The Triumph of Capitalism and The Power of Consumer Sovereignty Over Massive Government Failure–Bankruptcy of General Motors–Now Government Motors!

Posted on June 1, 2009. Filed under: Blogroll, Economics, Education, Employment, Energy, liberty, Links, People, Philosophy, Politics, Quotations, Taxes, Technology, Video | Tags: bankruptcy, Bill Gates, Brian Deese, capitalism, Consumer Sovereignty, General Motors, Glenn Beck, Government Motors, Microsoft, Obama, President Obama |

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http://mises.org/quotes.aspx

“Capitalism means free enterprise, sovereignty of the consumers in economic matters, and sovereignty of the voters in political matters. Socialism means full government control of every sphere of the individuals life and the unrestricted supremacy of the government in its capacity as central board of production management.”

~Ludwig von Mises, Bureaucracy, page 10

“Capitalism is essentially a system of mass production for the satisfaction of the needs of the masses. It pours a horn of plenty upon the common man. It has raised the average standard of living to a height never dreamed of in earlier ages. It has made accessible to millions of people enjoyments which a few generations ago were only within the reach of a small elite.”

~Ludwig von Mises, The Anti-Capitalistic Mentality, page 49.

Glenn Beck’s ‘One Thing’: 06-01-09

Glenn Beck Clips 06-01-09 Jonah Goldberg German Fascists Had a ‘People’s Car’ Too Called Volkswagon

Henry Ford Bailed out? The Horse and Buggy Industry? – Failure is good for the sole – Glenn Beck

McCotter on Fox News Cavuto Defending GM Workers and Retirees After Bankruptcy

President Obama’s prepared remarks on General Motors’ bankruptcy, Part 2

GM files for bankruptcy June 1, 2009

Every day in America thousands of new businesses are started and thousands of failed business are sold or enter bankruptcy.

Today General Motors sought protection from creditors by declaring bankruptcy under Chapter 11 of the United States Bankruptcy Code.

This is how capitalism works.

Resources are reallocated from failing businesses that are losing money for whatever reason to new and growing businesses that are more profitable.

What is different is that the United States government unconsitutionally bailed out both General Motors and Chrysler by providing over 100 billion dollars to both companies.

This despite the fact that the overwhelming majority of the American people opposed the bailouts of both the auto companies and banks!

Stop Spending Our Future – The Crisis

This was President Obama’s politically motivated payoff of the United Automotive Workers (UAW) union for campaign contributions in excess of $25 million and thousands of hours of union worker efforts to elect Barack Obama and the radical socialist of the Democratic Party.

It is not the role or function of the Federal Government to bailout or loan money to failing businesses.

The American people will continue to exercise consumer sovereignity by choosing the cars or trucks that meet and exceed their needs and requirements.

Millions of Americans who in the past bought cars and trucks from both General Motors and Chrysler, will now be disinclined to buy cars from Government Motors.

Listening to several talk radio shows, callers said they will never again buy a car from a company that was bailedout with billions of dollars from the American taxpayer particularly a car from Government Motors.

General Motors is an ANTI-AMERICAN Company…

Instead American consumers will continue to purchase cars and trucks from Ford, Toyota, and Honda to name the top three vehicles producers in the United States.

The failure of the so-called big three US auto makers, General Motors, Ford, and Chrysler to produce cars at prices, designs, quality and reliability that the American consumer want resulted in the decline in their market share and now the bankruptcy of two of them.

The meddling of the radical socialist Democrat Party by government intervention into the economy such as the recently announced proposed new fuel and vehicle emission standards and the huge cap and trade carbon dioxide emissions tax are just two more examples of the arrogance of the political class in ignoring American consumer soveignity and assuming the American people are stupid:

President Obama’s New Fuel Economy & Vehicle Emissions Standards

Congressman Campbell appears with Greta on “On the Record” to talk about CAFE standards

Rep. Dingell (D-MI): Cap And Trade Is A Big Tax

GM files for bankruptcy June 1, 2009

Who is Obama’s radical socialist handling the United Auto Workers account?

