AND 
Obama: Chrysler Will File for Bankruptcy
One month ago Chrysler was given until today to restructure all of its debt and merge with Fiat. This was not to be the case. President Obama announced that Chrysler will move to file for bankruptcy shortly. It is expected the process will be swift and surgical with a new Chrysler emerging within 30 to 60 days.
Some of Chrysler’s bondholders had refused to accept the government’s offer of $2 billion in cash, or an even higher $2.25 billion in exchange for $6.9 billion in debt. The union had agreed to its concessions.
As such the Auto Task Force will move Chrysler into bankruptcy court where the lenders will be forced to accept the $2 billion.
Chrysler will operate while in bankruptcy using $3.5 billion in government funds. Upon emergence Fiat will take a 20% stake that may rise as milestones are met, and the government will provide up to $4.7 billion in loans to the new Chrysler.
GMAC will operate as Chrysler’s financial arm as Chrysler Financial has been deemed unviable, and will be given additional funds to do so. The government will warranty all Chrysler purchases during this period. Chrysler will operate as usual with no job cuts. In the end, the Union will own 55% of Chrysler, Fiat will own 20%, and the government the rest.
GM has been given until June 1st to restructure all of its debt and produce other changes to achieve viability. Obivously Chrysler’s process will serve as a warning to GM’s debtholders.
Those debtholders have already balked at a proposed 10% stake in the new GM in exchange for equity. The have counterproposed getting a 58% stake in exchange for their $29 billion in outstanding bonds. The union would get 41% and shareholders 1%.
Source (Detroit Free Press)
88 Responses to “Obama: Chrysler Will File for Bankruptcy”
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April 30th, 2009 at 12:04 pm
Yeah, they can’t help the Automakers…
They’ve already given all the money in the Treasury to Wall Street.
Google Search: “Financial Rescue Nears GDP as Pledges Top $12.8 Trillion”
For Wall Street, everything.
For the Automakers, nothing.
Gotta love Wall Street.
Gains capitalized, losses socialized.
The best of both worlds, lucky b a s t a r d s
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April 30th, 2009 at 12:12 pm
Keep your eyes on the Canary, ladies and gentlemen, as the economic air gets more and more stale. Will this be a preview for GM (good or bad)? Is this an endorsement of GMAC, or an indictment?
Well, we’re in the car business now. Will there be a quick lube in the White House? Oh, wait; that was Clinton.
Flamestorm in 3… 2… 1…
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April 30th, 2009 at 12:19 pm
I’ve been reading a number of blog entries by Robert Salomon of the Stern School of Business at NYU, and he has had some excellent commentary regarding the Auto Industry lately. Anyone interested can read his blog here:
http://blog.robertsalomon.com/
Definitely worth the read IMO.
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April 30th, 2009 at 12:21 pm
Chances of GM going the same way: 60%
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April 30th, 2009 at 12:27 pm
I have mixed emotions. I don’t like government interference but I believe the government’s free(for all) trade policies have crippled american companies, esp. manufacturers for decades. You can’t compete when your competitors labor costs are almost zero and your benefit costs ARE zero.
If you read history, the government (federal) was almost completely funded by import taxes at the turn of the last century. This tax was very high, between 25 and 50% depending on the product and the time frame. That level of tax today could be used to fund healthcare for the U.S. and balance out the playing field for companies to produce products in the States. The only other holdback ( to rebuilding an industrial base) would be lawyers. I haven’t thought of a good plan to deal with them yet. I don’t have enough rope to hang them all.
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April 30th, 2009 at 12:28 pm
Sorry for the dense questions, but can anyone explain WHO the bond holders are and how could they possibly benefit from Chrysler or GM going into Chapter 11 (or 7)? Is it just a game of Chicken or is there a real benefit for the bond holders?
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April 30th, 2009 at 12:28 pm
How many nuclear plants could have been built with the money used to … uh… delay… bankruptcy. I do hope all those who voted for this level of incompetence are beginning to see the light. How many people are going out to buy Chrysler corporation bargains, owned and built by UAW workers?
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April 30th, 2009 at 12:30 pm
Don’t really know if this is the beginning of the end of Chrysler’s troubles, or the end of the beginning of Chrysler’s troubles. In other words, it still may be too late to ultimately save Chrysler, and it may still liquidate later down the road despite all of the concessions, the merger/alliance with Fiat, and the bailout money. The way I understand it is, after the DIP financing in bankruptcy court and the 6 or 8 Billion cash surge for the merger with Fiat, then the bailout spigot goes shut–am I correct in saying this? Is that money going to be enough to turn Chrysler around? Will they survive with continuing sour demand? The Company may die anyhow maybe a year down the road despite everyone’s best efforts. I’m hoping it don’t play out that way for all of these people’s sakes, but I just don’t see how this Company is anywhere close to being out of the woods.
