Obama: Bankruptcy Best Option for GM, Chrysler
Wow:
President Barack Obama has determined that a prepackaged bankruptcy is the best way for General Motors Corp. to restructure and become a competitive automaker, people familiar with the matter said.
Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest U.S. automaker can’t form an alliance with Fiat Spa, said members of Congress who have been briefed on the subject and two other people familiar with the administration’s deliberations.
While Obama two days ago gave GM 60 days to come up with deeper cost and debt reductions than the biggest U.S. automaker proposed in a viability plan submitted last month, the “quick and surgical” bankruptcy his administration described as an option appears to be inevitable, the people said. Obama personally signed off on asking GM Chief Executive Officer Rick Wagoner to step down, as he did on March 29, they said.
“Our focus is on accelerating the speed of our operational restructuring and reducing liabilities and debt on the balance sheet,” GM spokeswoman Renee Rashid-Merem said in an e-mail. “GM will take whatever steps are necessary to successfully restructure our company.”
Now if he only got religion about the banks . . .
>
Source:
Obama Said to Conclude Bankruptcy Best Option for GM, Chrysler
John Hughes
Bloomberg, March 31 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUFsRbmQyiJU&
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March 31st, 2009 at 9:12 pm
Might (hopefully) be a stern warning for the banks.
March 31st, 2009 at 9:16 pm
Gov. Granholm had a great defense for why America needs an auto industry on Hardball with Chris Matthews yesterday:
Everyone agrees that America needs to be energy independent for national security reasons. So what good does it do us to free ourselves from Middle Eastern oil only to become dependent on electric cars made in China?
March 31st, 2009 at 9:18 pm
wow, tom. with this plus what is going on in london right now, the markets should tank.
March 31st, 2009 at 9:23 pm
Think that report/link might be a hoax, ben22. Something’s not right with it. No MSM mention of it anywhere? Feels like a hoax to me. Let me know if you find out anything. I’ll do the same.
March 31st, 2009 at 9:29 pm
It is April 1st tomorrow. My bet is that it is an April Fools Joke and that we haven’t seen Bottom. BTW Mannwich, it’s been a pleasure reading you and the others (Leftback, Steve Barry, etc) over the last year or so.
March 31st, 2009 at 9:30 pm
Ya think Gov. Granholm might be sucking up to her constituents? And why should the auto industry enjoy special protections? And why should that taxpayers have to pay for it? And how are cars a national defense issue?
Seriously – was that a joke?
NPR had some “well-respected” hack saying that the reason GM didn’t make “small cars” was that Americans wouldn’t buy them unless gas was at $4/gal. Really? So why did GM lose so muc market share to foriegn companies that were selling “small cars” (his gross over-simplification, not mine) for the last 20 years, 18 of which gas was under $4/gal? Sadly, NPR didn’t challenge this idiodic statement.
The reasons that this hack was “well-respected” was that the car companies all bought his report. They bought it because it gave their executives intellectual cover for a piss-poor strategy from a so-called expert. As a strategist, it took about 30 seconds to figure out that his argument was utter nonesence, ironically, while driving in my American car. And they don’t pay me millions to make bad decisions for decades.
March 31st, 2009 at 9:31 pm
@DaveTheory: I’ll bet that’s it! I’ll bet you nailed it. What’s funny is I have a dentist appointment tomorrow morning. Am hoping any bad news (if any) is an April Fool’s Joke. Probably won’t be though!
Sorry for jumping the gun. I was a little suspicious from the get-go.
March 31st, 2009 at 9:39 pm
@gnomic:
A nation that produces nothing is a slave nation.
March 31st, 2009 at 9:44 pm
@Mann,
i can’t find anything on it anywhere which makes no sense at all. I checked every major web news outlet and nothing. I didn’t even think of April Fools. There aren’t even any videos on YouTube.
I don’t know why that freaked me out so much but it did. Pretty good joke, certainly got me.
March 31st, 2009 at 9:49 pm
What we are seeing is a classic competition over limited resources (those of the tax-payers as controlled by the govt), financials versus industrials and the outcome reflects the political balance of power. It is a wipe-out of the industrials indeed. It was easy to predict, so far, but the next round will be tougher. When the financial-cancer goes after the real flesh of the tax-payers, then we will be at singularities, and the script is harder to predict for now. Buckle up.
