I previously wrote on the scandal at General Motors (GM) over its lethal defect in the ignition switch on various models. Now General Motors has fired 15 employees and disciplined five others after an internal investigation by attorney Anton Valukas. The move raises some interesting litigation issues going forward in the controversy with both civil and criminal elements.
I am always leery of internal investigations and the report has yet to be released. GM CEO Mary Barra described it as “extremely thorough, brutally tough, and deeply troubling.” The move to fire the workers could help on the margins in expected litigation, though GM has pushed to be protected from liability under bankruptcy laws. They may well succeed. However, if not, there is little chance of making a type of rogue employee defense with so many workers. Respondeat superior kicks in.
Given this report and the obvious gross negligence of the company, it would be a second victimization of the families of lost ones to find themselves barred from suing GM. This is likely to be of little solace for them.
Byron: Incidentally, mespo clearly demonstrated a better understanding of Adam Smith. Why would you award the round to paul? That’s why you lack credibilty
RTC:
Oh, okay. Whatever you say.
Government is not listening to the people and it is doing what it jolly well wants. It is dictating to us a particular morality. One which a majority of people are rejecting.
DavidM:
From what I have read, the federal government pretty much forced banks to lend money to people who could not afford to make the payments.
The financial crisis is largely a function of government intervention in the market place. It was done for social reasons without regard for economic principles.
“Because Glass-Steagall was passed during the Depression, it is assumed that it was addressing a pressing need of the time. In fact, the lack of government-enforced division between commercial and investment banking had precisely zero to do with bank problems during the Great Depression. The 9,000 bank failures during the early 1930s had far more to do with the damage done by government regulation — namely, the unit-banking laws that made it difficult for banks to diversify their portfolios (by limiting them to a single office and making branching illegal) — than with a lack of regulation. These were small banks, not the behemoths for which Glass-Steagall would have been relevant. Canada had none of these stifling regulations, and had zero bank failures. (Incidentally, Canada also avoided all the post-Civil War bank panics that struck the U.S., even though Canada did not have a central bank until 1934 — yet again, reality refuses to conform to the where-would-we-be-without-our-wise-overlords comic-book version of events.)”
Tom Woods
This is a pretty good article on the history of Glass Steagal with some good references.
http://mises.org/journals/qjae/pdf/qjae1_1_1.pdf
Byron: government is not the arbiter of morals. The people enshrine their morals in government in order to carry them out. Only when we disagree with those morals do we accuse Gubmint of arbitrariness.
Of course, I can let Paul explain his take on all that, and you can misunderstand all of it later.
David: Reagan improved the economy largely with smoke and mirrors. He left this nation saddled with enormous debt and a savings and loan scandal.
You must have switched your blinkers out for blinders. Government policy had little to do with creating the housing bubble; that bubble was created by Greensspan and the central bank. And all you guys were cheering, “In Greenspan we trust! I mean, God! In God we trust. And also Greenspan.”
For me, proof of a conspiracy lies in the fact that all those worthless mortgages were bundled together, insured against failure, bundled together some more with solvent securities, sold as packages – packages containing poison pills – to unwitting buyers, and bet against by the sellers. See Michael Crichton, The Big Short. Oh, and Countrywide. It was their policy to hand out mortgages to three-legged dogs. There was a time when bankers were supposed to determine if some one was a good risk.
I remember the 18% interest rates of the Carter days. Not sure he was to blame.
I’ve owned several homes over the years, all with conventional thirty-year, fixed rate mortgages. Problem is, my home value was knocked down by the subprime busts that occurred throughout our town.
RTC – the government forced banks and lenders into the subprime market. However, they do not want to take their share of the blame. Every time a banking institution tried to stop subprime lending, the feds sued them for racial bias. Eventually, it was cheaper to give the subprime loans.
Paul:
that was good analysis.
I think Mespo has found an equally well read person with which to converse. I am looking forward to your future mano y mano’s. I would say round one is scored to you.
I havent read a theory of moral sentiments but does Smith ever mention government as the arbiter of morality or does he believe in do unto others as you would have them do unto you?
If one desires freedom of action, individual rights and liberty, reason dictates the necessity of a well developed personal moral and ethical code.
I am guessing Smith believes that human beings are able to be ethical and moral without the interference of government except for the punishment of transgressions.
David: Your blinkered vision never ceases. FDIC saved banking and finance following the Great Depression. Problem began when Reagan started the deregulation mania, which culminated in the Clinton-Gramm conspiracy to repeal Glass-Steagall. Once the financial racketeers figured out how to rig the game, it was a simple matter of convincing the masses that the American Dream was theirs for no money down and easy, low payments.
The fact is that there’s a transfer of wealth taking place in this country and it’s all going to the top. It is small-minded to blame an “immoral populace”; probably immoral to accuse the populace of being immoral under these circumstances.