Side note: GM better be watching Chrysler’s “surgical” Chap. 11 closely, and learn quickly from any mistakes, because frankly they’re next.
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April 30th, 2009 at 12:38 pm
#5 Solo [lawyers]
A good start would be they get paid by their customer and not as a percentage of the settlement. Win or lose they get a said amount.
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April 30th, 2009 at 12:39 pm
Seems Chrysler has a new spokesman, one that may be more effective than Lee Iococa! Wow!
#6 Voltair, those bondholders most likely have insurance if the bonds default. Why would they offer any discount, if the bonds default they get full value. The devil is in the fine print that the lawyers will exploit to their best advantage, while getting hefty fees.
Cheers
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April 30th, 2009 at 12:44 pm
They got what they deserve, I will only consider Ford or Japanese when I buy a car next month.
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April 30th, 2009 at 12:46 pm
/shocker
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April 30th, 2009 at 12:53 pm
#6 Voltair asks “Sorry for the dense questions, but can anyone explain WHO the bond holders are and how could they possibly benefit from Chrysler or GM going into Chapter 11 (or 7)? Is it just a game of Chicken or is there a real benefit for the bond holders?”
—————————————————-
It is more than a game of chicken. The Chrysler bonds are secured, meaning that the holders lent money in exchange to a claim on specific assets, such a property, equipment, or other tangible items. If Chrysler should be liquidated, they will get paid before others with unsecured claims. If Chrysler is not liquidated these bondholders obviously think they are entitled to more than was offered, which was very little, so their goal is plausible. Of course as DonC has said, bankruptcy is like a war, so various unexpected and unpleasant things may transpire for any of the parties involved.
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April 30th, 2009 at 12:57 pm
If things go more or less as planned, the future of Chrysler depends on the success of Fiat designs in the USA. The track record of Fiat in the US market is not very good. The last time they sold cars here people developed the mantra “Fiat red is the color of rust.” But maybe with Fiat’s new leadership there will be turn out to be some good opportunities.
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April 30th, 2009 at 1:00 pm
Great news. Lets hope GM does the same thing or the Volt is doomed.
Any chance of me buying GM again rests on zero government ownership.
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April 30th, 2009 at 1:01 pm
#6 Voltair asks “..WHO the bond holders are..”
——————————-
The holders seem to be banks, mutual funds, and individuals. At present the government seems to address them as abstract financial institutions, but in every case there are individual people who are and will be affected by whatever happens.
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April 30th, 2009 at 1:06 pm
I am very disappointed by the news that the UAW will own 55% of Chrysler. I really think that this will be a very iffy decision in regards to the fate of Chrysler.
Maybe I am wrong: maybe, just maybe, an “employee owned” company will actually work out fine.
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April 30th, 2009 at 1:08 pm
Statik,
I still see this as a government “bailout” and not a true bankruptcy / liquidation. Chrysler will remain largely intact.
As for the government / union 75% stake, we will all see the consequences of the inmates running the asylum.
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April 30th, 2009 at 1:10 pm
30 to 60 days? Not happening. Unfortunately, there’s no way we’ll have any conclusive information before it’s GM’s turn.
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April 30th, 2009 at 1:11 pm
I do wonder about the significance of GMAC managing all Chrysler financing. I can only see it as an endorsement for GMAC.
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April 30th, 2009 at 1:11 pm
What happens to Jeep? That brand that is very unique and still a valuable commodity.
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April 30th, 2009 at 1:15 pm
Did hear on NPR that the Chrysler bondholders did have insurance policies and if Chrysler goes bankrupt the insurance pays them full amount. So there is not way they would accept a deal. Suprised that they did not identify this before the UAW and major bondholder agreed on deal. In hind site it was going to be for sure that they would end up in bankruptcy with bondholders having these insurance policies.
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April 30th, 2009 at 1:20 pm
The deal appears to protect the union deal and seems to stop the bleeding . One thing we all need when we have a cut is to stop the bleeding . I say Hope for GM is greater because of it . Speek softly and carrie a big stick but if no one sees the big stick it does no good .
GM has at this time a 40% chance that it may indure some form but it has film movie and TV stories it can sell that could cut this months loss to 0.0 and get the ball rolling .
God Bless
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April 30th, 2009 at 1:35 pm
Good to see the Chrysler CEO is leaving too (forced out) since he helped run this corp into the ground ala R. Wagoner.
These CEOs should be behind bars !
