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Rick Wagoner is out as GM's CEO. He will be replaced by Fritz Henderson, GM's president and chief operating officer.

General Motors and the Obama administration still have high hopes for high tech, fuel efficient vehicles like the Chevrolet Volt.
Auto companies are faced with drastic restructuring or having their lifelines pulled

Last week was a busy one for President Obama.  First he reportedly finalized his plans for fuel economy increases for 2011 -- the first such increases in two decades.  And then over the weekend, he rocked the auto industry when he demanded that GM CEO of 8 years, Rick Wagoner, resign.  Rick Wagoner complied.

Now he has started off this week with a bang, one that's sure to leave the domestic automakers sweating.  White House staff said early Monday that neither Chrysler nor GM submitted satisfactory plans and that they had rejected GM's request for $16.6B USD more in bailout funds and Chrysler's request for an additional $5B USD according to MSNBC.  The decision sets up an endgame that may ultimately involve the demise of these two former bastions of the U.S. manufacturing and tech industry.

While denying full bailout funding, Washington has extended an offer of some assistance to GM and Chrysler under strict terms.  In Chrysler's case, the government states that a thorough review revealed it unable to sustain as an independent business.  The government suggests that Chrysler merge with Italian automaker Fiat SpA, which it already gave a 35 percent stake to several months ago.

White House officials say that it will offer up $6B USD in a one-time bailout offer to the pair if they can complete negotiations.  The Obama administration hopes a deal with Fiat, which already saw its own successful turnaround a few years ago, could save Chrysler.  However, if the pair cannot reach a deal the administration is prepared to walk away from funding, likely leaving Chrysler to its demise.

If this occurs, Chrysler's assets are likely headed for a complete sell-off.  It has no funds for other alternatives, and it already has undergone a previous devastating bankruptcy.

For GM, Washington is demanding a massive restructuring of the company's leadership, which started with the removal of Rick Wagoner.  The White House offered 60 days of operating money to sustain the company while it restructured, if it complies.  Fritz Henderson, GM's president and chief operating officer, reportedly has become the new CEO in compliance with the plan.  Board member Kent Kresa, the former chairman and CEO of defense contractor Northrop Grumman Corp., has taken over as the new chairman of the board.

According to White House officials, the majority of the rest of the board are expected to step down. 

After 60 days, GM is likely on its own unless the Obama administration has a change of heart.  GM has previously said that without bailout funds it cannot survive, and will be forced to liquidate.  So while its terms are just slightly gentler than Chrysler's, it ultimately may meet the same end.

President Obama stated on Meet The Press over the weekend, "We think we can have a successful U.S. auto industry. But it's got to be one that's realistically designed to weather this storm and to emerge -- at the other end -- much more lean, mean and competitive than it currently is."

The Obama administration made the decision in the face of growing public discontent over the bailout.  Administration officials said that GM and Chrysler had not made good on their promises, and that the administration was doing the companies a favor not calling in the billions in bailout loans -- yet.  The White House remains optimistic that Chrysler and GM may survive, if they play by their rules.  The Obama administration says GM, in particular, has the best hopes as they say it has strong research potential with programs like the Chevy Volt, and still enjoys a good brand name.

Despite slashing thousands of jobs, GM and Chrysler have a gargantuan task ahead of them in trying to survive.  GM owes $28B USD to bondholders and $20B USD in retirement benefit and healthcare to former employees.  Chrysler owes about $7B USD in debt, mostly to banks, and owes $10.6B USD in retirement and health care.

If either company fails to meet the government's terms, administration officials reportedly want a forced restructuring under court supervision, rather than Chapter 11 bankruptcy.  Administration officials say that Chapter 11 is not their goal, but that there could be a "role for a court supervised process to effect the restructuring... different from Chapter 11."  However, many within both companies and many financial analysts state that such restructuring is high infeasible and liquidation is the only possible outcome.

Regardless of what the end result is, it is clear that whatever form GM or Chrysler emerge in, they will be much smaller.  In the process many tech professionals will be laid off, many dealerships will close, and many suppliers will likely fold.  In this respect the recession has just claimed its largest casualty yet.



