Auto Company Plans Rejected by Task Force « naked capitalism

Monday, March 30, 2009

Auto Company Plans Rejected by Task Force

Oh, so there was even more to the GM Wagoner resignation than met the eye.

So how come no bank turnaround plans? Oh, if they were no good, the government might have to get tough with them. Can’t have that, now can we?

From CNBC (hat tip reader Dwight):

The announcement by the White House autos panel headed by former investment banker Steve Rattner marked a stunning reversal for management at both automakers and for GM investors and creditors who had bet on a softer line.

“We have unfortunately concluded that neither plan submitted by either company represents viability and therefore does not warrant the substantial additional investments that they requested,” said a senior administration official, who asked not to be named…..

he White House says neither GM nor Chrysler submitted acceptable plans to receive more bailout money, setting the stage for a crisis in Detroit and putting in motion what could be the final two months of two American auto giants.

President Barack Obama and his top advisers have determined that neither company is viable and that taxpayers will not spend untold billions more to keep the pair of automakers open forever.

In a last-ditch effort, the administration gave each company a brief deadline to try one last time to convince Washington it is worth saving, said senior administration officials who spoke on the condition of anonymity to more bluntly discuss the decision.

Obama was set to make the announcement at 11 a.m. ET Monday in the White House’s foyer.

From Bloomberg:

General Motors Corp. and Chrysler LLC must overhaul their recovery plans with deeper concessions to justify further taxpayer aid, and bankruptcy may ultimately be their best chance, an Obama administration official said….

Detroit-based GM sought as much as $16.6 billion in additional aid after receiving $13.4 billion since December. Chrysler sought $5 billion after receiving $4 billion. Both had to show progress by the end of this month in matters such as GM’s need to reduce unsecured debt by two-thirds.

Neither company completed the tasks, the administration official said. The aid plans submitted to the government Feb. 17 don’t warrant additional assistance, the administration concluded. GM’s plan to cut unsecured debt by two-thirds wasn’t sufficient, and Chrysler’s debt was far beyond what the company could sustain, the official said.

GM’s plan wouldn’t lead to success even in an improved economy, the administration found. The new strategy sought by the administration would focus on sustainable profit and significant changes in brands, workforce, nameplates and the retail network.

It would be better if we were wrong, but we are of the school that putting the big automakers into bankruptcy, despite its attractions (being able to restructure debt and dealer networks; the UAW contracts are far less significant economically than the media makes them out to be) misses out on one crucial element: you don’t have a business if you don’t have customers. And a GM bankruptcy would be a protracted affair. Even if consumers believe the company will make it, what about their local dealer? If they worry they might have to schlepp to get their car serviced, is it worth it?

In typical backwards American deal and contract focused thinking, the officialdom has not spent enough time assessing the single most important issue: how would customers react? If GM and Chrysler were to lose as many as 20% of sales they’d otherwise get as a result of a bankruptcy filing, that it is a very big change in outcomes. And the drop could be considerably higher than that.

I worry that this punitive move will wind up being Lehman redux. Recall that bailout disgust was running high post Bear and Fannie and Freddie, and Someone Had to Suffer to show the Administration was made of real men. Now since no one even dares bitch slap a bank (the bonus stuff is mere Punch and Judy), all the hostility is channeled at Big Auto. And the danger is going into overkill literally, not just figuratively, to make up for being too easy on the financiers.

And if GM or Chrysler were to be liquidated, the knock-on effects would be grim. They are important to quite a few parts suppliers. If those suppliers fail, it threatens the viability of the foreign transplants.

The markets appear to share these reservations. The Nikkei had been down, but has fallen further, S&P futures declined from 10 points down to 13 points down, and Treasuries have strengthened from their earlier in the evening levels.