Shouldn’t you be building an ark somewhere?
RTC, I don’t know where you lived, but Reagan brought us good economic times. The Carter years were horrible with people losing their homes to high interest rates. And if that post depression era Glass-Steagall law was so good, why was it not just brought back in Dodd-Frank after the recession? Bill Clinton was right, it was an outdated law that had little applicability to modern high tech global economy. There were so many loopholes, it wasn’t even functioning in the way it was meant to function when it was created.
The government policy of making it easy for every American to own a home is out there in plain site. Where is the evidence for your conspiracy theory that the lenders were behind a plot to convince Americans into buying homes with no money down and easy low payments? I’m just curious here, but have you ever bought a home? Did the lender trick you into buying your home by giving you a good deal with no money down, low interest, and low payments?
Whether Wealth of Nations is worthier than Theory of Moral Sentiment is immaterial. Adam Smith believed in a regulated capitalist market.
If not, you a the scallions of the earh.
keebler – you need a new keyboard.
If you are above a certain pay grade, you retire with a golden parachute. If nt, you are the scallions f the earth.
angry:
“Just out of curiosity; how many times will this anus be allowed to act like a Troll in an attempt to piss me off?”
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We tolerate trolls like cows tolerate flies. They are always with us and just not worth the effort to get rid of them. Even if it is a mere flick of the tail. After all, they’re still just flies.
” A new car built by my company leaves somewhere traveling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall? Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of a recall, we don’t do one.”
“Cornelius”/Narrator – Fight Club
I wonder if in the case of GM shielding itself from liability via bankruptcy it could be argued that GM knew of the product liability and delayed the process until they were discharged or had their debts restructured. If that is the case could the plaintiffs in the product liability case be able to force GM to pay damages unshielded by the bankruptcy?
rafflaw wrote: “If government had allowed GM to fold, why wouldn’t they also allow all of those big banks and investment companies from folding when they gambled Billions of depositor monies and lost and then came hat in hand to the government?”
Why do you ignore the role of government encouraging this gambling? If I told you to lend $100 to someone, and then I would immediately buy that loan from you for $103, why would you not do that? If I told you that I would guarantee your loans, so that if those I wanted you to lend to would default, then I would pay you back, why would you not take that bet? Government insuring loans facilitated the collapse, as well as an immoral populace who will take money they know they will not be able to pay back.
Thank goodness we have the XXII Amendment to look forward two. I think I am living Jimmy Breslin’s novel in real time
Paul:
“Mespo – Although, The Theory of Moral Sentiments is seminal to his other works, I, personally, do not find it his greatest work. Wealth of Nations is, to me, the far greater and more important work.”
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Well, you’d disagree with the author, then.
Mespo – funny thing about authors, they often do not know what their best work is/was. He may consider it his best work but it is rarely read much less mentioned today. In my opinion, The Discourse of Livy is a better book than The Prince, but not enough people read it either.
Good, Paul, then you know he was no fan of laissez-faire or unbridled capitalism. He also advocated sympathy and moral rules in dealing with others in his greatest work, The Theory of Moral Sentiments.
Mespo – Although, The Theory of Moral Sentiments is seminal to his other works, I, personally, do not find it his greatest work. Wealth of Nations is, to me, the far greater and more important work.
John:
“Free market capitalism would have seen Government Motors liquidated long ago. The assets of which would have been beneficially purchased for pennies on the dollar by those conservative investors who had preserved their cash. The natural and eminently rational, survival of the fittest. The manipulating “money changers” like Bernie Madoff, however, prevail perversely.
P.S. Post bailout, thug unionists benefit as “government workers.” Congratulations, comrades.”
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Where do you come up with these irrational, predatory free market ideas? Surely not Adam Smith who most capitalists praise but almost none have read.
I have read Adam Smith and he is just as relevant today as he was when he was first published.
rafflaw:
government should not have bailed out banks. Why would you think I would be for bank bailouts but opposed to GM bailout?
The principle is the same, the carcass is used as food for the living.
This is a beautiful thread.
They said it couldn’t be done but I stood up for you.
They said there is no way the Conservatives can blame The President for the GM debacle.
I said, “Oh yes they can” and I’ll be damned if I wasn’t right.
You maintain that because Obama chose to bail out GM; this allowed them to perpetrate an act of industrial ineptitude and intentional dereliction of their responsibility?
You do realize of course; that had someone predicted that Conservatives would try to connect The POTUS to an industrial failure; you would have been calling me a “Conspiracy Theorist”?
Only now; after they have actually demonstrated, that they have the “Nads of an Elephant”; would you be saying, “Damn!; that Angryman is a Far King Prophet.
angryman – thought you were female. How could you possibly be a Far King Prophet? Kings are male. 😉