Also, doesn’t anyone realize that the Volt has a GASOLINE ENGINE ! This needs to be repeated often. Most people don’t realize that this is not a fully electric vehicle (like the EV1). More like a half-ass attempt at EV. The Tesla S is a true and just attempt at an EV for the masses. GM needs to get its act together fast.
Remember People the Volt has a gas motor !!! This cannot be emphasized enough. Let the people know the truth about this car.
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April 30th, 2009 at 1:45 pm
Hot off the press, Chrysler will built Fiats and the proposed new brand will be the Fleesler.
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April 30th, 2009 at 1:45 pm
How do they justify just giving Fiat a 20% stake in Chrysler? Some random foreign company. Has Fiat paid a dime for it? I think they ought to liquidate the company. It’s not like there isn’t plenty of competitors who could use the extra business. A Chrysler liquidation combined with a GM and Ford restructuring could be just what the US auto industry needs.
The sad thing is that Chrysler is basically being punished for their reliability slip ups 10 years ago. Probably most of the people working there now that stand to lose their job had nothing to do with it.
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April 30th, 2009 at 1:46 pm
#22 SteveF says “Did hear on NPR that the Chrysler bondholders did have insurance policies and if Chrysler goes bankrupt the insurance pays them full amount”
——————————————–
It might be true for some bondholders but it is not true for all of them. For those for whom it is true, it has come at the cost of substantial insurance premiums.
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April 30th, 2009 at 1:49 pm
This is actually a big deal but not because of the Chrysler bankruptcy per se. We’ll see how much counter party risk shows up. Hopefully when that happens the government will not just rush in with billions for the likes of Goldman Sachs. At some point all those geniuses who wagered on defaults need to figure out that the road to wealth is not paved with million dollar bets with homeless people (aka financial institutions with no reserves to pay).
We are now seeing the results of thinking that financial markets are self organizing and self regulating, and that prosperity is ours if only the government will get out of the way. You’d think it would be the end of an era, but the banks still seem to have a surprising amount of political clout.
#22 SteveF – They only get paid if the “insurer” has the money. They don’t. To some extent the bondholders are betting the government will again be their sugar daddy.
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April 30th, 2009 at 2:02 pm
From Wash Post “…Obama said at a noon press conference, adding, “This is not a sign of weakness, but rather one more step on a clearly charted path toward Chrysler’s revival.”
—————————–
Not a sign of weakness?
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April 30th, 2009 at 2:03 pm
The thrill of victory the pain of the smellie feet .
Bundie .
This is just temporay short fall in income .
The Donald . ( Trump )
Not try Do or Do Not .
Yoda
Hope
Gods Word
God Bless
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April 30th, 2009 at 2:06 pm
I am afraid that GM is next in line. R U listening GM bondholders ?
Your ticket is about to be punched.
It is time to cut, slice and dice GM. A good start would be to immediately close half of all dealerships and close one-third of the U.S. factories. Send home those overpaid union workers and lazy salaried middle managers too. It’s time to get lean and mean so you can start building better quality cars and compete with the rest of the world on a cost per vehicle basis.
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April 30th, 2009 at 2:11 pm
Government owns 25% of Chrysler and the bondholders get nothing…the Founders would be sick. Eminent Domain I suppose. WAKE UP GM–TAKE THE DEAL WITH THE BONDHOLDERS!!!!
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April 30th, 2009 at 2:11 pm
#24 Thomas Gunn,
The Tesla Model S is going to cost just under $60,000, and the Tesla Roadster costs over $100,000 – that’s what a BEV costs.
By the Chevy Volt having a greatly reduced all electric range (AER) – 40 miles, which meets 100% of the needs of 80% of the drivers in the US – the cost is greatly reduced, yet the gasoline ICE is there for those rare instances you need more range.
Just take yes for an answer for once.
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April 30th, 2009 at 2:11 pm
Only a fool would buy a car from a bankrupt company.
Sadly, i bet there are a select few dummies that would actually do it using some contrived theory to back up their stupidity.
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April 30th, 2009 at 2:13 pm
#24 Thomas Gunn
I’m no fan of Bob Nardelli, but this is not his fault. Daimler stripped Chrysler of anything valuable and starved it of product development. Add that to the legacy liabilities, moronic work rules, and $4 oil, and Chrysler didn’t stand a chance.
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April 30th, 2009 at 2:18 pm
From the Acticle…”The government will warranty all Chrysler purchases during this period.”
Dumb question:
What about the warrantees for vehicles purchased…say 1 year ago?
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April 30th, 2009 at 2:20 pm
@24 Thomas Gunn
The Volt has a gasoline engine, really ? I though it was an electric car ? Is Chevy baiting us with the whole energy saving scheme ? I don’t trust this company.
