To be honest, I don’t really know why GM and Chrysler are closing dealerships. They have taken Billions of dollars from the government in bailouts, and as part of the restructuring they are closing thousands of dealerships. I’ve talked to several people and read several articles, and nobody really seems to have a good answer.

The most I’ve managed to come up with so far is that GM says its dealers have to compete with each other giving the consumers too much leverage. They say this could hurt future sales, but I just don’t see it. GM has a price that it sells cars to its dealers. After that point, why would they care how low the dealer sells it for?

The thing is, many of these dealers aren’t going to go quietly. GM doesn’t own the dealerships, they just sell the cars to them. Many of these dealerships will stay open, selling used cars and running their service shops. They make more money on these than selling new cars anyways. Guess what, they will also probably go to another brand and offer their services to them. Now Toyota and Honda and Nissan and Ford will be the companies they are competing with instead of themselves. How is this a good thing?

For the sake of all the money I’ve given this company as a taxpayer, I hope I am wrong. I hope they succeed, I just don’t see it happening. I said it in December before we gave them all this money, they were just prolonging the bankruptcy. I said that life will go on, and a bankruptcy wouldn’t be the end of the world as we know it. Things are going to be fine. Chrysler is close to coming out of bankruptcy after only a month. However, as a majority shareholder in the company, I would like to know why they think this is a good idea. It hurts consumers, it costs jobs, and it will increase their competition from the other automakers. If I’m missing something, which I actually hope I am, please let me know.

It’s the End of the World as We Know It (and I Feel Fine) [Video]

P.S. Work has been crazy busy recently and my laptop broke which is why I have had a lack of posts recently. I promise I’ll write more as soon as work slows down and I get a new laptop.

The Lid recently posted this:

CNN is reporting (and it has been confirmed by the administration) that as part of the bankruptcy filing the $7.2 Billion Dollars given to Chrysler by the American people will not be paid back. Don’t think of it as wasting $7.2 billion dollars, think of it as a nice little gift to the United Auto Workers. And don’t forget, we gave GM over $15 Billion. How soon before that goes away also?

I wrote about the Big Failed Three in December:

It’s sad really, that the taxpayers are going to be on the hook for another 15 billion in bailout money. Apparently that is the amount that Congress thinks will save GM and Chrysler.
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The fact is that there is no way 15 billion will save these companies. It will only postpone the inevitable.

Well, how about that, Chrysler is going bankrupt and the American taxpayers are out over 7 billion dollars. Like I said, shocking news. So shocking that I wrote it 5 months ago.
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In Obama’s recent Prime-Time speech  he said that he plans to attack this financial crisis on all fronts. Geithner is planning to detail to congress his list of new regulations he would like to impose on the financial sector to keep something like this from happening again. The one thing that would have made sure it was far less likely for this to happen everyone said couldn’t be done - we simply couldn’t let these businesses fail.

Letting more of these businesses fail would revitalize the economy and their respective industries. If suddenly the big 3 disappeared there would be entrepreneurs eagerly buying their old factories with dreams of starting the next big car company. The ‘lost jobs’ would only remain lost for a short while. We would have a new generation of people in top positions within these industries with new ideas. America used to be a land of opportunity… A land where creativity and hard work could put you on top. 

Now it seems, however, that America is the land of stagnation, the land where creativity goes to die, the land where entrepreneurs are trampled by the government, a place where it is more important to maintain the status quo and keep the rich on top than it is to reward good ideas and good business. Make no mistake these bailouts aren’t about the tax payer, they aren’t about the lost jobs, they aren’t really about the economic ramifications of AIG going bankrupt. these bailouts are about keeping the rich where they are so they can continue to line the pockets of politicians on both sides of the line.

You can’t reward a dog for shitting on your floor and say you’ll fix his behavior by watching him more closely.

Several members of Congress are planning on taxing away the bonuses that AIG has awarded several of its top executives.

Really this is mostly ridiculous. They have contracts in place that say they owe these employees money. They have to give it to them. Yes these contracts would have been ripped to shreds if AIG had gone bankrupt, but luckily the geniuses that run our government thought it was a good idea to give them over 170 billion dollars and counting so that they could survive. Since they survived, the contracts are valid and should be paid.

