So what are the latest GM-Chrysler rumors now that the election is over?

[Ghoste]

I haven't heard any news for a couple of days, what is the latest?

[Sinister68]

The 2 most recent articles that I found are...

"Cerberus Capital Management LP Chairman John Snow said Wednesday that president-elect Barack Obama and his treasury secretary need a bipartisan plan to counter the worst economic downturn in about 50 years.  "What we need is to make sure that a vital industry like autos ... which is such a big part of the overall economy, doesn't lead us into a deeper and harsher downturn," Snow said in an interview on the CNBC cable channel. "The collapse of the auto industry at this time would be devastating for a new president."

AND

"House Speaker Nancy Pelosi said Wednesday that Congress is considering bailing out Detroit's Big Three automakers. She acknowledged that taxpayers could resent "what they consider to be a bailout of inefficiencies" in the auto industry."

So if I get into too much debt, can I get some of the govt funded bail out money too?    Why should I be held accountable for my actions if the govt doesn't expect anyone else to?
What a bunch of sh--!    How can the govt consider a bailout which will cost tens of thousands of jobs (factories, spin-off jobs, etc.)?  

[Ghoste]

I don't know, how could they not at least "consider" a bailout that to ignore could cost tens of thousands of jobs?  In any case, for today Chrysler is still a company of it's own.

[RD]

i would rather see a bailout of the auto industries (where thousands upon thousands of jobs are affected) moreso than the banking industry.

[41husk]

The banking indusrty down turn does affect the auto industry.  If banks are reluctant to loan money for cars (or anything else for that manner) Sales will suffer.  If people or afraid to borrow money or spend money on anything considered a luxury item due to possible job loss, sales will suffer.  Poor sales auto, housing, appliances, etc.  lead to more job loss.  It is a cycle that has been caused by corporate greed.  I am not sure bailing out irresponsible industies will solve the problem, but I do believe simply allowing many major industries to fail will only decrease competition.  decreased competition will lead to higher prices due to greed.

[nh_mopar_fan]

Are they looking at the same sort of deal that Chrysler got in the 80s?

Loan guarantees vs outright handouts....

[ITSA426]

The banking indusrty down turn does affect the auto industry.  If banks are reluctant to loan money for cars (or anything else for that manner) Sales will suffer.  If people or afraid to borrow money or spend money on anything considered a luxury item due to possible job loss, sales will suffer.  Poor sales auto, housing, appliances, etc.  lead to more job loss.  It is a cycle that has been caused by corporate greed.  I am not sure bailing out irresponsible industies will solve the problem, but I do believe simply allowing many major industries to fail will only decrease competition.  decreased competition will lead to higher prices due to greed.

I remember when people would save to have money to spend on luxury items.

[moparstuart]

    I agree

[Mike DC]

 
This whole thing isn't even about which corporations are worthy of Federal help or not.  It's about which corporations are just too large to safely deflate all at once. 


We wouldn't have to bail out any of these corporations in the first place if they were smaller.  They could just be allowed to go under and the country would move on with a tolerable-size bump in the road.  But instead these industries have been allowed to get much too large in proportion to our society without adequate gov't oversight to keep them stabilized.

[Ghoste]

But forcing companies to remain within a certain size limit flies in the face of everything that capitalism stands for.  The obvious comeback to my argument should be that capitalism also stands for only allowing the strong to survive but I think the lesson here might be that (horrors!  )capitalism is not a perfect system after all?

[bull]

"House Speaker Nancy Pelosi said Wednesday that Congress is considering bailing out Detroit's Big Three automakers. She acknowledged that taxpayers could resent "what they consider to be a bailout of inefficiencies" in the auto industry."

The same could be said (and has been said) about the financial bailout that already occurred.

[Neal_J]

When GM announced recorded losses and liquidity problems today, Rick Wagoner said:

Wagoner, without mentioning Chrysler by name, said that GM had ended talks about a possible merger with a Detroit rival to concentrate on the cash crisis it now faces.

Mereger talks are dead but its likely that Congress will float loans to the Big 3 automakers, forestalling the inevitable.  However, I predict that one or more will declare bankruptcy within the next year.

[Ghoste]

However, I predict that one or more will declare bankruptcy within the next year.

A safe bet.

[PocketThunder]

The banking indusrty down turn does affect the auto industry.  If banks are reluctant to loan money for cars (or anything else for that manner) Sales will suffer.  If people or afraid to borrow money or spend money on anything considered a luxury item due to possible job loss, sales will suffer.  Poor sales auto, housing, appliances, etc.  lead to more job loss.  It is a cycle that has been caused by corporate greed.  I am not sure bailing out irresponsible industies will solve the problem, but I do believe simply allowing many major industries to fail will only decrease competition.  decreased competition will lead to higher prices due to greed.

I remember when people would save to have money to spend on luxury items.

Those were the days.  When i was a kid (late 80's) i mowed this ladys lawn and it took me an hour and a half with a push mower that must have weighed about 2000 lbs.  She paid me $7.  After a whole summer or 12 weeks of mowing i had $84 saved up.  I went to radio shack in the next town over and bought a blue R/C monster truck.  I had enough money for the truck and 4 "C" batteries to run it.  I got home and drove it all day long till the batteries ran out.  I had to save up another $84 to buy a rechargable battery kit.  Then i was good to go!

