Stocks for the Rest of Us
Posts tagged auto bailout
Thank Me? Thank Hank Paulson. I Didn’t Want To Give You Any Money In The First Place
Dec 24th
You have to love Chrysler. I get what they were trying to do but this is just ridiculous. Note to Mr Nardelli, we didn’t invest in Chrysler; we gave you a loan which we expect to be repaid. Not only that but we didn’t want to give you the loan. The money was basically stolen from us without our consent. I wonder how much it cost you to run these full page color ads in all the major newspapers? I wonder how many more cars you will sell because of these ads? I wonder how this will help Chrysler make better cars?
General Motors Bailout Could Be A “Sell The News” Event
Dec 2nd
Just a word of caution here for anyone expecting a rally if the Big Three are bailed out. The GM bailout might turn out to be a “sell the news” type of event in which we get an initial spike up and then a big sell-off. I think today’s rally was driven in large part by Nancy Pelosi saying that bankruptcy was not an option and the fact that we sold off so hard yesterday almost gaurantees a little bit of a dead cat bounce today. It’s looking more and more likely that the automakers will get the money and I’m starting to think that it might already be priced into the market. Just be careful chasing any strength you see as it can quickly turn into weakness.
Thoughts On The Auto Industry Bailout And Why I’m Against It
Nov 18th
It’s sad that the pinnacle of American manufacturing has come to this point. Rick Wagoner and the rest of the Big 3 CEOs are in Washington begging lobbying for taxpayer money to keep their businesses afloat. Now I realize the importance of an auto industry here in America but at what cost. In my opinion the ailing economy is not what has brought General Motors to its knees. Let’s not forget, GM has been losing money since 2005 when the economy was moving along at a respectable pace. So who’s to say that sales will pick up when the economy turns around. The fact of the matter is that GM has simply lost market share to other manufacturers and is too big and bloated to continue operating in it’s current form. There just isn’t enough demand to warrant their current capacity.
So how do we solve this problem? Well, here’s an idea…BUILD BETTER CARS!!! You can’t turn out junk for 40 years and expect people to continue buying your junk. I don’t understand why we can’t build better cars. Some people blame it on the American workers but Honda and Toyota both build cars right here in America with American workers and their cars are of much better quality. Why can’t these guys learn from the Japanese how to build a better car?
Unfortunately, it appears as though time has run out for these guys. My problem with bailing them out is that I don’t see any real plans going forward to reverse the downward death spiral that is General Motors’ business plan. Who’s to say they simply won’t burn through the 25 billion in 6 months and require more capital (think AIG). I think the best option, while risky, may be to put the automaker into chapter 11 bankrupty with the federal government as the DIP financier backing the warranties and suppliers. This would allow GM to get out of crippling labor contracts and re-organize (downsize considerably) under the protection of bankruptcy while giving some sense of confidence to the consumer and the parts suppliers.
I understand the arguement against bankruptcy and the rippling effect that it could have on the rest of the economy as a whole but unfortunately it looks as though no matter which path we choose the American auto industry is going to be downsized and tens of thousands of jobs will be lost. It’s just matter of whether it’s now or later.