1. The government will profit from the bailout. [Profit? Yes, in 1979 Chrysler faced bankruptcy and the government bailed them out at the sum of $1.5B, Chrysler repaid the Government loan 7 years ahead of schedule and with a return of about $350M interest. see: "Lemon Aid," Reason, March 1983]

2. The numbers shown “loss of $38.7B” is a personal loss that GM accepts, i.e. shareholders, employees of GM. This isn’t $38.7B of taxpayer money. What is not mentioned is tax revenue that the US government gained from GM and GM employee income taxes, and the roughly 6% sales tax on every vehicle sold. I assure you, America (you and I) make money from GM.

3. Teaching a lesson through negative reinforcement is slower and less effective than positive reinforcement. Psych 101

4. GM turned a profit on every vehicle that was sold. The losses incurred by GM relate to business expenses (vehicle research, tech development – especially regarding fuel efficiency, manufacturing plant construction, salary raises). To let this new technology and new plants just crumble.

You are making the case that America will be better off if one of these giants fall. Teach our kids a good hard lesson about the truths of business, right? Well, I believe in capitalism just as much as you do. So let’s teach the kids a lesson – let one of the Big 3 fall and let unemployment wreak havoc. Survival of the fittest, and to the victor go the spoils.

I think Malcom Forbes is the correct person to attribute this to.

It just seems to me that the ‘learning’ part is being way too sheltered these days.

Havelock Ellis

“There is nothing so useless as doing efficiently that which should not be done at all.”

Peter Drucker

“Failure is not a single, cataclysmic event. You don’t fail overnight. Instead, failure is a few errors in judgment, repeated every day.”

Jim Rohn

“Remember the two benefits of failure. First, if you do fail, you learn what doesn’t work; and second, the failure gives you the opportunity to try a new approach.”

Roger Von Oech

BK is not going to kill the Big 3, but give them an opportunity to retool their broken business model.

Thanks for dissenting.

Self-employed entrepreneurs do not deserve bailouts because there is minimal collateral damage – 1 family starves

Sure we do. Just like everyone else, no?

But now there are likely hundreds of thousands of entrepreneurs (agents) who are suffering; they’re likely finding new/second/third jobs to support themselves.

Whether you want to see a “millionaire CEO” get shamed is irrelevant to the fundamentals of the respective companies (although I’d tend to agree with you on that point).

I’m not going to address why the workers’ education level matters – the demand for autos is not going away; there’s a good chance that Toyota, Honda, Subaru, etc (who make an awful lot of cars here in the States) will hire these displaced workers – the demand will remain, and they will have to hire to meet the demand.

The Big 3 have proven that they are incapable of profitably producing and selling such cars. Their competitors are better at making and selling cars; the only shame is that “we” insist on propping up ineffective and unprofitable companies.

Failure is necessary – it’s how we learn to succeed.

Did you look at the link I updated the post with? If those numbers are accurate, that Congress is even debating a bailout for these companies is shameful.

It was a dead heat. General Motors sold 9.37 million vehicles worldwide in 2007 and lost $38.7 billion. Toyota sold 9.37 million vehicles in 2007 and made $17.1 billion.

That was the second best sales total in GM’s 100-year history and the biggest loss ever for any automaker in the world.

For Toyota, that was roughly $1,800 in profit for every vehicle sold. For GM, it was an average loss of $4,100 for every vehicle sold.

If I lost money on every single house I sold I wouldn’t sell houses any more. No sane company would.

Definition of insanity?

Self-employed entrepreneurs do not deserve bailouts because there is minimal collateral damage – 1 family starves. Uneducated and blue-collar workers do deserve bailouts because the Big Three are our nations largest employers – 3 million families starve.

At the same time though, it seems that many companies and individuals forgot to actually look at the risks involved. And they thought the “pouring rain” of money would never stop falling. That’s just bad business and greed.

I simply can’t believe that we can learn if we don’t fail at some level. Most of the most successful individuals I know or have studied only succeeded after the need to restructure and learn from their mistakes existed.

I would add that Realogy, the Tribune and one of the big 3 (Chrysler) are the products of recent *highly* leveraged buyouts by private equity firms.

These were speculative, debt-laden bets. That they are now finding it difficult to service their debt in a deflationary economy does not justify a bail-out. They need to be allowed to recapitalize the old fashioned way.