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Most MISLEADING Headline EVER
By michal1980 on 3/30/2009 10:15:10 AM , Rating: 5
GM gets money for another 60 days to comeout with ANOTHER plan.

Chysler gets money for another 30 days to comeout with ANOTHER plan.

Bailout founds haven't been deined, just given another timeout.




RE: Most MISLEADING Headline EVER
By JasonMick (blog) on 3/30/09, Rating: 0
RE: Most MISLEADING Headline EVER
By Gul Westfale on 3/30/2009 10:49:01 AM , Rating: 5
BS from JM, as usual, just a sensationalist headline with no real story. here is the REAL story, btw:
http://money.cnn.com/2009/03/29/news/companies/gm_...

from that article:
quote:
The government plans to give the automakers more money, but it is also holding out the threat of a "structured bankruptcy.


rather different from OBAMA DENIES FUNDS, no?


RE: Most MISLEADING Headline EVER
By Proteusza on 3/30/2009 11:42:29 AM , Rating: 5
Agreed, headline is completely inaccurate and misleading.

BTW, how come the banks werent asked to fire their execs and boards and shake things up? Oh wait, they have money for lobbyists.


RE: Most MISLEADING Headline EVER
By quiksilvr on 3/30/2009 3:37:32 PM , Rating: 4
Yay lobbyists!


RE: Most MISLEADING Headline EVER
By Regs on 3/31/2009 9:17:03 AM , Rating: 1
This is the perfect example of why finance does not correlate with politics.After two grueling years of accounting and finance courses in school, it amazes me how much clearer I can cut through the BS.


RE: Most MISLEADING Headline EVER
By MozeeToby on 3/30/2009 12:04:25 PM , Rating: 5
I think the real story is somewhere between the article and what you seem to be implying. While it certainly isn't the end of the road as far as GM and Chrysler are concerned, it does seem to be the end game of the political shit fest that the auto-bailouts have been.

The administration has laid down pretty strict rules that the companies need to follow if they want to stay afloat and more importantly has denied them funds based on poor performance of those rules. If the auto makers thought they had a blank check, at least this might make the pause and reconsider.


RE: Most MISLEADING Headline EVER
By Spuke on 3/30/2009 12:53:41 PM , Rating: 5
Obama just said this morning that he will not let GM and Chrysler be broken up and sold. At worst, the government will fund their bankruptcies and accelerate their bankruptcy proceedings. That was clearly stated by Obama himself. There is no speculation on this.


RE: Most MISLEADING Headline EVER
By FITCamaro on 3/30/2009 12:56:36 PM , Rating: 5
Any time the government is demanding the CEOs of private companies resign though is a bad time.


RE: Most MISLEADING Headline EVER
By Spuke on 3/30/2009 1:09:29 PM , Rating: 4
quote:
Any time the government is demanding the CEOs of private companies resign though is a bad time.
When you take public money, you have to make some concessions. If GM wanted to continue doing things their own way then they should've never asked for our money. Quite frankly, I'm surprised at the governments restraint. How many past governments, regardless of nationality, would've had such restraint given the circumstances?


RE: Most MISLEADING Headline EVER
By FITCamaro on 3/30/2009 2:29:28 PM , Rating: 4
The better idea is not to give ANYONE public money.


RE: Most MISLEADING Headline EVER
By Tsuwamono on 3/30/2009 8:59:15 PM , Rating: 3
good idea, that way the government hordes money and benefits no-one. This seems familiar...

Ahh yes.. The Vatican


By msomeoneelsez on 3/31/2009 1:16:34 AM , Rating: 2
Or lower taxes, taking a more classical economic approach...
That worked pretty well despite the lack of the Fed for the first 130 years of our country... Heck, why don't we go back on the gold standard too? (no, that was not sarcasm)

Anyways...
Here is where you draw the line between standard of living, or economic health. People generally believe that both come hand in hand, as they are related, but they are different as well.

With lower government spending, but lower taxes as well, the net consumption will drop, thus a lower RGDP... however, more money/wealth will be available for the individual consumer, and that means a higher standard of living.

Now here is the kicker, the flip side is true as well. Higher govt. spending and higher taxes lead to a net increase in consumption etc. etc. and that means less money for the individual consumer, but a higher GDP, thus better economic health.