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April 30th, 2009 at 2:21 pm
In real news… David Letterman is an idiot.
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April 30th, 2009 at 2:26 pm
HEY EVERYBODY THE VOLT HAS A GAS ENGINE!!!
Thank God.
I’ll take my Volt in Blue, please.
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April 30th, 2009 at 2:41 pm
Jason M. Hendler @ 18,
I’m pretty sure you’re confusing Chapter 7 bankruptcy (liquidation of the company) with Chapter 11 bankruptcy (the court forces them to pay off their debts (and often forces their creditors to take a haircut), all according to the court’s plan).
Bankruptcy is intended to handle exactly the situation that these car companies are in, and it’s usually not the end of the world. It’s just taken our politicians and the public a while to recognize it when it comes to Big Business. (This sort of thing happens all the time in small and medium sized businesses — except that it’s unusual to have the federal government bringing real money to the table. But most counties and municipalities would be bringing some tax breaks to the table to preserve a major local employer…)
Don’t ask me any more — I’m not an accountant, and I’ve just told you everything I know about bankruptcy.
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April 30th, 2009 at 2:47 pm
Obama once again contradicts himslef and claims good news. After trying for weeks to help Chrysler avoid bankruptcy, Chrysler
decides to do it and then Obama makes another of his fraudulent statements, this time claiming that “this path was the way to go and will do fine.” Obama apparently is betting on the media and public having a 60 second memory, or perhaps not paying attention to anything he says.
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April 30th, 2009 at 3:12 pm
IT”S ALL A HOAX!!!!!
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April 30th, 2009 at 3:16 pm
Chrysler is just a rehearsal for a much bigger play. That’s why they were given 30 days less than GM to reach agreement. Practice on a smaller scale.
I predicted long ago Chap 11 for GM. Like many others here. So far, things are going according to plans. Well, sort of
(
Statik @ 12 : a one word post. Must be a new experience for you. Congratulations are in order
Edwin Mang @ 30 : I think the correct Yoda quote is “Try not. Do, or do not. There is no try”.
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April 30th, 2009 at 3:20 pm
#6
Voltair “Sorry for the dense questions, but can anyone explain WHO the bond holders are and how could they possibly benefit from Chrysler or GM going into Chapter 11 (or 7)? Is it just a game of Chicken or is there a real benefit for the bond holders?”
_________________
The bondholders are really a mixed bag, there are hedge funds, mutual funds, pension funds individual investors and retirees to name a representative portion.
To take the question to a more fundamental level: Historically the govt. has been very bad at negotiating for profit contracts. If the bondholders keep this in mind, many will want to keep negotiating whenever the Govt. has a lot of influence on the process.
This is a sandwich no one appears to want to take a bite of, but bondholders are by law ahead of shareholders in payouts through dissolution, and the ones that are first in line may feel they have little to lose, either through negotiating or by holding out through bankruptcy. Some bondholders could have some inventive hedges, CDS’s or insurance coverage to protect their investments from losses in bankruptcy.
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April 30th, 2009 at 3:23 pm
19 LauraM Says:
April 30th, 2009 at 1:10 pm .30 to 60 days? Not happening. Unfortunately, there’s no way we’ll have any conclusive information before it’s GM’s turn.
———-
That’s what i was going to say. Good luck w/that. I see more $ going into this bankrupcy process too.
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April 30th, 2009 at 3:24 pm
kent beuchert @41.
Chapter 11 for Chrysler is good news for those who believe in the “american way” : if the company fails, it goes under, reorganizes and emerges as a viable entity. Right wing is satisfied.
On the other hand, Chrysler will benefit from more bailout money to restart business after Chap. 11. Left wing is satisfied.
Hopefully, jobs will be saved in this process. Union is satisfied.
Eventually (soon we hope) government will be able to let the business take care of itself again. Taxpayers will be satisfied.
Can’t be bad.
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April 30th, 2009 at 3:26 pm
CEO of Chrysler has stepped down. Lots of auto execs in the unemployment lines out in Michigan. Take a number and have a seat like the rest of us.
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April 30th, 2009 at 3:37 pm
47 David
Nardelli knew he was going to step aside from the moment they had the deal with Fiat in the works. He’s going to work back at Cerberus where was was before they appointed him to run Chrysler. He’s definately not unemployed.
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April 30th, 2009 at 3:39 pm
#43 Tall Pete said:
Statik @ 12 : a one word post. Must be a new experience for you. Congratulations are in order
==========================
thanks
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April 30th, 2009 at 3:40 pm
David #47 CEO of Chrysler has stepped down. Lots of auto execs in the unemployment lines out in Michigan. Take a number and have a seat like the rest of us.