Obama flunky, Brian Deese

GM Plant Closings, Brian Deese and GM Bankruptcy

Join the Discussion: Economy

Brian Deese Reacts to the Citizen’s Briefing Book

Change or Disenfranchisement

The American people should be free to chose the cars and trucks that they want to buy and not what President Obama and the radical socialist want you to drive.

When you mess with the American’s people’s choice of cars and trucks that they want to buy, the political class and elites can expect a massive pushback and backlash both in the market place, the ballot box and on the streets of American cities with millions of indepenedent Tea Party marchers.

Stop the radical socialist Obama designed car, vote with your dollars, ballots and firecrackers on Indpendence Day!

You are invited to attend a Tea Party on July 4, 2009, Indepedence Day!

Join the Second American Revolution

The Meaning of Independence Day

Ayn Rand Center for Individual Rights

Second American Revolution–Tea Party Celebrations–Washington Fair–July 4, 2009–An Open Invitation To The American People

American People’s Plan = 6 Month Tax Holiday + FairTax = Real Hope + Real Change!–Millions To March On Washington D.C. Saturday, July 4, 2009!

Millions of Rightwing Extremists To March On Washington D.C. Fair–Celebrating Independence Day Tea Parties and Chanting “Extremism in the defense of liberty is no vice!”

Please Spread The Message of Liberty

“Proclaim liberty throughout the land to all its inhabitants.”

Let Freedom Ring

Thomas Paine on to Washington

switchfoot-dare you to move(live)

“The public firm can nowhere maintain itself in free competition with the private firm; it is possible today only where it has a monopoly that excludes competition. Even that alone is evidence of its lesser economic productivity.”

~Ludwig von Mises, Nation, State, and Economy, page 186

“In spite of the anticapitalistic policies of all governments and of almost all political parties, the capitalist mode of production is still fulfilling its social function in supplying the consumers with more, better and cheaper goods.”

~Ludwig von Mises, Planned Chaos, page 15

1959_cadillac

Background Articles and Videos

Just 21% Favor GM Bailout Plan, 67% Oppose

“…Only 21% of voters nationwide support a plan for the government to bail out General Motors as part of a structured bankruptcy plan to keep the troubled auto giant in business.

The latest Rasmussen Reports national telephone survey finds that 67% are opposed to a plan that would provide GM with $50 billion in funding and give the government a 70% ownership interest in the company.

Even when presented with the stark choice between providing government funding or letting GM go out of business, only 32% of voters support the bailout. Most voters (56%) say it would be better to let GM go out of business.

As on many issues, there is a huge gap between the views of the Political Class and the rest of the nation. By a two-to-one margin, the Political Class says it is better to provide the bailout funding than to let GM fail.

Most political conservatives and moderates say it’s best to let the company fail, but liberals are evenly divided. A majority of voters in all age groups say it’s better to let GM go out of business. So do 59% of men and 53% of women. …”

http://www.rasmussenreports.com/public_content/business/auto_industry/just_21_favor_gm_bailout_plan_67_oppose

68% Say Bailout Money Is Going To Those Who Caused The Economic Crisis

“…With public outrage building over bonuses paid to executives of the bailed-out American International Group (AIG), 68% of Americans now believe most of the taxpayer money given out as bailouts is going to the very people who created the country’s current economic crisis.

Seventy percent (70%) of investors hold that view along with 67% of non-investors.

A new Rasmussen Reports national telephone survey found that, overall, only 18% disagree and 14% are undecided.

Separate survey data recently found that 64% of Americans believe that big business and big government typically work together against the interests of consumers and voters. Only 15% disagree.

Americans have consistently been wary of the large taxpayer-backed bailouts and 65% now say Wall Street has benefited more from the bailouts than the average U.S. taxpayer. Only 18% believe the taxpayer has benefited more.