A preview can be read in the Atlantic magazine, http://www.theatlantic.com/doc/200905/imf-advice
and a better perspective on market evolution is always found by revisiting that old reliable book-friend ,
The Worldly Philosophers, so we can put things in context. It takes a couple of hundred of years of history to realize we are not alone, and the actors have been on stage before…
March 31st, 2009 at 9:51 pm
Got me as well for a few minutes but the more I dug for info, the more I felt like I was being duped. Something didn’t feel right about it.
March 31st, 2009 at 9:53 pm
I’m really hoping the autos are just a warm up act for O getting religion on the banks. I think that’s gotta be it. This is just a little preview of things to come.
March 31st, 2009 at 10:00 pm
OBAMA is Illuminati!!!
March 31st, 2009 at 10:00 pm
The last time I looked, the banks still ran the world. Enough money was funneled to Detroit so that the friends of the bankers got theirs, and now it time to buy up the cheap assets and round we go.
March 31st, 2009 at 10:01 pm
I’m glad someone official has finally said that Chrysler is dead. A pre-packaged bankruptcy would be good for GM but it can only happen if the bond holders and UAW can agree to terms in sixty days. I think it is more likely that GM goes into bankruptcy with a Treasury provided DIP with an exit within six months as a much smaller company and bondholders getting pennies on the dollar in stock.
March 31st, 2009 at 10:03 pm
Link to story at http://tinyurl.com/dlbhlb
March 31st, 2009 at 10:04 pm
I think Simon Johnson’s terrific article about a quiet coup is bang on. It certainly explains the kit gloves with the banks. A double standard if ever there was.
March 31st, 2009 at 10:09 pm
Obama isn’t going to get any religion on the banks. I hate to say it, but I think if he does, he isn’t long for this world. I think he’ll continue to cheerlead the banks. Time will tell though.
March 31st, 2009 at 10:16 pm
Come on Barry – did you really think there was any other option? The moral hazzard backlash is waiting to spring it’s ugly head again the next go round of the 1T printing press action to bailout the share/bond holders of the insolvent banks.
March 31st, 2009 at 10:17 pm
are you guys questioning whether Barry’s link is a joke? – no, seriously, are you??
the auto task force is run by Treasury which is run by Geithner – he’s notorious for sending out trail-balloon policy ideas through the press first to see what the reaction is
plus, Obama is effectively in open public negotiations at this point with GM/the UAW – nothing like a little threat through the press to get the wheels churning over on the other side
also, there’s a good piece on the WSJ website how this talk about a ‘surgical’ quick-strike bankruptcy is way over-optimistic – its going to be a tangled mess and will take way more time than is being stated – I won’t post the link, so all the conspiracy hounds can debate whether I made that up or not…
March 31st, 2009 at 10:32 pm
Barry,
I know you’ve brought up the fact that the automakers have been dealt with on much harsher terms than the banks, and not that I think that is OK, but I do see a difference between the two. With the banks, I think there is a *reasonable* chance that a large percentage (I’m not saying most) of them will repay the TARP money. I think any money we give the automakers might as well be lit on fire, because there is no way a dime of it has a prayer of being returned.
Bravo for Obama. I can’t see Bush or Mccain showing the leadership to do this. If we had more leaders who would make the prudent and unpopular decisions, we’d have a much stronger nation.
March 31st, 2009 at 10:33 pm
fraklin411 Says:
“A nation that produces nothing is a slave nation.”
excellent point
March 31st, 2009 at 10:36 pm
@ cfischer
I question your intelligence
March 31st, 2009 at 10:47 pm
I’ll underwrite ahab @, both, 10:33 & 10:36
March 31st, 2009 at 10:50 pm
On the surface, it does appear that Obama has some spine (with respect to the auto companies). But undoubtedly he’s going to be pumping more money into GM, and it remains to be seen how much. I’m expecting some sort of “smoke and mirrors” game in which problems get pushed off into the future. But I hope I’m wrong about that.
March 31st, 2009 at 10:54 pm
Obama’s a lawyer from a wealthy family, he’s comfortable with bankers, but union workers?
