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Dyl Ulenspiegel
06-05-2005, 09:42:10
http://news.ft.com/cms/s/6e8feb8e-bd85-11d9-87aa-00000e2511c8.html

After both have been cut to junk ratings - which one will go belly up first? I'd bet on GM, but a friend of mine says Ford because GM is getting a lifeline from some Pentagon pork program for trucks....

Oerdin
06-05-2005, 10:26:26
Both are drowning in a sea of pension and health care costs. A few years back the UAW hit GM hard with a strike and since then the big three have basically given in to the unions on everything including agreeing to pay workers their full salaries when the factories are closed. Traditionally when there were more cars in inventory then could be sold the factory would be temperarially closed and workers furlowed until demand picked up.

12 years ago GM had AAA rated credit and today it is now junk status. :shame: 12 years ago GM had a total debt of $110 billion while today it has a debt of $300 billion and $85 billion of that is just health care obligations for workers with another $100 billion being pension debt for workers.

You can't run a company like that and survive. Pension costs will have to be slashed as will health care costs. Just about every big company in America has massive unfunded pension liabilities and health care costs are killing them so it would make sense for the government to step in and releave these companies of their health care costs by creating universal health insurance for all citizens. Doing that will spread the insurance costs around to the larger population thus making it more affordable and releaving businesses of this crushing cost.

The other big problem is high drug prices which are, in large part, the result of protectionist policies the Republicans have enacted. It is illegal to import most foreign made drugs in to the US because the industry claims drugs made in other countries are unsafe. :rolleyes: This is 100% protectionism and it is killing the American consumer. The Republican party gets millions of dollars from these drug companies so they basically do what ever the drug companies tell them.

Take for instance the recently passed Medicare Drug Benifit which provides free medication to senior citizens. Republican law makers wrote into the law that the government agency medicare legally must pay MSRP and can only by directly from the drug manufacturers. The problem is in the real world NO ONE pays MSRP on drugs and CNN reported that currently Medicare pays four times (!!!) as much as a company like Walmart because legally they cannot comparison shop. Being the biggest purchaser in the country medicare could be the leader in driving down drug prices by demanding volume discounts (just like every other big drug buyer does) but thanks to Republicans corruption the tax payer is once again screwed so wealthy donors can fleece America. :shame:

MRT144
06-05-2005, 10:37:35
Oerdin, Ill get you prescriptions from canada if you get me 40s from mexico

Oerdin
06-05-2005, 10:41:30
Drugs are already cheaper in Mexico and old folks looking for heart medication have already become the biggest drug smugglers in America. They come down to Mexico in huge buses and line up to buy market rate drugs which cost 50% less then in America.

Most of the drugs are even American made. The level to which the US drug prices have been rigged to stay artificially high is amazing.

Dyl Ulenspiegel
06-05-2005, 12:53:31
On the other hand, debt is the only thing holding GM together: Selling cars on credit, and GMAC (mortgages???). A general rise in interest rates and risk aversion will also undermine the business it has.

"it would make sense for the government to step in and releave these companies of their health care costs by creating universal health insurance for all citizens."

Won't help much, I think. The healthacre and pension dilemma is hitting Europe's state budgets and America's companies. Privatizing or nationalizing is just moving the problem around.

MDA
06-05-2005, 13:12:53
A coworker told me he knew people that had summer UAW jobs in Detroit factories that paid 35 dollars an hour. The full-time year-round auto workers made more than that.

That's a ton of money, and they get benefits on top of it.

Venom
06-05-2005, 13:43:22
Unions have outlived their usefulness. The lazy fucks get overpaid and don't work hard thanks to the ever present safety blanket of a union.

Lurker the Second
06-05-2005, 16:45:20
It amazes me how those two companies can be headquartered in the U.S., have as much manufacturing and other operations as they do in the U.S., and still be completely oblivious to consumer trends. Rumblings and grumblings about SUV's started several years ago. Why Ford and GM didn't see this coming is mind-boggling.