43 Comments:

Anonymous says:

March 30, 2009 at 12:46 am

Yves
The plan does IIRC include govt guarantee for warranties and some help in financing
http://big.assets.huffingtonpost.com/AutoPlan.pdf is a copy of the plan that had been embargoed till midnight.
pls

FairEconomist says:

March 30, 2009 at 12:53 am

If they had BK’d GM and Chrysler in December, as they should have, then they would probably be well on the way to a secure resolution and customer confidence would be recovering. It’s not like BK would be a big extra hit to dealing with customers; as it is people are terrified to do business with them anyway.

Given how underwater GM and Chrysler are, and the complexity and number of people it has contracts with, fixing them by voluntary stakeholder/creditor/dealer concessions is impossible due to free rider effects. BK is inevitable; the sooner it’s started the sooner it’s done.

Anonymous says:

March 30, 2009 at 12:56 am

I’m not convinced by the argument that bankruptcy is going to scare customers away. Any sane customer is already terrified of these companies, bankruptcy or no. So they’ve already taken the hit.

esb says:

March 30, 2009 at 1:04 am

I am sorry to say that this “position” of the Obama Administration is nothing more than another con, though it is difficult to say who is being conned here, the UAW, PIMCO, the American people, the attendees at the G20 gathering or all of the above,

but it is certain that what is presented at 11:00 today is not what is ultimately intended.

But the show must go on, and on and on it will go.

Anonymous says:

March 30, 2009 at 1:18 am

They are going to try and scare the American public into believing that the banks really are too big to fail. They get to stick it to the union at the same time. What is not to like about this move?

Sick fascist #%&@!

psychohistorian

Anonymous says:

March 30, 2009 at 1:25 am

The Obama administration needs to start making heads roll at the large money center banks or they will start seeing civil unrest (that is much harder to predict or control).

If the large banks are not forced into bankruptcy soon, reasonable people will begin to doubt the administration’s intentions and integrity.

Obama seems to have a good political ear, so he will hopefully ensure that the needful is done sooner rather than later.

Yves Smith says:

March 30, 2009 at 1:26 am

Anon of 1:46 AM,

The issue is not the warranties. The issue is your local dealer. Now that these cars are full of telematics, you can’t go to any old repair shop, warranty or no. You have to go to someone who has the electronic goodies that are in your car. You have to go to a dealer, and the dealer networks are clearly going to be trimmed. What if you buy a car in your town, and six months later, that dealer is shuttered and the nearest dealer is 60 miles away?

And the warranty provision is merely a financial guarantee. If GM goes under, rest assured the government is not going to take the steps to assure parts, again those telematics, will continue to be available, That will kill resale values. Think you can find parts for a discontinued car five years down the road?

Anon of 1:56 PM,

Previous surveys have found that 80% of prospective customers said they would not buy a car from a company that had filed for bankruptcy. No auto company has every emerged from bankruptcy.

This is something that could have been assessed pretty well via conjoint analysis and other survey methods (simple questions or focus groups not the best format).

Instead, we have people who are for the most part not in the target buyer universe making assumptions based on their prejudices on how buyers might react. You need to go to real buyer candidates and find out. The failure to do so is inexcusable.

This is the single most important unknown, and it has not been studied with any rigor (from what I can tell, not at all).

Yves Smith says:

March 30, 2009 at 1:29 am

FairEconomst,

The Deal went through in some detail what a GM bankruptcy would entail. If they had BK’d at the beginning of 2009, they would not emerge until late 2010.

What do you think it would do to confidence about the future of the cars to have the BK a news item for seven to eight quarters?

With all due respect, a lot of people are offering opinions without understanding what an enormous process this would be.

pigeon says:

March 30, 2009 at 1:30 am

Here in Germany, we had the threat of Opel (a GM Subsidy) default for quite some time, since the top government signaled it won’t orchestrate a bailout and labeled Opel ass not being “systemically relevant”. Nevertheless Opel sales picked up significantly recently due to the “Abwrackprämie” that helps especially producers of smaller cars. I think the reasoning of the customers is that a big brand like Opel will not cease to exist even if the company goes bankrupt. I would assume this to be even more the case for customers of the big three. Thus I would argue a bankrupcy of these totally messed up institutions would be the preferable solution.