No Way, as Reagan so aptly said on class warfare:
“…the workers lost”
Obama is just finishing what his hero Reagan started. Obama isn’t conservative, but he is for the ruling class, Simon Johnson has it nailed.
March 31st, 2009 at 10:56 pm
Obama’s “hero” is Reagan? Really?
March 31st, 2009 at 11:03 pm
I agree Mannwich- bizzaro
@ mhoffer- glad to see you got my back
March 31st, 2009 at 11:07 pm
The potential hoax referred to is the one having London on fire…the GM one is true.
I’ve been waiting for the catalyst for the next leg down…thought massive hedge fund liquidation would have happened by now. But maybe it is a huge psychological event like this one…the moment where the MSM can no longer point to financial companies as being the main source of problems. Just reflect for a moment…General Motors bankrupt? What does that do to investor psyche as they unwind this puppy? Shareholders get washed…empoyees laid off…pensions cut…
March 31st, 2009 at 11:14 pm
Steve Barry: You have a target on the SP where you dump QID?
March 31st, 2009 at 11:17 pm
and bondholders take losses, dealerships cut- that’s survival- better than extinction- I think they can survive and do well once they become lean enough- that vehicle sales have dropped from 16 million to 9 million is crushing all the car makers.
March 31st, 2009 at 11:17 pm
I’m with you, Steve Barry. Have been accumulating QID and SRS during this latest fake rally and will wait for a replay of Jan/Feb. It’s coming.
March 31st, 2009 at 11:33 pm
Obama from a wealthy family? Really? What part of being raised by a single mom and paying off student loans is that? He is Ivy League, so I’ll give you that.
March 31st, 2009 at 11:36 pm
DaveTheory:
I am going to target the S&P to trade at around .6 times sales. Sales are now 950 per share and dropping, probably to 800..so S&P target is around 450. If sales are even worse, that target drops. I have seen long term charts that say the Dow is still within its uptrend at 3500, so that would make the 450 optimistic.
While I don’t trade in and out, I do look at sentiment and short interest out of habit…when I do sell QID, it would be with put/calls at very high levels…now the 10 day put/call is near decade LOWS…I ain’t selling.
March 31st, 2009 at 11:39 pm
Jeff,
I think that post-Dec. replay is looking like a good call, and SB makes a good point re: GM, noone, save the Trilaterals, is going to be liking that scene..can’t be seen as a + for the market’s mojo..+ “earnings”, no matter the expectations, if they hew anywhere near the *Truth of the matter, are going to blow..
ahab,
on calls like those, anytime~
March 31st, 2009 at 11:45 pm
Nice to see that folks are coming around to what Senator Bob Corker has been suggesting all along.:-)
March 31st, 2009 at 11:47 pm
Chrysler becomes the second largest bankruptcy ever at 186 Billion…GM at 90 Billion would be fourth after Lehman and Chrysler and Worldcom. Maybe Lehman shouldn’t be counted due to their pumped up balance sheet.
March 31st, 2009 at 11:51 pm
Heh, hopefully the auto industry is the test lab for what the Obama administration plans for the banking industry.
March 31st, 2009 at 11:56 pm
Obama’s “hero” is Reagan? Really? – Mannwich
http://dyn.politico.com/printstory.cfm?uuid=39214DE5-3048-5C12-0083EDB0E58945AD
“During his bid for the presidency, Obama has repeatedly praised the political gifts of Reagan, the modern president most revered by Republicans, and whose policies are still held in contempt by many leading liberals.
A year ago Obama compared Reagan favorably to President Bush in a primary debate while defending his pledge to meet directly with the leaders of hostile nations without preconditions. “Ronald Reagan called [Russia] an evil empire,” said Obama, but he also “spoke to the Soviet Union.”
In January, Obama came under fire from within his party after casting himself as an emotive heir to Reagan. “Ronald Reagan changed the trajectory of America,” Obama told a Nevada newspaper in January, noting that Reagan “tapped into what people were already feeling, which is: We want clarity, we want optimism, we want a return to that sense of dynamism and entrepreneurship that had been missing.”