RE: Most MISLEADING Headline EVER
By porkpie on 3/31/2009 9:49:27 AM , Rating: 5
quote:
good idea, that way the government hordes money and benefits no-one
WTH, lol? What sort of braindead person thinks a government has no other function in life except to pass out buckets of free cash to one and all?

The government should pass laws and enforce them. That's it. Not spend trillions writing checks to people and businesses who can't support themselves.


RE: Most MISLEADING Headline EVER
By Reclaimer77 on 3/31/2009 10:59:54 AM , Rating: 4
quote:
WTH, lol? What sort of braindead person thinks a government has no other function in life except to pass out buckets of free cash to one and all?


Democrats, minorities, the President ? Quite a few people think that sadly.

John Adams said it then, and it's true today, this form of Government isn't going to work when a majority of people are effectively voting for leaders simply because they will get money from it.


RE: Most MISLEADING Headline EVER
By Teh Interwebz on 3/31/2009 12:22:33 PM , Rating: 3
And you're saying Republican ideology isnt financially motivated in a significant way?


RE: Most MISLEADING Headline EVER
By Reclaimer77 on 3/31/09, Rating: 0
RE: Most MISLEADING Headline EVER
By Teh Interwebz on 3/31/2009 1:53:03 PM , Rating: 2
And no democrat I've ever seen has promised me money either. You seem to imply Democrates and minorites stand for bread and circuses and that is simply a fallacy.

There are certainly other issues for both parties. Dems have generally supported the tree huggers which is certainly not financially motivated. Republicans generally cater to the bible thumpers which has no little to do with economics. However the main issue for most in either party is how government money is going to be spent. Repubs concentrate on tax cuts and military. Dems focus more on social programs and infrastructure. If you consider social security a handout then I would certainly consider a tax cut to be the same.


By MrBungle123 on 3/31/2009 2:40:32 PM , Rating: 3
quote:
There are certainly other issues for both parties. Dems have generally supported the tree huggers which is certainly not financially motivated.


It might not be for the tree huggers, but for the politicians that push the issue it most certainly is. Cap and Trade carbon contol policy will create a new commodity in the form of the carbon credit. Selling carbon allowances will bring in hundreds of billions in new revenue to the federal government.

quote:
Republicans generally cater to the bible thumpers which has no little to do with economics.


considering that 75%+ of America self identifies as "Christian" throwing a bone or two to that group of people can bring in huge quantities of cash in the form of campaign contributions. I would say that the Republicans are defineately not "catering" to the religious right, most of the socially conservative religious right are also fiscally conservative and are quite angry with the Republicans over the past few years.

quote:
However the main issue for most in either party is how government money is going to be spent. Repubs concentrate on tax cuts and military. Dems focus more on social programs and infrastructure. If you consider social security a handout then I would certainly consider a tax cut to be the same.


There is a huge difference between Social Security (a "handout") and a tax cut. Social Security takes your money away and keeps it for most of your adult life, then gives you part of it back in your last years. This takes some amount of financial freedom away from you during your younger years.

A tax cut just keeps the government from confiscating the money to begin with, giving you more freedom now... and arguably more later if you are smart with the money and put it towards things that will give you a greater pay out than a social security check ever would.

Anytime politicans propose new social programs they are essentially saying they know how to spend your money better than you do. Most of the time the people that actually pay for the social programs do not qualify to recieve benefits since they are typically only available to people in the lower economic classes, so the program amounts to a handout to the poor at the expense of the rich. They don't always promise money, they also promise services which cost money.


RE: Most MISLEADING Headline EVER
By vcolon on 4/1/2009 1:23:43 PM , Rating: 2
You sir, know NOTHING about the Vatican to make such an unfounded statement. Watching to much Bill Maher I presume?


RE: Most MISLEADING Headline EVER
By Reclaimer77 on 3/30/2009 10:48:14 PM , Rating: 1
quote:
When you take public money, you have to make some concessions. If GM wanted to continue doing things their own way then they should've never asked for our money. Quite frankly, I'm surprised at the governments restraint. How many past governments, regardless of nationality, would've had such restraint given the circumstances?


So many false premises and wrong in so few words...