_______________________________________
There isn’t enough money in the unemployment compensation system to keep this guy in the style he’s accustomed to. After plundering, I mean receiving his entitled compensation from Home Depot, I’d hate to imagine what he gets after bailing on what’s left of Chrysler. ( http://www.marketwatch.com/news/story/home-depot-chief-nardelli-resigns/story.aspx?guid={66FE1A6C-9057-4A4E-9200-E6BC2BCACA66} ) $210 million plus of Home Depot capital.
And another $245 million plus, according to ( http://www.marketwatch.com/News/Story/nardellis-hot-seat-home-depots/story.aspx?guid={8C59D5F3-DF2A-4078-976C-C9D3453C716E} ) “The elephant in the room will be the estimated $245 million pay package — and that’s a conservative estimate — that Nardelli is receiving while shareholders have lost money during his five years with the home-improvement behemoth.” Not a bad bailout package IMHO.
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April 30th, 2009 at 4:01 pm
My bad, I didn’t test the links in #50, they must have been crawled by Google and subsequently replaced by Market Watch. I apologize to the extant that an apology is due!
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April 30th, 2009 at 4:08 pm
29 RB. No kidding. But he’s right, its not weakness its failure.
I also have mixed feelings. I hate that the government seems to be trying to take advantage of this and the GM situation to get control for itself or the UAW. Buuuut if GM and Chrysler hadn’t relied on debt and been better managed they wouldn’t be in this situation.
Beggers can’t be choosers???
I’ll say one thing, if I were running a troubled company the LAST thing I would do is go to this government for a loan!
Chris
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April 30th, 2009 at 4:22 pm
#46 Tall Pete
You really are an optimist.
My point of view:
The right is claiming to be vindicated that the original Chrysler bailout was a mistake. Even though the US government made money on the deal.
The left doesn’t want bailout money for the car companies since they build SUVs. Apparently, the domestic companies have a monopoly on pollution. Oh, and the foreign workers need the work more than us rich Americans.
If the unions cared about saving jobs for the long term, we wouldn’t be in this mess.
The taxpayer will only be satisfied if we get our money back plus interest. And the odds of that happening are about the same as GM’s making a profit on its hydrogen program.
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April 30th, 2009 at 4:35 pm
#24 Thomas Gunn
#37 Britney
The Volt has a gasoline engine!!!
If it didn’t have a gasoline or other type ICE It would not be an E–extended R–range E–electric V–vehicle. And if it were not an E-REV then most consumers would not even consider it due to range worry. It is an electric vehicle because ONLY an electric motor drives the wheels. The ICE powers a generator after the battery has supplied enough power to travel the 40 mile expected range.
But Thomas, I do agree with you GET THE WORD OUT!!!!
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April 30th, 2009 at 5:01 pm
58% DUDE , check the prescrition .
1 every four hours not 4 per hour .
LOL
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April 30th, 2009 at 5:16 pm
Luke,
I understand that. How many bankruptcies involve government loans to prevent liquidation, cover warranties and provide financing to the company’s customers? Big difference.
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April 30th, 2009 at 5:36 pm
@Thomas Gunn 24
lol….
Idiot…
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April 30th, 2009 at 5:51 pm
One should never forget two things:
1). On 06/19/1982, Vincent Chin was killed by deabteat Chrysler employees named Ronald Ebens, Michael Nitz and stupid judge Charles Kaufman, it is too bad they either died or no longer affiliated with this company as of today.
http://en.wikipedia.org/wiki/Vincent_Chin
2). Chrysler filed Chapter 11 and potentially will liquidate in 60 days.
Both are tragedy and any reasonable person should NOT forget either one. To those employed by Chrysler or any Detroit area folks, do not let hatred take over you, you must work hard, get rid of UAW and strive to build better products. The American people are realistic and will ONLY buy those with the best values. I was at a local Dodge dealer this afternoon and several people asked about “Fire Sale”, they demanded at least 50% off the MSRP, so you know this is America, when you have trouble and wounds, other people will stab you and benefit from your PAIN!
God bless Vincent Chin in heaven and all those dedicated folks in Detroit (Minus those who are lazy and poorly qualified employees)!
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April 30th, 2009 at 6:04 pm
#34 Lido Says, ” … Only a fool would buy a car from a bankrupt company. Sadly, i bet there are a select few dummies that would actually do it using some contrived theory to back up their stupidity.”
And only a person with a weak argument would try to use personal insults as a substitute for the facts.
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April 30th, 2009 at 6:05 pm
#11 GM Outsider Says, “They got what they deserve, I will only consider Ford or Japanese when I buy a car next month.”
When you buy Japanese, you betray your whole country, not just the GM management.