________________________________
________________________________
Yeah, let’s face it, most Democrats got suckered.
April 1st, 2009 at 12:00 am
Auto industry bankruptcy has the possibility of bankrupting BlueCross and Blue Shield of Mich and Ohio, due to all of the GM retirees and workers they provide services for. Other unthought of consequences will follow that will add to the confusion and drive the market down.
April 1st, 2009 at 12:04 am
@S Brennan: I know what you’re getting at, but I hardly think that Reagan was/is Obama’s “hero”. He was using Reagan as an example of leadership and inspiration but certainly the two share very little (or no) resemblance to each other politically.
I’m not totally happy with O either at this point but I think it’s a bit early (75 days into his presidencY) to totally write him off, don’t you? I’m willing to give him more time before making the judgment.
April 1st, 2009 at 12:06 am
inflated sense of self worth…
can that be said enough? Johnson’s quiet coup is the best piece of sharkbait I have read in a while. Lets hear that populist engine roar. Trample and drown is the last bailout.
April 1st, 2009 at 12:13 am
Obama from a wealthy family? Really? What part of being raised by a single mom and paying off student loans is that? He is Ivy League, so I’ll give you that. – larry
Obama was born into a well off family, in the fact that he did not need to work or support himself in any way. He was actually raised by his wealthy grandmother, while his mother married a wealthy oil minister in Indonesia. He attended the best private schools in Hawaii. Obama attended a grade school that cost 14K per year, more than most Universities at the time. His relatives in Kenya were also well-to-do..as was his step-father..There are no records he actually worked at anything as a teenager or young adult. Even as a grown-up, he was supported by his family. Taking student loans does not make you poor, it makes you credit worthy….jeeze.
April 1st, 2009 at 12:31 am
Confirmed by Detroit’s NBC affiliate:
http://www.clickondetroit.com/news/19060632/detail.html#-
It is too bad for bondholders, suppliers and employees that the Democrats took six months to realize that which is blindingly obvious to anyone who can read financial statements. These companies needed to be put into a pre-pack BK last autumn when auto demand collapsed. If they had been put into BK last autumn, they would have had a lot more cash left with which they could deal with their problems.
April 1st, 2009 at 12:35 am
“Now if he only got religion about the banks . . .”
Never happen. Why? Banks are part of the aristocracy. Same as politicians. Not expendable.
Autoworkers are comprised of a few million middle class and lower employess. They’re serfs.
April 1st, 2009 at 12:44 am
Silliness,
This is only the beginning of a welcome revolution!
Calling all “bean counters”, you better bone up on the term natural capital!
And do it like yesterday! Google it…and don’t get all cross-eyed. Save that look
is for CNBC!
The Monopoly game is over folks!
We’re officially in the peak oil period…and everyone with a brain knows it but doesn’t want to say it!
Why not…We’re already teetering on global panic with the blackmailing financial system…
Just come right out and spill the petro Juan Valdez…(sorry alaska, couldn’t resist)
The smart move (or money in your terms ) says let Babylon fall now! (“Burn it all baby!”)
…and there might be enough of us left over to get beyond oil…
And for all those on this board who think we’ll find petro alternatives in time, well let’s just say
a have a big stack of Citi Derivatives to sell ya! They’re a real win win…honestly, you can’t really lose
in the game of Monopoly – right?
Ya know I was angry for a while…but now I just view you guys and gals as a bunch of freak’in aliens
who came to fester on this planet and suck it dry. Like a bunch parasitic hyenas!
This Mantra that the Financials run the world…wtf! Bone up on natural capital and we’ll talk about it!
All of you need to put your Financial Monarchies back to hell where they came from!
Perhaps someone will invent flavored money soon for you aliens…cause your gonna need your nourishment during the revolution!
We real homosapiens need your compost…no fossilization required!
How’s that for April Foolishness…
=)
P.S. I find it quite ironic that the “Boomer Generation” has come to bust!
Get it, boomers to bust…how bout boomers to dust…
April 1st, 2009 at 12:47 am
In case there was any wonder, the G20 Anarchist Fire article uses a photo from Feb 10:
http://tinyurl.com/37wj4a
So.. yeah, april fools
April 1st, 2009 at 1:45 am
@ S Brennan,
Well, your comment shows how anybody can throw crap out there and someone will believe it. “Wealthy oil minister in Indonesia” — oy.