Anonymous says:

March 30, 2009 at 1:31 am

Yves,

They are not liquidating the companies, just financially restructuring them (perhaps with a pre-package bankruptcy).

So the companies will continue to make and sell cars, dealers will continue with minimal disruption, and parts makers’ can continue production.

Post-bankruptcy, both companies’ cost structures will allow them to produce cars that are more competitive, improving the dealers and parts makers own outlooks.

Anonymous says:

March 30, 2009 at 1:35 am

pigeon,

Interesting, but not sure that applies to US. Opel could probably be bought by another auto co. GM too big for that, and not sure any tidy way to break it up (save foreign brands like Opel).

Russ says:

March 30, 2009 at 1:36 am

My first reaction was that Wagoner, a relatively small fish, is being sacrificed as misdirection from what is clearly a Geithner/Obama policy priority to maintain the big bankers in their jobs.

I think a clear sign that a system is no longer democratic capitalist but rather corporatist is that no one loses his job even over major screwups. Thus we have:

1. No one fired over 9/11.

2. Vis Katrina, Bush got rid of “Brownie” only under extreme duress. (I would bet that to this day Bush still doesn’t understand what Brown did wrong.)

3. Now no one since Fannie and Freddie is to lose his job over the planned destruction of the global eceonomy.

It’s clear that no one but ideologues could think it’s reasonable, moral, or desirable to retain the existing management of these banks, and in the administration we obviously have such ideologues.

Yves Smith says:

March 30, 2009 at 1:39 am

Anon of 2:31 AM,

I am well aware of the difference between Chapter 11 and liquidation. There is no assurance that a company that enters Chapter 11 will actually emerge. As noted earlier in comments, an auto company BK is an unprecedented event in terms of scale and complexity, and would take nearly two years to complete. If sales were to deteriorate far enough, a resturcturing would no longer be viable and the company would be liquidated.

bg says:

March 30, 2009 at 2:00 am

Yes, but the government might have concluded that a BK/government DIP is better than an endless rentseek.

I did notice in one article that the government has agreed to guarantee the warrantees, which is a first step to prevent the customers from abandoning the franchises.

We are going to see if it works.

It may have been a bad idea to let LEH fail, but had they supported LEH they would have had to support AIG, C, BAC too (oops… that happened anyway).

I think there is little chance of unlimited bailouts happening, so they decided to take their chances with BK. Again, the government will come up with the DIP, to save some of the jobs.

ndk says:

March 30, 2009 at 2:03 am

Very glad to see this action, for the same reasons bg enunciated above. Kudos.

But it could not have been communicated worse. Ugly and unprofessional to have it dribble out like this. Let’s see a little discipline and management.

IF says:

March 30, 2009 at 2:10 am

My “fun car” is an old Isuzu Rodeo, which I bought used and drive on road trips and on dirt roads in the desert and the mountains. Isuzu abandoned the US market. But any independent repair shop will work on the car, as the car parts are surprisingly standardized. Cars are a huge market and many parts are exchangeable. Even for electronics one can find aftermarkets suppliers. The sketched prospects might be inconvenient to customers, but hardly end-of-life for the affected cars in case repairs are needed etc. Cubans are still driving cars that look like US cars from the 50s. Worst case other cars are cannibalized or duct tape applied.

Anonymous says:

March 30, 2009 at 2:21 am

IF,

An old Isuzu is not comparable to a car of the last 5 years. Apples and oranges. My understanding is a lot of the electronics are specific to the car maker. Do you think you can put just any old memory module into your PC? Same issue. If someone informed tells me otherwise, I’ll listen, but your car experience is irrelevant, and I’ve been told different (admittedly, my experts could be exaggerating).

And even if you could find the parts, I buy the business about resale. You are not going to pay as much for a car if you think you might have to scrounge to find parts.

Anonymous says:

March 30, 2009 at 2:38 am

I’m so naive.