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April 30th, 2009 at 6:06 pm
From Apr. 17, 2009:
Credit Default Swaps Behind Two Major Bankruptcies This Week; is GM Next?
http://firedoglake.com/2009/04/17/credit-default-swaps-behind-two-major-bankruptcies-this-week-is-gm-next/
The author writes:
“There is no doubt in my mind that the refusal of the bondholders to make a deal with GM is in part due to credit default swaps. The bondholders owning CDSs get paid off in the event of a bankruptcy. They don’t get paid off in the event of a restructuring. Why should they make a deal? Screw the workers. Screw the management. Screw everyone in sight. Isn’t that the function of credit default swaps? Isn’t that why financial elites love them and want to keep them?”
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April 30th, 2009 at 6:09 pm
@carcus1 61
All this stuff is giving me a headache. Imma go getta Beer.
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April 30th, 2009 at 6:19 pm
“Chrysler will operate as usual with no job cuts.”
________________________________
http://www.bushcraftireland.com/images/Whittling%201.JPG
CaptJack @ 62
Makes my stomach hurt too. I’m gonna mix up a pepto and scotch.
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April 30th, 2009 at 6:22 pm
Bob G:
You must be really stupid to claim it is a betray of the USA by buying Toyota Corolla, actually mine was made in Osaka, Japan, it took me 30 min to find a Japanese one from the lot last month! It is better, PERIOD!
I pretty much buy anything Made in Asia now!
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April 30th, 2009 at 6:37 pm
#61, carcus1
Thanks for the link, I think, anyway. The author also says
“According to the DTCC, there are 5,252 CDS contracts outstanding on GM, with a gross value of $38.4bn and an expected notional value of $2.68bn. According to the DTTC, the notional amount is the maximum amount of money that will change hands on the occurrence of an event of default, after netting and application of collateral. The total amount of GM bonds is about $29bn.”
So if the government holds the insurance policy (by default AIG?) would it be cheaper to just pay them off? Or would it look better to declare bankruptcy and pay even more?
I am not driving any more today, time to have a drink!
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April 30th, 2009 at 6:47 pm
Nothing will change with these giants, Chrysler will remain Chrysler and GM will remain GM. As someone stated before me this is not a true bankruptcy. Of course the figure heads have to go to give the illusion of change. The only difference between Chrysler, GM and Toyota, Honda is where they are headquartered. GM makes cars abroad and Toyota employs Americans in the US. Let’s come back to this post in 5 years and see how little has changed.
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April 30th, 2009 at 6:55 pm
#24 Thomas Gunn Says:
I hear you Thomas, oh wait I can’t hear you the VOLT generator just kicked in! LOL
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April 30th, 2009 at 7:11 pm
#61 carcus1
We really should have nationalized AIG–which would render those credit default swaps worthless.
And, the credit default swaps may be why the Chrysler bondholders didn’t agree to the treasuries offer. They were offered a cash settlement that looked pretty good to me, but I don’t know what Chrysler’s value would be in a liquidation or reorganization.
However, so far credit default swaps are not affecting the GM. The deal GM is offering their bondholders is absurd.
http://blogs.wsj.com/autoshow/2009/04/27/statement-from-gm-bondholder-commitees-advisers/
The bondholders have countered with a deal that I think is realistic. And, since it’s their first offer, they’re probably prepared to take less.
http://online.wsj.com/article/SB124105121817871157.html
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April 30th, 2009 at 7:14 pm
66 Brenda: GM makes cars abroad and Toyota employs Americans in the US.
You’re making it sound like evil GM makes all their cars abroad, and good Toyota makes all their cars in America.
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April 30th, 2009 at 7:15 pm
“When you buy Japanese, you betray your whole country, not just the GM management.”
This has got to win the award for the dumbest comment on the site today. Congrats!
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April 30th, 2009 at 7:18 pm
#60 BobG
Betraying the whole country? Don’t you think that’s a little harsh? If anyone is “betraying the whole country,” it’s the government for not sticking a tariff on imported vehicles.
#66 Brenda
The foreign manufacturers import a higher percentage of vehicles sold than the Detriot three. And Detriot uses a significantly higher percentage of American parts. Finally, Detriot’s engineering, R&D, and corporate jobs are mostly here. Toyota and Honda’s are mostly in Japan.
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April 30th, 2009 at 7:47 pm
We can’t buy Japanese?
Whoa! I better send back my Cellphone, Television, Stereo System, Washer & Dryer, my Cameras, any of my Portable Radios, and of course, the computer that I’m typing this on…! Sheeeeesh!
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April 30th, 2009 at 7:48 pm
Just kidding about the washer and dryer.