1. They didn't take public money, they were given it. If GM asked Congress to jump off a bridge would they do it too ?

2. Restraint ? Restraint would have been to NOT interfere in the running, or failing, of private industry.

3. Concessions ? I think allowing the President to decide what products you make, how you sell the, and who can CEO your company for how much money is beyond the scope of reasonable, and legal for that matter, "concessions".

Spuke have you ever heard of something called the Constitution ?


RE: Most MISLEADING Headline EVER
By Teh Interwebz on 3/31/2009 12:35:31 PM , Rating: 2
How is this the governments fault at all? GM and Crysler made shortsighted judgements recently and have paid the price when the gas crunch and this resession hit.

THEY then asked for money to prevent bankruptcy. Whether you agree their request should have been granted is moot.

THEY did not need to accept the White House's terms for more money.

THEY decided trying to go for the money would be better than bankruptcy and quite possibly liquidation and so Wagner stepped aside to comply. He could have stayed and tried to right the ship on his own. Evidently he decided it was impossible without this help.

The only thing you can argue is point #2 and it is really moot at this time. We've crossed that bridge.


RE: Most MISLEADING Headline EVER
By Reclaimer77 on 3/31/2009 1:12:09 PM , Rating: 2
quote:
How is this the governments fault at all?


It is 110% the governments fault. My points are not "moot" because you choose to believe it is the governments responsibility to prop up failing companies, so GM is the bad guy for requesting federal help.

Guess what ? LOTS of things are requested of Congress. You and others like you act as if they are obligated to always grant these requests. They are not. And in this case, certainly SHOULD not have.


By Teh Interwebz on 3/31/2009 2:00:58 PM , Rating: 2
No they arent. I never said I agreed or disagreed with what happened. Tbh I'm still not sure which is the best route let all the banks, automakers, and everyone else attached to them fail and chance a full on depression or intervention to lessen that chance. The economy is incredibly complex and difficult, if you think you've got a perfect grasp on what is going on you're dilusional or you shouldnt be on this website wasting your time.

Either way the point IS moot because the decision to pursue intervention has been made by both parties. The only thing left to argue is how to best carry out that intervention.


RE: Most MISLEADING Headline EVER
By jtesoro on 3/30/2009 1:29:32 PM , Rating: 2
I think we all pretty much figured out it's a bad time when these CEOs started begging the government for money.


RE: Most MISLEADING Headline EVER
By Lord 666 on 3/30/2009 2:37:20 PM , Rating: 2
But trust me, we will be asking Obama to resign... if not begging.


By MrBungle123 on 3/30/2009 1:20:18 PM , Rating: 2
quote:
While it certainly isn't the end of the road as far as GM and Chrysler are concerned, it does seem to be the end game of the political shit fest that the auto-bailouts have been.


I have little faith that this will be the end of the political shit fest. There are simply too many UAW workers employed by GM and Chrysler for the Democrats to simply let them go under.


RE: Most MISLEADING Headline EVER
By Hiawa23 on 3/30/2009 2:13:35 PM , Rating: 2
I am all for the Govt doing whatever it can to get the auto companies on some sort of plan to make em profitable, cause it's clear if left to them along with the UAW, it just wasn't going to happen anytime soon. I don't want anyone to fail, but it's tough times & they have to make tough decisions & hopefully they will rise up when the economy turns around.


RE: Most MISLEADING Headline EVER
By MrBungle123 on 3/30/2009 2:32:01 PM , Rating: 5
I think the companies would be better off declaring bankruptcy to free them of the unions.


By wallijonn on 4/2/2009 1:53:32 PM , Rating: 2
quote:
I think the companies would be better off declaring bankruptcy to free them of the unions.


I wish everyone would stop making the unions scapegoats. The plain fact is that the auto makers were making SUVs and trucks when no one wanted to buy them because gasoline was at the $4 a gallon mark.

At the same time they went out of their way(s) to short circuit gas mileage legislation. You'd think that in the past 30 years, since the Arab Oil Embargo, that technology would have been advanced enough to give 50 miles per gallon on today's automobiles. Instead the citizenry were sold on more and more power, bigger engines, larger tyres, faster and quicker cars. And the same gas mileage as cars from 35 years ago, 17 to 20 mpg.