I’d always thought the problem with an automaker BK was with the consequences of speculation on the credit default swaps.

Silly me.

Peter Pan

IF says:

March 30, 2009 at 2:51 am

Anon @3:21, let me rephrase my statement: Cars are commodities. Even shiny new ones.

vlade says:

March 30, 2009 at 2:59 am

Yves,
GM cannot survive as it is regardless. If the company was bleeding money in times where everyone bought cars left, right and centre, how can they survive when much better car manufacturers suffered 30%+ sales drop?

Basically, the industry has HUGE overproduction capacity, and that is not going to be taken equally of each producer. The worst and weakest ones are going to the wall, and that, for better or worse seems to include GM and Chrysler. You drink too much, you get a hangover. Anything else is wishful thinking.

Even Europen “eco” car subsidies aren’t making much difference, as people use them to buy small cheap cars – basically the cheapes possible car applicable.

The best situation is to figure out a way of saving parts suppliers – they will have to downscale, probably dramatically, but might be able to save them.
Ford should be saveable too. Triage, eh?

And yes, the same should apply to banks. The fact it doesn’t does not mean that it shouldn’t apply to car manufacturers or someone else. Two wrongs don’t make one right.

Anonymous says:

March 30, 2009 at 3:22 am

Anon @3:21 – bad anaology. True, you can’t put *any* memory module in your PC. But you can put in any memory module that matches the industry-standard technical specifications accepted by the motherboard and CPU, which is generally speaking satisfied by a large variety of modules from many suppliers (none of whom are either the motherboard or CPU vendor, for that matter).

Michael Fiorillo says:

March 30, 2009 at 4:46 am

It seems to me highly likely that these companies will eventually be liquidated, given the gravitational force of investment bank predation. The IBs will continue to engorge on the fees generated by the liquidation of all that productive capacity which, while excessive for private autos, could have been re-directed toward rails, light rail and mass transit.

Instead, we’ll see finance continue to prey on the productive capacity of the nation, as we’ve seen for the past 30 years.

It should be good enough to get these characters a few more meals at Nobu and Per Se in Manhattan, but it’s a catastrophe for the rest of us

Bendal says:

March 30, 2009 at 6:08 am

Until consumers gain enough confidence in their own financial future to start buying big ticket items (especially cars), the auto manufacturers are going to continue to struggle. Dealerships are stuffed to the gills with new cars they cannot sell; no one is coming in to look, much less buy right now, although used cars are selling (but that doesn’t help the manufacturers).

No amount of money given to the manufacturers will help their situation until consumers begin buying again.

patrick neid says:

March 30, 2009 at 6:36 am

Plans and hobgoblins everywhere. God forbid we trust the marketplace to work out the details. No, can’t do that, the market’s too stupid. We the anointed know better.

If GM and Chrysler were worth saving they would have saved themselves a long time ago. To big to fail is a canard trotted out by folks who don’t trust the market but instead sit around large tables and pretend they have a clue.

And please save the lame excuse that it was the market that got us into this jam to begin with. Politicians, Repub/Dem and the government establishment have had their boney little fingers around the golden goose’s neck for decades. We have been collectively trying to prevent the business cycle from functioning for the better part of 30 years, some would suggest much longer.

Alex says:

March 30, 2009 at 7:26 am

Yves,

It’s hard not to get emotional about some of this because my father has been a General Motors employee for 31 years now.

General Motors paid for my college education at the University of Michigan. General Motors provided a salary for many middle class families that also helped doctors, dentists, attorneys, etc. The trickle-down effect of General Motor’s existence should not be understated. The value-add for this wealth generation and distribution, while it lasted, was significant.

While I’ve become better acquainted with and generally support economic Darwinism, I can’t help but feel that General Motors gave what it could to the common man. It created a middle class in Detroit. So when I see the decrease in real wages since the 80’s and the growing gap between the pay at the top and bottom, I’m not really surprised.