I have no idea where those were made.
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April 30th, 2009 at 7:58 pm
I can’t believe Chrysler is going down. And so soon after announcing the Chrysler Peapod.
http://www.autobloggreen.com/tag/chrysler+peapod/
Damn, I really thought that thing was going to save the company. The 25 mph speed limit is so…. sexy.
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April 30th, 2009 at 8:13 pm
Did anyone watch Bob Nardelli being questioned by Maria Bartiroma on CNBC today? At the end of each statement, he broke out into the weirdest little grin, kind of like clenching his teeth. I’m sure it will show up on an upcoming episode of the TV show “Lie to Me.”
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April 30th, 2009 at 8:28 pm
David G @70 says:
“When you buy Japanese, you betray your whole country, not just the GM management.”
This has got to win the award for the dumbest comment on the site today. Congrats!
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Well let me say this. If you reactively buy a Japanese (or Foreign Car of any type) car without at first AT LEAST LOOKING at an equivalent American Auto and test driving it, then I think in fact you betray your country. You should give the American Car companies the benefit of the doubt if in your mind it’s anywhere near close in your decision. The Car companies have made incredible efforts with their hands tied by the Federal Government (and the state of CA) and the Labor Unions, to improve the cars. They have for the most part suceeded. If they had anything close to a level playing field they would have no problems with the Japanese or the Europeans. Detroit has some of the best engineers in the world. We need our manufacturing base in this nation. We have lost so much already. We cannot afford to be just a service and argicultural economy. That’s the path to a third world nation. We are already on this path.
The biggest obstacle to progress has been the UAW and the FEDS.
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April 30th, 2009 at 8:34 pm
#68 LauraM
All that big money stuff is making my head swim, really. So I think I will have another drink and go back to changing the brakes out on my Colorado. Good truck that is, 60k and the pads are still not worn out. The pedal is getting a little mushy though. All them dirt roads and salt you know. Yup I am happy with my GM truck. It is smaller than most. However it gets better mileage. Most people buy the bigger trucks. Oh well that is why GM is in trouble, If they had all bought Colorado’s they would be making smaller trucks.
I guess I am rambling, but why not. It will probably be a while before the ICE kicks in thread. How loud will that thread be? In the meantime we have the nationalization of GM threads going on. The left will be subsidizing the car of the right, go figure. I am amazed. Obama today was surreal, go buy a Chrysler, it is as strong as the dollar.
What is a mullet? My wife does my hair so I do not know. Anyway Bill Gates never owned a comb till he got married. So I want a Camaro, subsidized by the left…
Enough rambling. Back to working on the brakes.
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April 30th, 2009 at 8:40 pm
Folks, this whole situation looks to me like the typical cycle whereby the taxpayer builds the needed social infrastructure at the price it takes to do the job properly. Then, after some time, these same assets are sold off to private/corporate interests (i.e. supporters of those in government) at firesale prices, so that they can reap the profit generated. This way, the rich get richer, and the poor chumps (us taxpayers) get poorer.
Oh, and to sweeten the pot even more for the future corporate owners, why not cut the salaries now for the taxpayers working there? Don’t our government and corporations have a beautiful relationship?
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April 30th, 2009 at 10:01 pm
#76 truthguy
Is every product you buy American? Take a look around your house, I’m guessing the answer is no. I’m a big consumer. I buy a lot of consumer products and some American some not. Cars are just not something I happen to buy American.
But you’ll be happy to know for the first time in my life I am considering buying an American car. A Tesla. Not because I feel obligated, but because someone finally made a car I really want to buy that happens to be made here!
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April 30th, 2009 at 11:09 pm
#58, I definitely agree. People are starting to sound all xenophobic like they did in the early 90s when he died and it is a bit scary. It is so bitterly ironic that he wasn’t even Japanese, but rather from a people that have far more reason to hate Japan than even Americans do. Then again, what in the heck have the younger generations ever done to China or the US that warrants such vitriol? Japan has never acted like a saint and certainly doesn’t play fair with trade, but after all of our auto bailouts we can hardly say the US has been hands-off. Maybe I’d be more pissed if I were a laid-off autoworker, but nothing justifies such extreme hatred.
I’m certainly no bleeding-heart liberal, but these patriotism accusations flying around the comments are ridiculous. I think it is stupid that many people blindly buy foreign cars because they have misconceptions about American cars. However, it is even more stupid to accuse people of traitorous behavior for simply buying a Japanese car. Japan, especially since their “lost decade” is not a threat to the US. With China you might have a point, but even then it would be very tenuous. Maybe those people lack sufficient national pride, but traitor is not a word to be used lightly.