April 1st, 2009 at 2:57 am
Level of discourse here is way below usual levels of quality. On a real-world, historical basis, Obama taking on GM is far more important than the banks. Technologies drive economies and cultures. GM is the equivalent of an IBM 386 or Mac SE. GM needs to be destroyed so that it can return from the ashes to live again. GM still clings to the same pre-1973 business model it has always had: American men want big cars and trucks because it makes them think their *** are bigger. Women, for the same reasons. This business model does not work with $4 gas. Or $2 when you are unemployed.
April 1st, 2009 at 7:51 am
WASHINGTON (Reuters) – President Barack Obama’s thinking on the crisis facing General Motors Corp has not changed since Monday, a senior administration official told Reuters on Tuesday.
“Nothing has changed on this,” the official said when asked about a Bloomberg report that the president has determined that a prepackaged bankruptcy is the best way for GM to restructure and become competitive. “This report is not accurate.”
The White House wants the 60-day period for GM and a 30-day period for Chrysler to play out, as announced by the president on Monday, the official said, speaking on condition of anonymity.
Clearly the Bloomberg story BR referenced appears to be a trial balloon, as a reader referenced above. The Reuters story that later came out denying the accuracy of the BN story indicates that Obama took a lot of heat for that balloon trial. The reactionary push back to Obamas bankruptcy plan for GM must have been strong for Obama to come out and not only retract the statement but deny its accuracy.
My take on this: Obama wants a “timeout” and clearly showing that he is out of his depth here. Meanwhile, the 30 day grace period for Chrysler is untenable.
March 31 (Bloomberg) — Chrysler LLC may face an “impossible goal” in completing an alliance with Fiat SpA and meeting an Obama administration deadline to erase debt and win more union concessions by April 30. “It is an impossible goal,” said Sheldon Stone, a partner at Amherst Partners LLC, a restructuring firm in Birmingham, Michigan. “The likelihood is that the 30-day period is going to allow Chrysler to get their house in order for a bankruptcy.”
“Given the magnitude of the concessions needed, the most effective way for Chrysler to emerge from this restructuring with a fresh start may be by using an expedited bankruptcy process as a tool to extinguish liabilities,” Obama’s task force said.
“I don’t really see how this is going to get resolved in the next 30 days,” said Stephen Spivey, an automotive analyst at Frost & Sullivan Inc. in San Antonio.
From Bloomberg’s Chrysler story we can discern that “given the magnitude of concessions needed” Obama intends to use the 30 day grace period “to allow Chrysler to get its house in order” for bankruptcy as Sheldon Stone said and not as a “one more chance” option that Obama disingenuously spewed out over the weekend.
So sad, too bad for Chrysler. Given that trial balloons tend to become policy and given that Chrysler is a foregone conclusion for bankruptcy, GM is likely to be a goner too 60 days hence. Particularly in light of the Obama admins summary report on GM:
“What the administration is asking for ‘will require creditors to recognize that they can’t hold out for the prospect of endless government bailouts,’ Obama said. ‘Unions and companies must also make sacrifices, he said. GM’s best chance at success may include a “quick and surgical” bankruptcy, according to a summary given to reporters by the administration.”
The irony will be rich if and when Obama decides to allow GM to stay alive. That will put the gubmint in the awkward position of deciding which companies get to survive and which companies get to die.
@cfisher: Of course the banksters will want to soon pay back TARP funds. And guess what, Geithner, stroke of genius that he is, has come up with a scheme to make that possible in May 2009 when he launches his PPIP program to artificially inflate the price of their toxic waste which will enable the banksters to unload their crap at insanely unjustifiable prices. This too will be taxpayer funded and guaranteed. And that is how the Banksters will refund the legally expropriated TARP dollars. And you know what the sad part is to this fairy tale story ending? The sad part is the banksters and Obama administration will be self-congratulatory, patting themselves on the back and tell us the taxpayers who just overpaid for the banksters toxic waste (which we will simultaneously gift to PIMROCK so we better all make sure we inflate our gift deductions on our tax forms) that the Banksters are actually being the good guys here. I shit you not, that is precisely what they will do, say “look, we are the good guys here, we are giving the taxpayers back their TARP dollars.” Sure, they will have stuffed our TARP dollars back in one pocket, after they have expropriated even more dollars from our other pocket!