[Neal_J]

I think the Big 3 are suffering from unprecidented problems.  With Chrysler in the last 1970's, the big challenges were (1) crappy management that created (2) cars that no one wanted.  The government loan gave Chrysler time and cash for Iacocca to clean out the white-collar house and change production.  Once they created the K-car and minivan, which consumers wanted, problem solved and loan repaid.

That's not the situation now.  The current and much more difficult problems are (1) banks are unwilling to loan money to the automakers and others, and (2) most consumers don't have the money to purchase a new car.  Even if banks or the Federal government help relieve the first problem with tons of $$$$, the cold hard fact is that demand for cars is now, and certainly for the foreseeable future, squat.   All automakers, but especially GM, Ford & Chrysler are hosed. 

I'm concerned that, within a year, my Dodge Charger will join my Olds Cutlass as orphans. 

[Mike DC]

But forcing companies to remain within a certain size limit flies in the face of everything that capitalism stands for.  The obvious comeback to my argument should be that capitalism also stands for only allowing the strong to survive but I think the lesson here might be that (horrors!  scared )capitalism is not a perfect system after all?

That's the issue.  We can restrict the size of the corporations or we can start regulating them a lot more, but either way the answer is more govt intervention in this case.  I hate to say it but it's true. 


Rant off. 

[Hemidog]

I just read that GM is going bankrupt by the end of the year without financial aid, and that the Chrylser merge isn't on top of the todo list... 

[Ghoste]

I can't help but think that Chrysler is close to the same condition.  Merging the two would have only meant they went down at the same time.

[Mike DC]

I think the Big 3 are suffering from an unprecidented problems.  With Chrysler in the last 1970's, the big challenges were (1) crappy management that created (2) cars that non one wanted.  The government loan gave Chrysler time and cash for Iacocca to clean out the white-collar house and change production.  Once they created the K-car and minivan, which consumers wanted, problem solved and loan repaid.

That's not the situation now.  The current and much more difficult problems are (1) banks are unwilling to loan money to the automakers and others, and (2) most consumers don't have the money to purchase a new car.  Even if banks or the Federal government help relieve the first problem with tons of $$$$, the cold hard fact is that demand for cars is now, and certainly for the foreseeable future, squat.   All automakers, but especially GM, Ford & Chrysler are hosed.

I'm concerned that, within a year, my Dodge Charger will join my Olds Cutlass as orphans. 

I agree that it's mostly unprecedented, at least in terms of the # of factors combining at the same time.  But I simply refuse to call this situation unforeseeable.

Any idiot off the street could have looked at the situation a few years ago and seen the problems coming.  The loan industry was off the leash five years ago.  A dead Chicago voter could have probably gotten a no-down-payment house loan and a zero-interest credit card.

WTF did the auto industry possibly think was gonna happen in the next few years?  The severity is a little unusual but not the basic issues. 

[Ghoste]

Are they the guilty party though or is it the consumer?  After all, we're the ones who wanted the big SUV's and to have all our material goods we could ever imagine on credit.

[Mike DC]

Are they the guilty party though or is it the consumer?  After all, we're the ones who wanted the big SUV's and to have all our material goods we could ever imagine on credit.

Well, I don't blame the consumer. 


Detriot in particular was given a free money-printing machine with the SUV/truck boom.  It was handed to Detroit specifically, not even to the whole industry.  Same with the American public's buying spree that was caused by the loan situation.   

The big three were known to be totally broke before/without these factors, and these factors were clearly historically unsustainable.  If they didn't use that money to prepare themselves for rougher times, it's not the consumer's (nor the country's) fault. 

[Ghoste]

I suppose we could argue endlessly about whose fault it is (since I don't completely agree with you  ) but it seems like while we play at being armchair CEO's and closet economists trying to decide who to blame it would be a lot more positive to tell them how to fix it.  Sadly I don't have that knowledge.

[1969chargerrtse]

Don't know but Automobile magazine just did a big spread on the volt coming out next year, and Motor Trend ( I think ?) did a big section on all the electrics coming out by Gm and Chrysler and some foreign cars, plus the soon to come Hydrogen cars.  Starting as soon as less than 2 years, cars on the road as you know them will be changing forever.  I think it's cool.  gas will drop even lower and we can drive around in some col American classics (cheap).

[Mike DC]

I'd love to see Detroit survive like that.  I suppose it could happen.  Too early to tell the future about alternative fueled vehicles right now.



But at the same time, if their work on the "alts" looks viable, I would think they could raise enough private money to save themselves.  I don't see how a need for govt bailouts or bankruptcy protection becomes called for.  Not unless the private sector just won't take the risk to cut them a break even though their long term situation looks reasonably viable.   (Maybe the private lenders just won't go long-term enough.  Or maybe the current lack of credit situation in the banking market creates a historically anomalous lack of investment, etc.)

[nh_mopar_fan]

Apparently, Hyundai is now interested.

http://www.cnbc.com/id/27599376