These numbers are roughly comparable to the findings in a survey in October just after Wall Street’s problems burst into public view and Congress was close to passage of its first bailout plan for the financial industry despite strong public opposition. …”

http://www.rasmussenreports.com/public_content/business/federal_bailout/68_say_bailout_money_is_going_to_those_who_caused_the_economic_crisis

Introducing GovMo

By Michelle Malkin

(Photoshop credit: Reader Joe N.)

“… It’s official. General Motors has filed for bankruptcy. Government Motors is now in business, with a perpetual taxpayer lifeline:

General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration’s plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.

GM’s bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.

As it reorganizes, the fallen icon of American industrial will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That’s on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.

George W. Bush stuck the key in the bailout ignition.

Barack Obama floored the gas pedal.

The taxpayers got stuck with a lemon for life. …”

http://michellemalkin.com/2009/06/01/introducing-govmo/

After 101 years, why GM failed

Peter Cohan

“…To help other companies avoid GM’s fate, it’s worth exploring the five reasons that GM failed:

1. Bad financial policies. You might be surprised to learn that GM has been bankrupt since 2006 and has avoided a filing for years thanks to the graces of the banks and bondholders. But for years it has used cars as razors to sell consumers a monthly package of razor blades — in the form of highly profitable car loans.

And the two Harvard MBAs who drove GM to bankruptcy — Rick Wagoner and Fritz Henderson — both rose up from GM’s finance division, rather than its vehicle design operation. (Read more about GM’s bad financial policies here.)

2. Uncompetitive vehicles. Compared to its toughest competitors — like Toyota Motor Co. (TM) — GM’s cars were poorly designed and built, took too long to manufacture at costs that were too high, and as a result, fewer people bought them, leaving GM with excess production capacity. (Read more about GM’s uncompetitive vehicles here.)

3. Ignoring competition. GM has been ignoring competition — with a brief interruption (Saturn in the 1980s) — for about 50 years. At its peak, in 1954, GM controlled 54 percent of the North American vehicle market. Last year, that figure had tumbled to 19 percent. Toyota and its peers took over that market share. (Read more about GM ignoring the competition here.)

4. Failure to innovate. Since GM was focused on profiting from finance, it did not really care that much about building better vehicles. GM’s management failed to adapt GM to changes in customer needs, upstart competitors, and new technologies. (Read more about GM’s failure to innovate here.)

5. Managing in the bubble. GM managers got promoted by toeing the CEO’s line and ignoring external changes. What looked stupid from the perspective of customer and competitors was smart for those bucking for promotions. (Read more about GM’s managing in the bubble here.) …”

http://www.dailyfinance.com/2009/05/31/after-101-years-why-gm-failed/

Reasons Why GM Failed

By FRANK CARNEVALE

“…Some of the reasons for the failure.

* Hard-headed thinking at the top

Writing in Detroit’s Metro Times Jack Lessenberry believes that the management of the company could not make the hard decision. “What’s wrong, in a nutshell, is that it is a narrow, insular culture. Those who make it to the top of the heap, like Rick Wagoner, tend to be white Anglo-Saxon Protestant males who have worked at the same company their entire career, and have come up with the same set of buddies … It is very hard to fire your old pals.”

* Dropping the electric car program

One of management’s bad decisions was not sticking with it’s EV1 electric car program. The program began in the lates 1990s and the company had a lead on other car companies. They scrapped the idea and Toyota took the green mantle .

* Uncompetitive vehicles

Again Toyota was able to make cars that consumers wanted. Daily Finance writes that people were “willing to pay more for Toyota vehicles than for GM’s since Toyotas were better designed and built so they had higher quality, cost less to own, and lasted longer.” …”

http://www.myfoxchicago.com/dpp/money/dpgo_Reasons_Why_GM_Failed_fc_20090601_2529418

Bankruptcy for GM

[Jim Manzi]

“…What would it mean to have GM go bankrupt? A change in ownership and a renegotiation of contracts.