Under Geithners scheme, the ill
April 1st, 2009 at 8:02 am
Banks are walking away from foreclosures! Lots of reasons, one that I think of is the banks don’t want their FC sales to bring down market values further before Tiny Tim’s Toxic scheme transfers title on these
http://www.nytimes.com/2009/03/30/us/30walkaway.html?ref=business
April 1st, 2009 at 8:06 am
“Yeah, let’s face it, most Democrats got suckered.”
I think that was true of ’006
in ’008 most everyone got taken..
see: http://www.youtube.com/results?search_type=&search_query=the+obama+deception&aq=f
and, Jeff, 7.5 days, 75 days, 2 years, leopards and spots and all that..
April 1st, 2009 at 8:07 am
Abandon ship!!!!
http://www.nytimes.com/2009/04/01/business/01boats.html?emc=eta1
April 1st, 2009 at 8:08 am
Walkaways and floataways, this is truly a tossaway society!
April 1st, 2009 at 8:19 am
No bankruptcy for the auto companies. At least for another 4 years. Look forward to four more years of continuing expressions of ‘best route is bankruptcy’ jawboning.
And with the left hand he and a democratic congress will take taxpayer monet, from people making minimum wages no less, and will put GM, Ford, and Chrysler (read: Autoworkers, UAW, $75.00 and hour wage and benefit packages for four more years, at least) in bankruptcy when heaven is populated by lawyers, politicians, and “The Chosen” investment bankers .
April 1st, 2009 at 8:54 am
@ Douglas Watts 9 at 2:57 am
“Level of discourse here is way below usual levels of quality.”
Agreed.
Surprised to0 at MEH endorsing ahab’s ad hominem. Usually he lets folks’ comments speak for them, no need for takedowns.
Really, I come here primarily for BR’s and commenters’ info and insights (including opinions) on markets and the occasional good humored banter economy, not for disparagement of other commenters and their inanities.
April 1st, 2009 at 9:04 am
batmando,
I didn’t see it that way..to be clear I started out to endorse ahab’s take on franklin’s point:
fraklin411 Says:
“A nation that produces nothing is a slave nation.”
excellent point
then, added on by seconding his view of cfischer’s post: “I question your intelligence”..
I’m not sure if I see the ad hominem..
w/this: “With the banks, I think there is a *reasonable* chance that a large percentage (I’m not saying most) of them will repay the TARP money. ” –cfischer
I will question his *intelligence*, I think he’s dreadfully wrong, and would love to his Proof..
April 1st, 2009 at 9:11 am
@MEH
Not referencing your amen to ahab’s take on franklin’s point which was fair comment, not ad hominem.
I now understand your take on “intelligence” as data, rather than questioning cfischer’s mental capabilities which is what I took to be ahab’s intent.
April 1st, 2009 at 9:22 am
batmando,
as we know, text is, sadly, on occasion, 2-d
past that, I think in ‘text-land’ it gets scored as NHNF..
April 1st, 2009 at 9:43 am
w/this: “With the banks, I think there is a *reasonable* chance that a large percentage (I’m not saying most) of them will repay the TARP money. ” –cfischer
————-
On other boards, I’ve seen the argument that many banks will use other bailout money to repay the TARP, making it look as if the banks are in better shape than they really are.
April 1st, 2009 at 10:14 am
Socialized losses for the banks and capital losses for main street workers. Think of the pensions, healthcare and retirees hurt by this one.
April 1st, 2009 at 10:56 am
@ GB at 10:14 am
“Socialized losses for the banks and capital losses for main street workers. Think of the pensions, healthcare and retirees hurt by this one.”
On previous thread(s), I expressed a preference that if there are to be bail-outs they ought be bottom-up.
The corollary, let the hits be from the top down, stop lying to ourselves, and let losses be allocated according to each and everyone’s exposure through their investments. Better than bankrolling insolvent banksta’s in perpetuity with our tax dollars.
