Bailout Watch 461: More Money, Same Threats

Robert Farago
by Robert Farago
bailout watch 461 more money same threats

The news that the Presidential Task Force on Autos (PTFOA) has decided to “loan” Chrysler and GM more money arrived well ahead of the March 31 (Tuesday) deadline. No less a personage than the president confirmed that Uncle Sam would turn a deaf ear to the 60 percent plus of America voters who oppose Motown Bailout III (Don’t forget the DOE tour). The announcement removed any possibility that GM bondholders and/or the unions would satisfy the previous loan’s conditions for a major debt for equity swap, or that GM would get its brands sorted out. To counter-spin this wholesale lack of “progress,” Bailout III will claim that new, piano-wire like “strings” are attached. Such as?

All I can find: GM bondholders and/or the unions will have to satisfy those same unsatisfied debt for equity/health care swaps. Or else. Here it is, via The New York Times.

Administration officials have said the bailout of the automakers is at a turning point, and the task force would intensify its oversight of G.M. and Chrysler until talks with the union and bondholders reached a conclusion.

Those officials also said the administration had no intention of nationalizing the auto companies or taking direct control of their managements.

Nor, apparently, calling the loans, putting Chrysler into Chapter 7, putting GM into Chapter 11, or removing current management and providing debtor-in-possession financing. Which is, was and will be the only sensible strategy or credible threat. Well, at least it was a credible threat until the Obama admin let it ride. Which they wouldn’t do again, would they? Meanwhile, here’s the thing . . .

The longer the feds keep throwing multi-billion dollar bags on the automakers’ IV pole, the less viable Chrysler and GM become. The process accelerates their product plan chaos (e.g., on-again, off-again GM products, the yes/no/maybe Chrysler Fiat hook-up); the constant erosion of command and control structure (employee cutback take their toll); and the brain damage caused by hitting their metaphorical heads against the same old walls (e.g., unions, debt, dealers, brands, products, inventory, marketing, technology). It has a cumulative effect.

As the Brits say, there will be tears at bedtime. Chrysler and GM will be worse off after federal life support than they would have been had they’d faced reality and filed. A C7/C11 would have forced the radical changes that the PTFOA seek. The damage to Chrysler and GM’s reputation would have been less severe.

Meanwhile, the new new federal loans aren’t a bridge to nowhere. They’re a road to nowhere paved in gold. Our gold.

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  • Rastus Rastus on Mar 29, 2009

    Did you have a shot or three of courage and decide to go on the that what this is? The definition above speaks for itself. If you don't know the full picture then you have no basis for declaring anything sound or unsound...financially speaking. That's don't need to go any further, my friend. If M3 is bullshit and is totally irrelevant, then why grace it with such a lofty title? Why even identify it? All those "others" cease to exist...we can just sweep them under the rug, right? But only for the U.S. GAAP only applies to corporations, right? Ok,...please...go stand in front of the mirror and calculate its coefficient of reflectivity with you in it....drinking your favorite brand of vodka. But of course, be sure you have a dimmer switch available so you can integrate your initial finding (at say, 100 watts) over the various levels of luimens from 0 to 250 watts. When you are finished, please report your findings in a scientific journal and submit to the CARB...they would love to hear from you. You are just their type...perhaps you can apply for the Chief Engineer role.

  • Pch101 Pch101 on Mar 29, 2009
    decide to go on the offensive There is nothing offensive about correcting Fox News' mistakes. I'm sure that it feels like an attack because you don't have an adequate rebuttal, but let's remember that you asked for someone to identify some factual errors and I complied with your request. You could thank me for helping you by providing you with a fact-based reply, but I suppose that such gratitude won't be forthcoming. The definition above speaks for itself. I think that we've established that they are different, albeit related. So, tell me, what makes M3 better than M2? As I stated previously, I want you to tell me **why** the absence of M3 poses a problem. Again, since this is **your** stated belief, I'm trying to get you to clarify and explain it. Since you believe so strongly in this position, it should be easy for you to explain it, shouldn't it?
  • Dusterdude The "fire them all" is looking a little less unreasonable the longer the union sticks to the totally ridiculous demands ( or maybe the members should fire theit leadership ! )
  • Thehyundaigarage Yes, Canadian market vehicles have had immobilizers mandated by transport Canada since around 2001.In the US market, some key start Toyotas and Nissans still don’t have immobilizers. The US doesn’t mandate immobilizers or daytime running lights, but they mandate TPMS, yet canada mandates both, but couldn’t care less about TPMS. You’d think we’d have universal standards in North America.
  • Alan I think this vehicle is aimed more at the dedicated offroad traveller. It costs around the same a 300 Series, so its quite an investment. It would be a waste to own as a daily driver, unless you want to be seen in a 'wank' vehicle like many Wrangler and Can Hardly Davidson types.The diesel would be the choice for off roading as its quite torquey down low and would return far superior mileage than a petrol vehicle.I would think this is more reliable than the Land Rovers, BMW make good engines.
  • Lorenzo I'll go with Stellantis. Last into the folly, first to bail out. Their European business won't fly with the German market being squeezed on electricity. Anybody can see the loss of Russian natural gas and closing their nuclear plants means high cost electricity. They're now buying electrons from French nuclear plants, as are the British after shutting down their coal industry. As for the American market, the American grid isn't in great shape either, but the US has shale oil and natural gas. Stellantis has profits from ICE Ram trucks and Jeeps, and they won't give that up.
  • Inside Looking Out Chinese will take over EV market and Tesla will become the richest and largest car company in the world. Forget about Japanese.