When you have a market like NYC and dealers refuse to take trucks as trade ins, and the new truck inventory starts to back up, when no one is paying attention at the factory, who's fault is it? Certainly not the unions.

Reagan busted a lot of unions. Look at the airline industry now. They are just starting to become profitable after nearly going bankrupt over the same thing - the price of gas. It's plain economics - price an airline ticket at $1000 and fewer people will be able to afford it. Price a car or truck at $50,000 and fewer people will be able to afford it.

The last thing I want is a Walmart style auto industry. If that's the case just close them all down and buy direct from India and China.


RE: Most MISLEADING Headline EVER
By Reclaimer77 on 3/31/2009 1:41:41 PM , Rating: 2
quote:
I am all for the Govt doing whatever it can to get the auto companies on some sort of plan to make em profitable


The government, which has never came up with profitable plan that came under budget, and has never managed a budget responsibly, is going to come up with a plan to make GM profitable...

*giggles*


RE: Most MISLEADING Headline EVER
By Teh Interwebz on 3/31/2009 2:08:56 PM , Rating: 2
Who said they were going to make them profitable? The gov saw the companies' plans to make themselves profitable was malarky and didn't invest. If they dont come up with a better plan they'll go bankrupt all by themselves.

Where in that do you see the government running the business?


By Reclaimer77 on 3/31/2009 2:35:03 PM , Rating: 3
quote:
Where in that do you see the government running the business?


Please you guys have to stop using these lying catchwords like "investing" and "loaning" and call this for what it is. This is absolutely a government takeover of the auto industry. The President already had a CEO stop down. How long do you think it will take before Union bosses and politicians are making up the board of directors ?

This isn't about Gm being profitable. This is about GM running things the way the Government wants them to, WHILE somehow finding a way to still be profitable. Things like making cars environmentalist want, not the consumer. Things like not even touching the UAW, and still being profitable. Things like still having to honor retirement, pentions, and UAW insurance and still be profitable.

You guys actually believe the largest or one of the largest auto makers, in the world, for decades suddenly forgot how to be profitable and needs a Democratic congress and President, of all things, to tell them when a plan is going to work or not ?

Let the free market decide if GM's plan will be profitable or not. But then again, if I had my way, the free market would have decided GM's fate. Not Obama.


By Whaaambulance on 3/30/2009 5:50:21 PM , Rating: 3
I know it's ridiculous, but in DT's eyes, they got their page views for their adverts. But then again, knowing the kind of BS stories Jason Mick posts, did you really expect anything different?


RE: Most MISLEADING Headline EVER
By Reclaimer77 on 3/31/2009 9:43:53 AM , Rating: 2
Last month Obama says Gm " can't be allowed to fail ". And that Chapter 11 is simply not an option.

Billions of dollars later, and the forced resignation of a CEO, bankruptcy is suddenly an option. Not just an option, but "likely".

Another flip flop in policy by the prez...


RE: Most MISLEADING Headline EVER
By Spuke on 3/31/2009 5:21:45 PM , Rating: 2
Chapter 11 is not failure, Chapter 7 is. He hasn't flipped. You just don't know what Chapter 11 bankruptcy is.


RE: Most MISLEADING Headline EVER
By ira176 on 4/1/2009 1:45:51 AM , Rating: 2
Is Chapter 11 called reorganization? And if it is, does it allow GM to not pay back obligations to its creditors?


RE: Most MISLEADING Headline EVER
By Boze on 3/31/2009 2:32:25 AM , Rating: 1
When the article's writer's comments are being voted into the negative, I think we have a problem on the ability to report fair and balanced news without sensationalism.


RE: Most MISLEADING Headline EVER
By trisct on 3/30/2009 10:43:25 AM , Rating: 4
Well, time will tell. You could be right, this could be a delaying tactic that only makes it look like the white house is punishing the car companies - but then they relent in a couple more months, when the public starts feeling sorry for the automakers, and all the employees that will be laid off or left without retirement packages. Just watch the news for the next 3 weeks and you will probably be able to predict the outcome. If the media starts running sob stories connected with the auto industry, we'll know this was not logical analysis but emotional politics.


