You are correct.

Because that industry employed two million people and a blow that large to the workforce with the economy how it was might have resulted in consequences that reached far beyond that industry.

Put another way, a free market will result in the best solution. Eventually. There's no reason we can't target what might end up being cascading failures to reduce the negative swings in the economy. I would hazard that this will result in a better economic outcome quicker, but even if it doesn't, I think it at least results in less human suffering, which is a fair trade in my eyes.

As I understood it, the durable goods industries are the part of an economy that gets hit the most in a recession: Whether B2B or B2C, in the case of an uncertain economic outlook many customers will postpone investments in durable goods (e.g. cars, machining, housing upgrades like better heating/isolation systems etc.) more than they'll do with other products.

So: Many companies were similarly over-leveraged, but those in the durable goods industries were folding over it.

See IIRC Finland as an example: No banking or housing problems in 2007/8, but still in a recession because of the big role durable goods exports play in their economy.

I think that depends entirely on whether you saw what happened as the government bailing out GM, or the government keeping an industry from collapsing, which just happened to by by taking the first major company of that industry to fail, and injecting capital. I don't think it would be wise to expect the government to bail GM or any other auto-maker out of a financial problem in all industry conditions and all market conditions. Investors that expect that will lose their money to investors that correctly assess all the preconditions required. I don't expect most investors to be so stupid as to think nothing bad can happen to their investment in a failing company because occasionally extreme measures are taken in extreme circumstances. At a bare minimum, they should recognize that even if a company is bailed out, that doesn't guarantee a positive return, just a theoretically less negative return than before.

Considering the profit was at most a secondary goal of the investment, I wouldn't consider it bad at all.

>Factor in the interest USA would have saved by paying down the national debt instead.

The average interest rate on the debt is 2.43$, we have around $17 trillion debt, and you're talking about a $17 billion paydown (0.1%).

The amount of interest saved would be around $400 million per year. The profit on the GM bailout was $2400 million, so it would have taken 6 years for the decreased interest to total 2.4 billion.

>we can point at the various Solyndras the USA has bet on and lost while we are at it.

Can you point to the value of the hundreds or thousands of engineers and employees of failed new energy startups that received invaluable real world training and experience who are lending those talents to other companies.

Think about NASA and the 18 billion we "piss away" down that black hole every year, and the huge benefits that we derive from their work and the experience that those who work there gain.

Not every investment the government makes has a return in next-year-dollars.

Consider the loss in tax revenue and increased social program expenditure if the industry collapsed and some portion of the ~ 2 million US auto-workers lost their jobs. Consider the effect this could have had on the wider economy, and how that could have affected government finances, not to mention the average citizen.

The US government has always invested in it's industries, either through broadly applicable programs like the patent office, or through more targeted items like specialized laws and grants for specific industries. Cash investment isn't really all that different, except they might actually expect some sort of monetary return on that investment, unlike grants.

Just want to comment on the "Factor in the interest USA would have saved by paying down the national debt instead." statement. During the financial crisis paying down the national debt would have been pure folly. The US was borrowing at basically 0% at that point and purposefully trying to flood the economy with cash.

It's always a mix. And is it luck or preparedness and foresight? Either way, there's a strong argument to be made that Ford was in very bad shape, and their timing in 2006 was amazing. Had they held out much longer there might very well not be a Ford today.

This is an interesting article I just ran across, and suggests the fundraising actually predated Mullally: http://fortune.com/2011/05/25/fords-forgotten-man/

I dunno. Ford is looking a bit 90's Apple right now IMO. Product (outside of the F-series) seems a week point.

I just finished reading American Icon by Bryce Hoffman.

Ford realized they needed to change long before this; around 2001 (around the same time that Bob Lutz was preaching to GM). Bill Ford and Mark Fields were already planning to do many of the things that Mulally wound up doing.

What Alan Mulally did was still incredibly amazing - he restructured the reporting structure at the top of the company, increased accountability, increased transparency, increased trust and made people deliver on the plans. He got people to surface their problems at the executive level, where before everyone hid the issues for fear it would be used as ammunition against them by fellow executives.

Mulally emphasised the core brands, and in fact wanted to ditch ALL the brands except for Ford. He got Ford to bring over the European models that were far superior to their equivalents in the USA. He brought the Mazda product development model to Ford, where the engineers and designers sit in the same room. He sped up implementation of Global Ford Production System, patterned in large part on the Toyota Production System. He worked with the UAW to decrease legacy costs by funding the VEBA (UAW run healthcare fund) and trading worker concessions for promises to keep production in the USA. He worked with suppliers to decrease costs and increase supplier satisfaction. He reduced the number of dealers.

When I say "he" did these things above, I mean he pushed for them. In almost all instances they were accomplished by other executives and team members.

The discipline and planning were not luck; the timing was very lucky indeed.