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05/06/2011 11:32 AM ID: 89176 Permalink   

GM Announces Biggest Profit in 11 Years


General Motors announced that its first quarter results were the biggest since 2000. For the first time since 2004, Ford Motor and Chrysler Group are also in the black simutaneously.

Only two years ago, federal bailouts were needed for GM and Chrysler.

In the first quarter 2011, GM earned $3.2 billion. A large part of this profit was made with sales of GM´s interests in Delphi Automotive and Ally Financial´s preferred stock.

Excluding those special profits, GM still shows a profit of $1.9 billion (95 cents/share), which is the biggest profit since the second quarter of 2000, where they gained $1.8 billion.

    WebReporter: walktheline Show Calling Card      
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  Looking back  
Now that the bailout money has been repaid(with interest), isn´t this better than having those employers not being allowed to fold.
  by: VermiciousG     05/07/2011 08:27 PM     
It is if you also assume that their failure could only result in them completely disappearing from the face of the planet and all their employees becoming unemployed.

In the real world, when a huge corporation goes bankrupt because it has been horribly mismanaged... it is sold to an investor(s) who make the necessary changes in order to create a profitable company.

Would there have been some people who lost their jobs in that scenario? Of course there would. I would posit that there were and still are a large number of people working for GM who should be unemployed. I happen to know a few of them.

That´s the long answer to your question. The short answer is, no. :)
  by: silencedmajority   05/08/2011 01:55 PM     
I think your long answer is still short-sighted. Yes, when a big corporation like that goes bankrupt, investor(s) *tend* to buy the company and they *attempt* to make it profitable again.

There´s no hard-and-fast rule that says anyone will buy it, or that if they do, they´ll fix whatever ails the company. There´s still a chance nobody buys it, and an even bigger chance that whoever does will fail.

There´s also the possibility that the company could be taken over by a competitor; in this case, Honda may have decided to purchase GM and poof, there goes a major U.S. auto maker. Bailing out GM had everything to do with the fact that it´s an American company; we wouldn´t do the same for Toyota, for example.

This was the government elected by the people deciding that it was in the U.S.´s best interest to have a strong auto industry. With the company paying the money back, there´s no harm done except to the company´s reputation, which can be seen as a good thing because then it will be motivated to overcome the bailout stigma.

Plenty of companies take out loans from time to time to help tide them through bad times. As long as they pay them back, there´s no long-term harm.

But because we called it a "bailout" instead of a loan, and because certain people think "government" is spelled with just four letters, this somehow became more in the public mind than it really was.
  by: ben_reilly     05/08/2011 03:22 PM     
to begin with, the taxpayers still hold a 25% stake in GM. With that said and with the knowledge of how very volatile the stock market remains... the perceived profit to the taxpayers could very easily become a real loss. All that has to happen is for GM´s stock to tank, leaving the taxpayers holding a bunch of worthless stock certificates.

You´re assertion that the company might not be bought is about as solid as one asserting that if you throw a steak into a pen full of hungry dogs... it might go uneaten.

The reality is that GM´s production facilities, molds, et al, would have been bought by some one or some group. Consequently, those assets would have been bought with the intention of using them to produce automobiles.

As for the notion of "American" automobiles... there is no such thing. GM assembles its vehicles using parts made in Mexico, China, Japan, Taiwan, America, and other countries. Guess what? Toyota assembles vehicles in the United States, using American labor, parts made in Mexico, China, Japan, Taiwan, America, and other countries.

Not much difference there, is it?

Lastly, go ahead and let Toyota´s American operations start to fail and see how quickly American politicians start throwing money at it. After all, thousands of Americans would loose their jobs and we simply can´t have that.
  by: silencedmajority   05/08/2011 03:54 PM     
Who´s to say someone buying GM for its facilities, molds, etc. wouldn´t just parcel that stuff out firesale-style? Who´s to say it would be domestic ownership?

The economic benefits to keeping GM functioning and American are simply too great to consider what could happen if GM wasn´t simply lent some money.

And yes, I am aware that Toyota makes vehicles here and that GM makes vehicles abroad. But please don´t try to pull some stupid shell game with me:

Post-recession, GM still has roughly 68,500 American employees.

Toyota has roughly 36,000 American employees -- a little more than half.

If you look at domestic-parts content ratings, GM vehicles still makes a whole lot more vehicles in America than does Toyota (or any other import):

Needless to say, with more American employees and more American manufacturing, GM pays a lot more in American taxes than does Toyota as well.

Again, I don´t see why so many people have such a big problem with what amounts to emergency government loans to keep American companies afloat. While far from perfect, keeping Wall Street and the U.S. auto industry from collapsing were probably the two biggest steps the Bush administration took toward solving the economic crisis that began in 2007.

Again, the anger seems to be based not on rational thought but on a knee-jerk prejudice against the government.

[ edited by ben_reilly ]
  by: ben_reilly     05/08/2011 05:22 PM     
  To Many  
Nothing this administration does will be right. Had this administration not bailed GM they would castigate him for that.
  by: ichi     05/08/2011 05:36 PM     
Don´t forget -- the Detroit bailout originated in the Bush administration:

Let me say, I agreed with the rationale of the Bush bailout of Detroit and the follow-up lending by the Obama administration. But ownership of -- and I believe, credit for -- the rescue of the U.S. auto industry goes to both sides of the aisle.
  by: ben_reilly     05/08/2011 05:51 PM     
If you support bailouts and stimulus programs, your are exercising the ultimate form of short-sightedness.
  by: T-bagger   05/08/2011 06:06 PM     
Regardless of who bought GM´s hard assets, and how much was paid for them... they are single purpose tools and the only motivation one might have for owning them is to either build automobiles or sell them to someone who will do so.

And the only knee jerking that has taken place here is that which was done by our government and those of you who support it.

Rational thought dictates that when someone does something destructive to his business... his business should suffer/fail. You´re only looking at the number of current employees, current taxes paid, etc. There is a lot more involved with propping up a failing entity... regardless of whether it is propped up privately or with taxpayer money.
  by: silencedmajority   05/08/2011 06:21 PM     
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