave market fundamentalist takes the position that there is in fact perfect information, and that people will knowingly purchase medical services from a drunk or buy a car that explodes if it’s bumper is nudged, because they are willing to save money and all of the risks are disclosed ahead of time.

  90. Malaclypse says:

    I’m also confused by your use of the word parasite. They do work, right?

    I’m assuming he thinks they might be Democrats. “Thinks” may be the wrong word.

  91. joe from Lowell says:

    Ah, yes.

    With the public supporting the workers over the wingnut politician by better than 20 points, a really shrewd political move will be for the politician to lay the workers off.

    Please don’t throw me in the briar patch.

    Oh, and why are the teachers skipping their work duties if its all about “the children”?

    Nobody could have predicted that someone who thought the auto bailout money was a waste wouldn’t understand the idea of a long-term investment.

  92. hv says:

    You do understand that they still get to vote even if they get pink slips?

    Do you ever make arguments that take more than a millisecond to find huge flaws in?

  93. olexicon says:

    After Reagan raised taxes

  94. joe from Lowell says:

    This isn’t 1983; Obama is much more popular than Reagan was.

    no President since 1945 has won with unemployment above 8%

    No president since 1945 has had approval ratings about 50% with unemployment at 9-point-something, either.

    Obama is already vastly outperforming history, in terms of how the unemployment rate is affecting his support. Why this is happening is an interesting discussion.

    Analyzing his political standing without paying attention to, you know, his political standing? Not actually interesting.

  95. MobiusKlein says:

    Please don’t assume Reality Check represents all programmers, or even the majority.

  96. Malaclypse says:

    no President since 1945 has won with unemployment above 8%

    No sitting president has ever faced as big a freak as the Republicans are likely to nominate. Whether that is likely to help or hinder the reality-based community is left as an exercise for the reader.

  97. Davis X. Machina says:

    So long as one of us, somewhere, is covered by a collective bargaining agreement, how can we say that any of us, anywhere, is truly free®?

    (Free® and Freedom® are trademarks of the Republican National Committee. All rights reserved. Used with permission.)

  98. hv says:

    If only there were another way for labor to assert itself, besides the government. Some way to organize, to collect their bargaining power.

  99. A Random Lurker Temporarily Decloaked says:

    Sadly, based on my current experiences working for a software company while foregoing grad school due dealing w/ health issues (since it’s mentally, physically, and financially easier to do such work than grad school in a field science), WrongfulRealBigJim views seem to jibe w/ a pretty substantial portion of programmers, even if it isn’t a majority.

    Admittedly, it seems to mostly be the views of ones who aren’t particularly good at coding, but that’s a separate issue.

  100. joe from Lowell says:

    Actually, they’ve been shrinking their SUVs and full-sized cars for years.

    Haven’t you noticed the rise of the “crossover” market and the elimination of Hummer?

    The new Mustang gets better than 30 mph highway. With a V8!

  101. papa zita says:

    I expect he has a headband-mounted LED display in front of his eyes that show “INHALE” and “EXHALE” at regular intervals, and an oxygen tank for bedtime. Would explain why he never learns anything – it would be difficult to read around that display during waking hours.

  102. papa zita says:

    Unfortunately true. Many/most programmers I know fit the mold. They even hate the FSF.

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