We all have heard about GM’s troubles. If GM files for bankruptcy in the states, it might be another tsunami hitting our shores, rippling through the economy. Obama thinks GM is too big to fail; Bush wants “to trade” his support for a GM bailout if the Democrats will pass a free trade bill with Columbia. Meanwhile, GM is doing fine in China. If fact there are rumors that failure in the states will mean reopening plants in China.
The car giant is in talks to increase its stake in a Chinese joint venture that makes small, cheap cars and vans, reports The Wall Street Journal
GM wants to up its stake in SAIC GM Wuling Automobile Co. in Guangxi province in southwestern China, the paper reported, citing unnamed sources. The car company is 51 percent privately controlled by Shanghai Automotive; GM now owns 34 percent and would presumably buy more from the state-run minority partner.
So much in all this is just strange. Bush would let GM go under in exchange for a free trade agreement with Columbia? He, or his advisors, think that somehow there is a deal here?
Then there are those that argue, “Well, GM has fallen this much; we should just let it go.”
The following is interesting:
In the first nine months of this year [December,2007], GM posted net income of $481 million in Asia-Pacific and $754 million in Latin America. In Europe, the company had a loss of $2.6 billion and in North America, it posted a loss of $34.7 billion, mostly because it wrote down the value of future tax benefits.
GM is cutting first-quarter North American production 11 percent after its U.S. sales dropped by the same rate in November. Growth in China, Brazil and Russia kept the company’s sales higher than Toyota’s in the first nine months of the year. U.S. sales may fall to 30 percent of the company’s total within 10 years, its vice chairman, Bob Lutz, said in October.
“GM’s main hope is put in Asia Pacific, within which China is the most important part,” said Chotai.
GM is investing $250 million to build a research laboratory, the company’s China office and Asia-Pacific headquarters in Shanghai.
“There’s no doubt there will be new facilities,” said Wale.
Oh, to be a fly on important walls. The world is reshaping itself rapidly. We, the garden-variety flies that buzz outside boardrooms and Congressional or White House corridors, have only inklings of what is happening. Because we know so little, we can argue ideology, always a safe argument. Do we believe in the wisdom of the marketplace? Do we believe in free trade, as opposed to those horrid tariff mongers?
One thing is for sure: The average American is in a world of hurt. Something has gone terribly wrong. The world has been mismanaged.
At the turn of this century we were told that everything was a win-win. Globalization and free trade and deregulation would bring benefits to all. Wise men were at the helm.
Whiners did not save; whiners did not read the fine print–in mortgage or trade agreements–; whiners did not value education and re-training; whiners were clearly not competitive. Good riddance to whining flies.
Now we average flies are watching one bailout after another. We need a daily scorecard. Bloody dizzying. At each turn, we were told the end is near: Just this one more bailout. Hard for a day to pass when our eyes do not pop out a little more. Even the daily market pundits don’t quite what to say.
Oh, to be a fly on important walls; then we would know if our golden gods were really stupid or just looking out for number one. Then we would know just how we have been sold a pipedream by those economists who promised a rosy future.