Posts filed under “Bailout Nation”

The 1980 Chrysler Bailout

A friend reminded me about this section of the book. This is an excerpt from early draft of Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy. Given the bankruptcy filing today, it is totally suitable.  (The final version is thematically similar, but different in actual content).

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The current no strings attached bailout demands of the Big 3 stands in stark contrast to the 1980 Chrysler deal. Regardless, the subsequent decades post-bailout reveals the deal wasn’t particularly good for either the industry or the firm’s employees.

In the 1950s, Barron’s described the Detroit automakers as the big two and a half – with Chrysler, the perennial sales laggard, as the half. When the embargo hit, Chrysler suffered the most of the Big Three.

By the mid-seventies, the company was hemorrhaging cash. Chrysler lost $52 million in 1974, and a record $259.5 million in 1975. As smaller, less expensive and more fuel-efficient from Japan and Europe gained increasing market share in 1970s, Chrysler found itself in an ever-deepening hole. It looked like they might have to declare bankruptcy.

As soon as the energy crisis ended, it was back to business as usual. 1976 a hugely profitable year: the company’s net income was $422.6 million. 1977 was profitable, but less so: $163.2 million net income. By late 1978, they were running in the red again, losing $204.6 million. The fall of the Shah of Iran and a new US Oil embargo sent prices higher once again. By 1979, Chrysler was looking at its first billion dollar annual loss.

Management decided to was time to visit their Uncle Sam.

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Category: Bailout Nation, Bailouts

Ratings Agencies Abject Failure

“Ratings agencies just abjectly failed in serving the interests of investors.” -SEC Commissioner Kathleen Casey > Nice takedown on the highly conflicted, over rated ratings agencies in Bloomberg yesterday: “Investors, traders and regulators have been questioning whether credit rating companies serve a good purpose ever since Enron Corp. imploded in 2001. Until four days before…Read More

Category: Bailout Nation, Legal, Markets, Regulation

Ugly Process: Rationalizing Insolvent Banks Existence

Of the many issues that arise via the banking bailouts we have seen, perhaps the most pernicious is how corrosive the process becomes. It corrupts even the most well intended parties. The latest example is the stress tests, which run the risk of being window dressing. As noted last week, the Stress Tests themselves weren’t…Read More

Category: Bailout Nation, Bailouts, Credit

After the Storm…Where Are We Now?

> My fishing buddy David Kotok is hosting a conference in Philly this week where I wll be presenting: The Financial System, Banks & Economy: After the Storm…Where Are We Now? The 27th Annual Monetary and Trade Conference: Thursday, April 30, 2009 The Global Interdependence Center and Drexel University’s LeBow College of Business Present: >…Read More

Category: Bailout Nation, Bailouts, Credit, Derivatives

Simon Johnson and Ferdinand Pecora on Bill Moyers

Bill Moyers speaks with economist Simon Johnson and Ferdinand Pecora biographer and legal scholar Michael Perino. Johnson is a former chief economist of the International Monetary Fund (IMF) and a professor at MIT Sloan School of Management, and Perino is a professor of law at St. John’s University and has been an advisor to the Securities and Exchange Commission.

click for video

moyers-johnson

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Bill Moyers

http://www.pbs.org/moyers/journal/04242009/watch.html

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Category: Bailout Nation, Economy, Video

Bailout Nation: Estimated Delivery May 8th

Wow, this is kinda cool: Amazon (but not Barnes & Noble or Borders) is showing an estimated delivery date for Bailout Nation on May 8th, 2009: >

Category: Bailout Nation, Bailouts

The Power of “The Daily Show”

Yesterday, I had a lunch meeting about Bailout Nation with the folks at Borders HQ in Detroit was quite interesting. I was over-caffeinated, and essentially babbled away for 2 hours. I did manage to remember to ask a few questions, and learned quite a bit. It was an education for me in a real “Art…Read More

Category: Bailout Nation, Bailouts, Financial Press, Television

Bailout Nation Update

The Bailout Nation manuscript has officially been accepted by Wiley. I am told we are on target for a mid-May publication date, with the book in the stores sometime before Memorial Day. (Makes for the perfect beach read!) You will be able to pre-order the book at Barnes & Noble or Amazon or Borders. A…Read More

Category: Bailout Nation, Books, Markets

Bailout Nation Cover

Well, here is the final version of the cover, by graphic artist/cartoonist John Sherffius. John also did the ‘toons that adorn each of the 5 Section pages. Its available for pre-order at Amazon with a May 4 publication date. > > His work is awesome . . .

Category: Bailout Nation, Bailouts, Books, Corporate Management, Credit, Derivatives, Federal Reserve, Markets

Bailout Nation Editor Quits McGraw Hill

I now have permission from the relevant parties to release this information: The week after McGraw Hill refused to publish the book as written, the editor I was working with there, Jeanne Glasser, resigned. Jeanne Glasser was the person who first approached me about doing this book. She was terrific to work with, and I…Read More

Category: Bailout Nation, Bailouts, Books