We’ve gotten exactly what we wanted.
Welcome to the new America.

run75441 says:

March 30, 2009 at 7:26 am

Yves:

Deeper Concessions? I wonder what those could be? Preventing the business cycle from occuring? Don’t make me laugh.

Other than wringing money out of bondholders and forcing retirees to give up healthcare, what ideas do you believe a bunch of Washington podunks with manicured nails could come up with besides bondholders, union workers, and retirees? This will not solve the issues with automotive and manufacturing as these problems are not solved by accountants and bankers.

Wrong target once again and Obama and administration are taking out their anger over AIG and Merrill on bonuses in a misguided effort to appease an angry constituency that is looking for blood on W$. Toss the public a bone and show them how tough we are with upper management. We will sack automotive and divert the public’s attention away from W$ and the $170 billion we have given to AIG and the $billions that went to other W$ firms. After all it is just Michigan and Ohio and anything wet of the Hudson is a wilderness anyway.

In all fairness, the issue is still plants, product lines, standarization of parts across carlines, with people as the fallout from the closing of the plants and the elimination of the product lines. To get down to a 10-13 million automotive year and reduce the cost of operations and manufacturing; this is what it takes and yes the unions will suffer as a result but then Labor is still incrementally smaller than the Burden (plants and bennies) and Materials (carlines and parts). Drucker and company have to be rolling over in their graves. Automotive was well on its way to resizing its manufacturing capabilities before W$ dove off the cliff last year, the economy started to contract, banks froze up, and people stayed home.

Paul Krugman has a nice article today called the “America the Tarnished.” He discusses the dynamic trio who saved the global financial system and the results of their actions then . . . Greenspin, Rubin, and Summers as featured on Time’s cover. Maybe it is time to feature them again in a post-op report.

chris says:

March 30, 2009 at 8:13 am

Almost time to turn the business over to Goldman Sachs to prepare the sell off to foreign “investors”, wouldn’t you think?

sanjay says:

March 30, 2009 at 8:23 am

I believe there was a poll that showed people were more likely not buy a car from a company receiving financial aid from the government then they were from a company in bankruptcy. Irrespective of the poll the numbers show Ford picking up market share and the GM and Chrysler losing it. So the entire premise of this post is invalidated. It is between dying slowly surely as customers deserted a financially uncertain company (the posters plan) or perhaps dying quickly but with a chance of recovering.

Anonymous says:

March 30, 2009 at 8:31 am

The announcement by the White House autos panel headed by former investment banker Steve Rattner

Not an engineer, not even someone with the slightest experience managing a manufacturer. And definitely not someone with the least empathy with Middle America. Just another blood sucking NYC-centric financial maggot from the ethnic oligarchy that created the problem.

Yves, Dr. Simon Johnson of MIT deserves far more attention from N-C. Vastly more than Nouriel Roubini, for instance. This latest episode underlines and highlights his Atlantic article point about the behavior of entrenched corrupt financial oligarchies during crises. Namely, they screw everyone else any way they can to maintain their own preeminence.

sanjay says:

March 30, 2009 at 8:33 am

we are at this point because of the various financial bailouts of wall Street- including bond holders in Fannie and Freddie.

There is no incentive for a GM bond holder to go along with write down after the Government folded with the banks. They are in effect structuring their own toxic asset plan. If GM goes in BK their assets would be worth something (15?)as the plants and brands are sold to another auto maker. If they go with the deal they get something that might be worth 30% but if they play chicken the government might come in with a deal and buy them out.

Sounds to me like the chickens of moral hazard are coming home to roost a lot quicker then most people expected. If the administration folds whose next in line and if they don’t sacrificing the union workers but not Wall Street I start worrying about Washington being burnt a second time.

Anonymous says:

March 30, 2009 at 9:26 am

If GM goes in BK their assets would be worth something (15?)as the plants and brands are sold to another auto maker.