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April 30th, 2009 at 11:09 pm
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#81 LauraM Said:
#66 vincent
I think it’s a little unrealistic to expect Elon Musk to give GM credit for anything. They’re competitors. I’m sure he’s thrilled anytime the Volt get’s bad PR.
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I agree Elon can’t be expected to give GM public credit especially considering the Fisker tie to GM. But would Elon be better served by not publicly throwing stones at a car company that the government is a very big stakeholder in? Tesla has applied for a $350M government loan financing facility to help finance the Tesla Model S production. In theory Tesla throwing stones at GM should not influence the government decision to provide Tesla a loan but in practice….well you know how that goes.
I’m a big Tesla fan (and Volt fan). I give Elon credit for getting behind Tesla and following through with getting the Tesla Roadster into production. There is only a 200 AER mile gap and $10,000 cost premium gap preventing the Tesla Model S from being a near perfect Electric Car for a very wide consumer base. Those gaps disappear over the next five years if Tesla is moderately successful with the Model S. For all that to happen, Tesla needs the cash to build the Model S.
Putting aside the question if the government should be in the business of providing car companies loans, I can think of no automaker more technically qualified than Tesla to receive an EV government loan grant. Tesla getting or not getting the ~$350M government grant loan will be a test of how even handed the Obama administration is towards aiding EV development.
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May 1st, 2009 at 12:01 am
So I guess the UAW head guys will all be on the board of directors. Wonder how that will work. Could actually be a positive because they now have the motivation to make better operational decisions.
Instead of forcing GM to build cars in Detroit they will look at the costs and say, “If we build down south our numbers look better and the stock price will go up”.
Then again, if they don’t have top executives making those decisions they will most likely not make the best decisions.
Now contrast this to Chrysler’s new directors having to compete head-to-head with the Japanese and their cut-throat competitiveness and razor sharp management style. Good luck Chrysler!
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May 1st, 2009 at 9:55 am
I have not read any comments. But, I do not like the idea of the UAW owning 55% of Chrysler or any other auto company. Having the union own any part of a company is quite different than employee ownership, which I do not object to. I have owned several Chrysler autos over my life time. I will not ever own another as long as the UAW is in ownership. The same will hold true for GM purchases. None. None at all.
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May 1st, 2009 at 12:02 pm
Chrysler is after all GMs little brother, hahah
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May 1st, 2009 at 1:03 pm
#64 GM Outsider Says, “You must be really stupid to claim it is a betray of the USA by buying Toyota Corolla, actually mine was made in Osaka, Japan, it took me 30 min to find a Japanese one from the lot last month! It is better, PERIOD!”
Perhaps you think that calling me “stupid” convinces everyone that you are correct, and saying “PERIOD” means that the debate has ended and you have won. In reality, if you want to convince people of the validity of your point of view, you need two essential ingredients: facts and people skills.
The facts that I have are that Japan has a history of protectionist trade policies and subsidies to their domestic industries. This gives their industries a tremendous unfair advantage in the U.S. market. Their distorted cost structure is what has historically allowed them to provide more quality for a lower price. But, even at such a disadvantage, U.S. industry has been catching up in recent years.
When you buy Japanese products instead of similar American-made products, American industry suffers. If we were talking about a nation that trades more fairly (like Canada), they would reciprocate, give our products a fair chance to be sold in their country, and the gains from the exports would balance out the losses from the imports. But Japan doesn’t reciprocate (otherwise, they wouldn’t have such huge trade surpluses). This weakens our whole society, because less jobs are available to support our families, and less tax money is available for social programs, infrastructure, and national defense.
That is why I contend that, when reasonable alternatives are available, but you choose to weaken America’s economy just to get a better deal for yourself, you are betraying your country.
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May 1st, 2009 at 1:14 pm
#71 LauraM Says, “Betraying the whole country? Don’t you think that’s a little harsh? If anyone is “betraying the whole country,” it’s the government for not sticking a tariff on imported vehicles.”
I always enjoy your refreshing voice of reason! I will concede that “betrayal” is too harsh of a term, but I have strong feelings about people who intentionally harm my country. Furthermore, I couldn’t agree more with you that the U.S. government has failed at resolving trade inequities. I really hope our new president does exactly as you say.
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May 1st, 2009 at 2:21 pm
Yeah, that plan’s a sure fire success. Personally I’m thrilled to suffer inflationary pressures and higher taxes to postpone the inevitable.
Good money after bad. Sigh.
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May 28th, 2009 at 12:43 pm
A few weeks ago I discovered this blog and have been following along steadily. I decided I would give my opening comment. Im not sure what to write except that I have loved perusing. Nice blog. I will continue coming back to this site in the future. I have also taken your RSS feed for updates.
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