RE: Most MISLEADING Headline EVER
By MadMan007 on 3/31/2009 4:26:43 AM , Rating: 2
Imo it's just a bluff tactic to force the bond holders and unions to make real concessions. Neither wants to but perhaps with some fear of losing it all they will. If not then there will be 'restructuring' although they'll call it comething else than Ch 11 that's what it will be. I don't believe that even the free market types want to see the companies go under because the credit markets seized up virtually over night.


Administration hubris
By billg1745 on 3/30/2009 10:25:40 AM , Rating: 1
I find it amusing that a president who never so much as had a paper route or operated a lemonade stand and whose treasury secretary cannot do his tax return, is telling corporations how to run their businesses.




RE: Administration hubris
By inperfectdarkness on 3/30/2009 10:40:59 AM , Rating: 5
funny...

if only because the man he replaced in that job had a history of running companies into the ground.


RE: Administration hubris
By MrBungle123 on 3/30/2009 10:45:06 AM , Rating: 4
Yes, and if you've noticed the Dow Jones has lost about half its value since BOTH of them started giving OUR money away.


RE: Administration hubris
By CheesePoofs on 3/30/2009 11:13:52 AM , Rating: 5
correlation does not equal causation


RE: Administration hubris
By MrBungle123 on 3/30/2009 1:16:04 PM , Rating: 2
and am I supposed to give a pass to Obama for further escalating the terrible economic policies of Bush? Hopefully someday people will wake up and see that these jackasses in office are screwing us all over despite the media cheerleading.


RE: Administration hubris
By invidious on 3/30/2009 3:03:14 PM , Rating: 5
Unless the offender is republican. The double standards in our politics are obsurd. Innocent until implicated by the media is the law of the land nowadays.


RE: Administration hubris
By omnicronx on 3/30/2009 12:18:40 PM , Rating: 4
It also rained yesterday, when I got drunk and did the rain dance. It was already cloudy, and the skys were gray, but I am convinced I was the catalyst!


RE: Administration hubris
By Hieyeck on 3/30/2009 1:47:59 PM , Rating: 2
you must've been really smashed to forget you got high as well ;)


RE: Administration hubris
By omnicronx on 3/30/09, Rating: -1
RE: Administration hubris
By Master Kenobi (blog) on 3/30/2009 2:17:55 PM , Rating: 2
Obama and his Advisors are interested in the next election in 4 years. Following the strategy that worked so well for Clinton, Obama is following the polls and doing what public opinion wants. Sure fire way to get the majority votes in a few years.


RE: Administration hubris
By Dasickninja on 3/30/2009 6:47:01 PM , Rating: 2
Astounding... a politician doing what the people want. Novel idea that is.


RE: Administration hubris
By danrien on 3/30/2009 10:08:19 PM , Rating: 2
little of revisionist history there. have you forgotten about karl rove?


RE: Administration hubris
By oxymojoe on 3/31/2009 3:02:25 AM , Rating: 2
This is EXACTLY what is going on. The Obama Adminitration is terrified that GM will fail on their watch. Saying it was Bush's fault probably won't pan out so well in 2011. Americans have short memories and "letting GM fail" will be unforgivable in many peoples eyes.

It would be a death blow to Obama insofar is re-election is concerned. So sit back and enjoy the show as we prop up the auto industry for untold billions.

But there will be a lot of fancy legal mumbo-jumbo like "structured bankruptcy" and "congressional oversight" that might make some feel better about us financing this mess.


RE: Administration hubris
By MrBungle123 on 3/31/2009 4:47:23 PM , Rating: 2
quote:
Obama is following the polls and doing what public opinion wants. Sure fire way to get the majority votes in a few years.


No, Obama with the help of the mainstream media (MMM) is telling people he is doing what they want him to all the while pushing forward his lefitst agenda to the detrement of the people he is supposedly helping.

Obama/MMM say the Dems passed a stimulus package. They really passed a giant $780B pay off of campaign contributors, and gave people a $400 tax credit that they renamed a "tax cut" you are still responsible to pay the same amount of income tax at the end of the year you just get less taken out of your check each week. (the politically ignorant believe the political "rebranding" of terms and never realize what is happening)

Then they say they are going after AIG execs for collecting "obscene" bonuses and yet the bonuses were allowed by bailout legislation written by democrats and signed into law by Obama and with the MMM to cover for them most people are none the wiser.