The “Chapter 11″ reorganization idea is an assumption. There is little contemporary evidence that a Chapter 11 reorganization of GM can succeed under the current system. A Chapter 7 bankruptcy liquidation is more likely. And there is no evidence Chrysler will do anything other than liquidate.

Excess capacity is excess capacity. The way excess capacity is reduced by reducing the supply. Reducing off-shore supply would be the preferable means, rather than unemploying and dehousing 100,000s more Americans. But “Wall Street” makes too much too easily by arbitraging so-called “free trade”. This means buying low and selling high.

Therefore “excess capacity” will be reduced by closing domestic plants, firing the work force and liquidating equipment and real estate as surplus.

Of course the true excess capacity is in “NYC” kulchur’s insatiable greed for unlimited profits by the mechanism of effortless rotten paper-flipping.

Only someone who hates his ostensible fellow citizens could propose replacing domestically produced vehicles with foreign imports.

Moopheus says:

March 30, 2009 at 12:19 pm

“The issue is not the warranties. The issue is your local dealer. Now that these cars are full of telematics, you can’t go to any old repair shop, warranty or no. You have to go to someone who has the electronic goodies that are in your car. “

This was, indeed, a factor in my own decision to buy an 8-year-old (now 10-year-old) used car instead of new car (that and being able to buy for cash). I know my local guy can work on it–he has done so and it runs pretty well now. The manufacturers are trying to shut out the independent shops as a deliberate tactic.

That said, if I ever have the opportunity and means to buy a Tesla, I’d think about it.

Timo @ Work says:

March 30, 2009 at 2:58 pm

The issue that seems to concern people a lot – namely, the reliance on the local dealer for diagnostic equipment to interrogate the car’s electronics – is something that I’d consider a minor issue. Yes, at the moment a lot of these systems are dealer only but for a large number of them, viable alternatives already exist in the aftermarket or could be provided if there is a market. A lot of these rigs can and have been cobbled together using laptops with an interface box and some custom pieces of software. If the dealers go belly up, there will be enough demand from the smaller shops to make such products viable for cars where this hasn’t been the case so far.

As some may recall, the last independent volume car manufacturer here in the UK (Rover) went under a few years ago. At the time, a lot of the scenarios above came into play. Cars didn’t sell as people were worried if they could get them serviced and worried over the availability of spares. This died down after a short while but the cars are still comparatively cheap. Spares aren’t a problem, though. A lot of people don’t realise just how many parts come from third party suppliers that are generally willing to continue manufacturing said spares as long as there is a big enough market here.

That said, several of the suppliers did not recover from the loss of their main customer and the knock-on effect on the dealerships was rather noticeable. Keep in mind that even though this was a volume manufacturer, it didn’t have anything like the market share that GM and Chrysler enjoy in the US still. If I recall correctly, the market share was in the order of 5%-10% and parts of the company had been sold to other manufacturers years ago.

The frightening scenario is that a collapse of both GM and Chrysler has the potential to knock out the majority of the US car manufacturing capacity due to their suppliers going down with them. As the car business is quite interconnected at the supplier level, it is not inconceivable that this can take down several other, perfectly viable car manufacturers unconnected to GM if they’re not able to stomach the potential write downs if their US factories have to close due to the sudden lack of infrastructure. This is a global game of dominoes that I certainly would not like to see played.

Cat says:

March 30, 2009 at 3:13 pm

I am still surprised to read anyone here lamenting that the US taxpayers are going to wake up to this treason, heads on pikes, Washington burning, yadda yadda.

The US government is perfectly capable of both measuring and manipulating public temperature. The tools for both efforts have been perfected since the German Nazis first used cinema for propaganda. Before that, the Romans distracted the masses with “bread and circuses”.

There will be no revolution. Not this century. We’ll need to purge ourselves of the fat sheeples and carnivorous Baby Boomers and get a generation of tired and hungry on the ground before anyone will have lost enough to have nothing less to lose, and see the value in putting things to the torch if only to have some light and heat again.

In the mean time, kiss your country goodbye. It’s G-O-N-E gone.

