Detroit's Fate Sealed in West Wing - WSJ.com
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White House economic adviser Mr. Summers led a conference call at 8:30 p.m. Sunday with lawmakers who had expressed strong interest in the auto bailout. At one point during the call, Mr. Summers told lawmakers the administration was pushing for the Fiat-Chrysler deal to include "building an energy-efficient vehicle in this country," Sen. Bob Corker said.
Sen. Corker, a Republican from Tennessee, said he told Mr. Rattner on Monday that he was alarmed that the administration would dictate what kind of vehicles would be constructed. "Deciding what vehicles and plants will survive is setting industrial policy," the senator said.
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at this point we know that the us govt will mandate which brands will survive, what the business model will be, who will run the company, who will be on the board of directors. min this is a direct subsidy, up to possible full blown govt controlled market of business. where it falls i do not know at this point.
U.S. Threatens Bankruptcy for GM, Chrysler - WSJ.com
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The Obama administration, wading deeply into the U.S. auto industry, is weighing a fix for General Motors Corp. and Chrysler LLC that would divide their "good" and "bad" assets and send the auto makers into bankruptcy to purge their biggest problems.
The potential move would transform two companies that have helped define U.S. industrial power over the past century. Following the ouster of GM Chief Executive Rick Wagoner, it would represent one of the biggest-ever government incursions into private enterprise.
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As part of their proposed pact, Fiat and Chrysler agreed over the weekend to scale down the Italian auto maker's initial stake in Chrysler to 20% as a condition of the Treasury Department's bailout. Fiat earlier this year struck an agreement to take a 35% stake in Chrysler initially, and up to an additional 20% at a later date.
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With GM, the Obama administration is interested not just in preserving jobs, but in pushing other policy prescriptions, in particular creating a "company of the future" with clean and energy-efficient vehicles, a frequent campaign theme during Mr. Obama's quest for the presidency.
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GM looks increasingly like it will be forced into filing for bankruptcy protection, sometime in mid-to-late May, and that the surviving "new GM" will retain select brands and some international operations, said several people familiar with the situation.
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A key ingredient in acting on this plan is getting the UAW to agree to an entirely new contract, including major reductions in health-care benefits, said several people involved in the matter. "That's the No.1 wild card here," one of these people said Monday.
Under the plan, the "good" GM wouldn't be expected to hold the tens of billions of dollars in retiree and health-care obligations that hurt the auto maker in recent decades. Instead, those obligations would be transferred to an "old GM," made up of less-desirable brands such as Hummer and Saturn, and underperforming plants and other assets.
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apparently barack obama and company have decided (wait obama has yet to come out and put his full name on this with whether or not he has ousted the board and ceo) that gm is a "systemic risk" and thus must be taken over by the federal govt. this once again will allow a failure of a company to shed weight and continue operations only of its profitable divisions in much the same way aig did. with the systemic risks take overs what is next? walmart? mcdonalds? see the major issue here? then post govt take over you spin the puppies apart good and bad and allow good to flounder under the ownership of the uaw and creditors while the us taxpayers ride our the losses on the failure of bad gm as it sits in b-court to be chop shopped and sold off maybe for only a giant loss. what do we have the chapter 11 system for? barack obama needs to keep in mind that his high dollar contributors (do we need to show the hundreds of millions unions tossed his way or the automakers) are not the only ones suffering.
who else is hurting? small business owners and their employees-these mom and pop shops and their workers paid their taxes like everyone else as these continue to close they foot the bailout and costs as their pay/hours are reduced and business shrinks and do not see a bailout only b/c they simply work for a smaller company. americans working for "foreign" companies in the auto industry, you know like the folks in marysville working for honda, or one of hondas hundreds of suppliers in ohio, hyundai in bama or nissan on symrna, tn, their companies have been hit just as hard yet due to a more competitive model better cost structure theyve gained market share yet borne the blunt of the direct subsidy/govt takeover/govt backstop and funding of gm, chrysler (and a tad of ford). why should these workers who are paid a lower wage see tax dollars funneled into their competitors? the share holder of the auto industry, those who have invested in profitable successful auto companies invested in the free enterprise system based on the read of the economic environment, those who have bought the "foreign" auto makers did so on a reasonable ivestments and rational basis based on a quality product, competitive basis to find a chance for profit and growth, is it fair the govt comes in now (and repeatedley) shifts the playing field, diminishing your values your investment and propping up less successful companies? the taxpayer- it is one thing to step in and provide a backdrop and maybe provide a loan to bridge restructuring or provide chpater 11 assistance in a way that aovids complete liquidation to preserve assests for the sale and reset of the company, to drop billions into a company for the sole purpose is that it is as barack obama says is the "emblem of the american spirit" the right thing to do on billions of the taxpayer dollars? no. gm/chrysler eomployees who will end up with even fewer employees working for sensible wages with reduction in benies and potentially without legacy costs-subsidized by the taxpayers- or reduced through transactions.
bottom line-is chapter 11 bankruptcy in court the better decision of the american workers, taxpayers and those vested with interests above or is the better choice the politically swirling winds of washington and white house?
02-21-2009, 02:39 PM
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