The shame is that this is just a political game to distract people from how badly the government handled the whole situation. Who really cares about 160 million when you gave them 170 BILLION. It is a whopping .09% of the bailout money. Sure, it sucks that we are paying these bonuses, but it should not be the issue we are focusing on.

Really, the only problem here is that these big financial companies suck at writing contracts. Why do they have “bonuses” that are guaranteed? I can tell you with certainty that I won’t get a bonus this year if our company loses billions of dollars. Now, I don’t work at a company that has any chance of losing billions of dollars, we would all be out out on the street way before that point. The point is that the bonus only happens when the company is doing well and making money.

That is what is so confusing to me. These banks and big businesses that are losing money are still paying dividends and giving out bonuses. How does that make any sense. Dividends are a sharing of the profits among the shareholders of a company. It seems logical to me that these would only occur when there are, you know, profits.

The same goes for bonuses. A bonus is something you give an employee for a job well done. When the company is losing billions of dollars each quarter, these executives are not doing a good job. Running the entire financial system of the world into the ground does not constitute job well done. So why in the world would the write contracts that give guaranteed bonuses? If that is the case, just put the money into their salaries. There is no reason to call it a bonus.

While I think the bonuses are stupid on the part of these companies, it is really only a drop in the bucket compared to the rest of the mess that is these bailouts.

What do you think about the bonuses? What do you think about the political circus around them? Should we be focusing on getting this money back in taxes, or is this just a political game to distract people from how poorly Washington has handled the bailouts? Let me know what you think in the comments below.

The truth: Obama is doing a few things right. I know it’s unusual to hear a conservative say those words, however we should be hearing this far more often from conservatives.  I know some of my conservative readers may be surprised to hear this from me, especially given the criticism he usually gets at GeekPolitics, but this is only because they don’t realize how many of Bush’s policies Obama approves of, has claimed as his own, and will be enacting during his presidency.  Let’s start this article with a clip covering Obama’s inauguration day speech from America’s top news source - The Daily Show.

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Time magazine has an article up discussing the need for a potential bailout of the media industry. What have we come to? If this nonsense keeps up we’ll all be working for Uncle Sam soon, so we should start stocking up on red white and blue material now so we can make the uniforms we’ll be wearing while we serve our new Federal Government Overlords. I’m going to start sewing - I’m a big guy and my government uniform is gonna take awhile. You should read the article from Time Magazine so that you can fully appreciate what America is sinking into.

One of the oldest newspaper chains, Journal Register, went bankrupt late last week. It had too much debt and too little operating income. The daily newspapers in Philadelphia have also filed for Chapter 11. There have been rumors, almost certainly untrue, that The New York Times (NYT) will run low on funds to pay its debt. In the case of The Times it has valuable assets to sell, but its situation deteriorates each quarter. By most estimates, its second largest property, The Boston Globe, loses $1 million a week.

So it has been announced that Obama along with Congress will limit the executive pay for companies accepting bailout money. I understand the sentiment, I understand the anger and resentment, but I don’t understand why anyone would think this is a good idea. A lot of these companies who need to accept bailout money need to do it as a result of poor leadership in executive positions. The only way for these companies to recover is to fire these executives and replace them with new blood or old experienced blood. The problem is that these companies will not be able to attract the most talented executives who can really turn the company around because the companies those talented people helped run didn’t suffer to the point to require a bailout - their companies can still afford to make them a great offer and they will.

This leaves us with keeping the ‘talent’ already in the companies, we have to keep the people who got us into this mess and hope they’ve wizened up. Unfortunately a lot of these people have very specific contracts stating how much they are to be paid and in what form, what perks they will receive, and what their bonuses will look like. These contracts aren’t somehow dependent on whether the company takes a bailout or not. If these companies wanted to be out of these contracts perhaps they should have just filed bankruptcy. As it stands now congress may be wishing a pile of litigation on these companies.

Over the past few weeks we’ve shared plenty of opinions on the big three, bailouts, foreign carmakers, and bankruptcies, but today I thought I’d share some opinions from some of our friends around the blogosphere.

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