April 1st, 2009 at 12:11 pm
As much as I dislike obama he is right on this one. The auto industry needs to go chapter 11 and regroup. Of course it also lets him control one of the largest industries in the nation and serves as a message where he is taking us, “a kinder, gentler,” fascism.
April 1st, 2009 at 12:43 pm
@Bruce N Tennessee Says:
April 1st, 2009 at 11:33 am
Lockyer: Trouble getting bank credit may prompt need for federal bond aid
I’d love to see the press conference where Schwarzenegger says “Collifornia needs a bond aid”
April 1st, 2009 at 1:11 pm
@batmando
cfischer Says:
“I think any money we give the automakers might as well be lit on fire, because there is no way a dime of it has a prayer of being returned.”
and:
“With the banks, I think there is a *reasonable* chance that a large percentage (I’m not saying most) of them will repay the TARP money”
My comment was short- I was questioning cfischer’s reasoning skills- the two scenarios are highly unrelated but we do have a precedent with an auto company loan from the federal government being paid back with a profit to the USG- Chrysler. The banks and financial firms such as AIG on the other hand are getting federal money which is astronomically more (50X??)than the auto companies with no end in sight and which may require complete nationalization at taxpayer expense for years to come and have singlehandedly compromised the global economy. Thus my comment. I’ll stick by it.
April 1st, 2009 at 1:57 pm
@ call me ahab at 1:11 pm
Understood comments hereon are often short, even cryptic, sometimes impenetrable (@ MEH ;<).
Take little exception to your explication of the two scenarios, e.g., these quibbles
(1) foggymemory – were not Chrysler loans only Federally guaranteed? I don’t recall a return on the guarantee
(2) banks may “re-pay” TARP I funds from right hand pocket, where the TARP $ were stashed, with taxpayer $ funnelled nto their left pocket through AIG and other rigged games to come.
Back to the main thrust of my comment, questioning someone’s reasoning is fair game, whereas questioning their intelligence is something else entirely that adds nothing and does nothing to further the discussion and leads to tit-for-tat.
April 1st, 2009 at 3:26 pm
i doubt the banks will ever repay the loans. after all how many of them make billions ever year in profit? they would have to make ExxonMobil numbers from last year to pay it of in a short time period. and the oil company isn’t that profitable this year. and if GM goes in bankruptcy i don’t see chance of it not ending up chapter 7. with the debt holders not wanting give in as it seems, they might end up with pennies on the $1000. And i don’t see what Fiat offers to Chrysler. they aren’t going to put money into it (they don’t have any either). and the cars won’t be available for at least 2 years with investment (which is not happening now. why would they do it later?).
the best bet is to force GM and Chrysler together, and I suppose split off the unprofitable parts. but not sure that will not end badly too.
and why not do this same thing to banks, only make the new business an investment bank with all of the bad assets, that the new business has to pay full price for. then shut the new one down?
or the government buys the toxic stuff, but the banks are on the hook for the life of loans if they go bad?
April 1st, 2009 at 4:42 pm
@ batamando-
from newsday:
“Chrysler avoided bankruptcy and eventually drew down $1.2 billion in loans and repaid them within three years – seven years early. The automaker turned a profit in 1982, and the government made $311 million in the sale of stock warrants and another $25 million in loan guarantee fees”
from websters:
ad hom·i·nem Etymology: New Latin, literally, to the person
Date: 1598
1 : appealing to feelings or prejudices rather than intellect
2 : marked by or being an attack on an opponent’s character
batmando Says:
“questioning their intelligence is something else entirely that adds nothing and does nothing to further the discussion and leads to tit-for-tat.”
good point- my comments are typically to the positive but . . . sometimes Mr. Meanie shows up.
April 1st, 2009 at 4:54 pm
@ call me ahab at 4:42 pm
Thanks for citing the reference (I am abashed, as MEH sometimes reminds us, let’em do their own homework), I appreciate it, having been such a wee lad (not) when Chrysler went through the wringer the first time. Hmmmm- I wonder what Lee’s up to these days?
Also appreciate that yours was but a mild breach compared to some of the near-flaming tangents in which some hereon indulge.