The factories, computers, office space, intellectual property and so forth that are now owned by GM would not disappear; they would basically become the property of GM’s creditors. These creditors would sell the assets to the highest bidder. Assuming there is economic value to be created by continuing to operate the company as a business, private equity or strategic investors would buy the assets, shut down some plants, fire some union and exempt workers, and probably use the leverage of bankruptcy court to get a better deal from the unions. The current employees and creditors would be better off if you and I were forced by the federal government to prevent this by paying money to the corporate entity named General Motors, to then be paid to these employees and creditors. Of course, you and I would be worse off in this situation. On balance, if you believe that markets are more efficient allocators of capital than Congress is, the population of the United States would, on the whole, be worse off.

Is this fair to the people who work at GM and will now have a deal changed after the fact? Well, when people sold parts to GM on credit, or employees (individually or via union negotiations) entered into labor contracts with GM, they undertook counterparty risk. That is, they were taking, in part, a bet about whether GM would actually be able to pay them what they are owed. This is also true for pension payments, which are simply deferred compensation, as much as it is for deferred payments on credit terms for parts. To act now as if they should be protected from this risk is to treat them as children. …”

http://corner.nationalreview.com/post/?q=YzEzMThjN2UyMWE3NTMxOTA2ZTg3MDdlZWY5MjJmMTU=%3E

Consumer Sovereignty

“…Consumer sovereignty is a term which is used in economics to refer to the rule or sovereignty of purchasers in markets as to production of goods. It is the power of consumers to decide what gets produced. People use the this term to describe the consumer as the “king,” or ruler, of the market, the one who determines what products will be produced. ^[1] Also, this term denotes the way in which a consumer ideologically choices to buy a good or service. Furthermore,the term can be used as either a norm (as to what consumers should be permitted) or a description (as to what consumers are permitted).

In unrestricted markets, those with income or wealth are able to use their purchasing power to motivate producers as what to produce (and how much). Customers do not necessarily have to buy and, if dissatisfied, can take their business elsewhere, while the profit-seeking sellers find that they can make the greatest profit by trying to provide the best possible products for the price (or the lowest possible price for a given product). In the language of cliché, “The one with the gold makes the rules.”

To most neoclassical economists, complete consumer sovereignty is an ideal rather than a reality because of the existence — or even the ubiquity — of market failure. Some economists of the Chicago school and the Austrian school see consumer sovereignty as a reality in a free market economy without interference from government or other non-market institutions, or anti-market institutions such as monopolies or cartels. That is, alleged market failures are seen as being a result of non-market forces. However, it has also been argued (e.g., by Goutam U. Jois) that even a “pure” market system violates the consumer sovereignty norm. …”

http://en.wikipedia.org/wiki/Consumer_sovereignty

Chapter 11, Title 11, United States Code

Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy, while Chapter 13 provides a reorganization process for the majority of private individuals. …”

“…When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11.

In Chapter 7 the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors. Any residual amount is returned to the owners of the company. In Chapter 11, in most instances the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court.^[1]

Features of Chapter 11 bankruptcy

Chapter 11 bankruptcy retains many of the features present in all, or most bankruptcy proceedings in the United States. It also provides additional tools for debtors as well. Most importantly, 11 U.S.C. § 1108 empowers the trustee to operate the debtor’s business. In Chapter 11, unless appointed for cause, the debtor acts as trustee of the business.^[2]

Bankruptcy affords the debtor in possession a number of mechanisms to restructure its business. A debtor in possession can acquire financing and loans on favorable terms by giving new lenders first priority on the business’ earnings. The court may also permit the debtor in possession to reject and cancel contracts. Debtors are also protected from other litigation against the business through the imposition of an automatic stay. While the automatic stay is in place, most litigation against the debtor is stayed, or put on hold, until it can be resolved in bankruptcy court, or resumed in its original venue.

If the business’s debts exceed its assets, the bankruptcy restructuring results in the company’s owners being left with nothing; instead, the owners’ rights and interests are ended and the company’s creditors are left with ownership of the newly reorganized company.

All creditors are entitled to be heard by the court.^{[citation needed]} The court is ultimately responsible for determining whether the proposed plan of reorganization complies with the bankruptcy law. …”