MarcoPolo says:

March 30, 2009 at 3:14 pm

“Now that these cars are full of telematics….”

Telematics? Real ones? Gimme a break. Any boomer who grew up making 400 horses out of those ohv v8s won’t have any trouble with that. The analyzer is $69.95 at Pep Boys. And given the value of their 401k they’ll be looking for something interesting to do. Then they’ll paint flames on it. Somebody above mentioned Cuba. Good comparison. I would mention Mad Max.

A better question is new sales. That can be hammered for any number of reasons and as Yves said there has been no objective analysis.

Eric L. Prentis says:

March 30, 2009 at 3:18 pm

Many trillions of taxpayer dollars given away to the bastard bankers who single-handedly caused this depression, so they can live lavishly on bonuses while the rest of us starve, and peanuts for the average working person in Detroit who actually produces automobiles important to our way of life. Rectify this by repealing the Federal Reserve’s charter and replace it with the Federal Industry. President Obama, why are you a captive of the effete financial ruling class.

Anonymous says:

March 30, 2009 at 3:30 pm

This is 3:21 again, and I stand by my PC analogy, as someone who regularly keeps computer hardware running well beyond the life its manufacturer hoped for via planned obsolescence (8-10 years).

Memory cards, video cards, and hard drives for older hardware can be hard and/or costly to come by. I suspect those of you who assert they are readily available have either only added memory to a relatively new computer (last 3ish years) or replaced a hard disk that crapped out unexpectedly.

Taunter says:

March 30, 2009 at 4:32 pm

Yves:

The problem is that GM cannot be fixed WITHOUT bankruptcy. The levers under discussion – the $27bn of bonds and $20bn VEBA – are simply too small for a business with $188bn of obligations (generously assuming we believe their 8.5% pension plan growth rate) against $110bn of liabilities.

Getting GM positioned to go forward requires rearranging the dealer footprint, amending supply contracts, and dumping the OPEB and VEBA liabilities AS WELL AS cramming down the bonds.

http://tauntermedia.com/2009/03/30/rare-optimism/

There is a risk of volume loss in bankruptcy, especially a protracted bankruptcy. But there is a chance of success, which is more than can be said with an AIG model wherein we pour money into the company and it sprays it out to its various claimants with no regard for the necessity or social utility of the payments.

Anonymous says:

March 30, 2009 at 5:44 pm

Timo,

Why should consumers take a risk? Easier to buy a car without hassle potential or worries about finding a qualified service source. While you may be right, what matters is consumer perception. If consumers perceive it to be a problem, you get fewer sales.

Anonymous says:

March 30, 2009 at 10:04 pm

In addition to Mr. Wagoner’s humiliating firing, is it really too late to also give him a good public flogging in the Detroit city square? Let’s make it an event for the whole family, with popcorn and CNN webcasts. And, I volunteer to crack the first whip on his back…LOL

Vinny Goldberg

PS – I’ll drive to Detroit in my Toyota, thank you very much…LOL

Anonymous says:

March 30, 2009 at 10:09 pm

>> So how come no bank turnaround plans? Oh, if they were no good, the government might have to get tough with them. Can't have that, now can we? <<

That's because UAW didn't contribute as much as they should have to Obama's campaign. Should have taken their cue from banks and insurance companies…LOL

Vinny

Bendex says:

March 30, 2009 at 10:27 pm

“Anonymous said…

The announcement by the White House autos panel headed by former investment banker Steve Rattner

Not an engineer, not even someone with the slightest experience managing a manufacturer. And definitely not someone with the least empathy with Middle America. Just another blood sucking NYC-centric financial maggot from the ethnic oligarchy that created the problem.”

Another investment banker.

Words fail me.

Anonymous says:

March 31, 2009 at 12:36 am

please differentiate between productive and unproductive
no society can reproduce itself if based on the latter
but the latter is exactly what so many seem to think necessary to save
after financializing for decades the confusion is understandable
but not rational.

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