Next they are going to "help" us with "green" energy and cap and trade carbon policies, this is going place a heavy burden on manufacturers and energy companies alike and simply raise all of our energy bills.


RE: Administration hubris
By Hiawa23 on 3/30/2009 2:33:47 PM , Rating: 5
I find it amusing that a president who never so much as had a paper route or operated a lemonade stand and whose treasury secretary cannot do his tax return, is telling corporations how to run their businesses.

regardless of what you think, he is the Pres & looks like he is trying to do more in his first few months than our last Pres did, so God Bless him & someone needs to help or tell the car companies something given GM & Chrysler's track record. They have been losing money for years. Perhaps, if someone told them something years ago, they may not find themselves in this position, or maybe our govt shouldn't have given them one dime & just them continue on the crash course they were on last year.


RE: Administration hubris
By michal1980 on 3/30/2009 3:39:43 PM , Rating: 3
trying to do something more

does not equal doing more.

And most improtantly, doing more does not equal doing good.


Ford
By wookie1 on 3/30/2009 11:59:17 AM , Rating: 5
Ford's management looks genious now for rejecting bailout money! They're probably high-fiving each other for dodging that bullet, now they may be the only US automaker left by the end of the year if they can hold on.




RE: Ford
By Spuke on 3/30/2009 1:11:57 PM , Rating: 2
Ford said that as long as GM and Chrysler stay in business, they won't need any government money. But if either fails, they'll need it. But since Obama said that he won't let either fail, that's a moot point.


RE: Ford
By MadMan007 on 3/30/2009 1:55:07 PM , Rating: 2
That's interesting. What's the reason Ford would need bailout money only if GM and Chrysler go under?


RE: Ford
By Jimbo1234 on 3/30/2009 2:06:41 PM , Rating: 1
Two words: shared suppliers.


RE: Ford
By MadMan007 on 3/30/2009 2:10:53 PM , Rating: 2
Ok, not much of an explanation though. It also doesn't explain why *Ford* would need a loan rather than the suppliers. Please elaborate.


RE: Ford
By Jim28 on 3/30/2009 4:27:53 PM , Rating: 1
Simple economies of scale. Parts would cost more because less are being bought, less competition etc.etc All this adds up to ford having to pay more for the parts as the supplies left would be more expensive.


RE: Ford
By MadMan007 on 3/30/2009 5:10:19 PM , Rating: 2
But there would also be more competition between the suppliers for Ford's business which would put downward pressure on prices. Is your reason something you made up or what Ford itself said? I'd like to see some linkage with reasoning about this and not just ideas.


RE: Ford
By Spuke on 3/30/2009 6:59:19 PM , Rating: 2
If GM and/or Chrysler failed, the ensuing fire sale on GM and/or Chrysler vehicles would make it difficult for Ford to sell any cars during that period. So they would need money to weather the storm.


RE: Ford
By MadMan007 on 3/30/2009 9:55:53 PM , Rating: 2
But I thought the fear was that no one would buy a car from a bankrupt company? Still looking for a reference that Ford themself said that.


RE: Ford
By Spuke on 3/31/2009 4:16:31 PM , Rating: 2
I thought I saved it but can't find it either. All I have found was a mention of dragging the suppliers down.

http://www.huffingtonpost.com/2008/12/10/ford-bail...


RE: Ford
By Spuke on 3/31/2009 4:29:50 PM , Rating: 2
Looks like their official reasoning is shared suppliers and shared dealerships. Wherever I got that other info from, it was wrong.

http://financialservices.house.gov/FordPlan.pdf


RE: Ford
By Jim28 on 3/30/2009 11:26:06 PM , Rating: 2
et tu brute?

Where are you links?
Or did you just make that up?

It actually isn't certain how many suppliers would survive,
and sure there would be fierce competition at first, until the ones that don't make it are dead, or are they gonna sell to government motors? (Guess they could.)


RE: Ford
By MadMan007 on 3/31/2009 3:56:27 AM , Rating: 2
All I've asked for is where Ford said they'd need bailout money only if GM and Chrylser go under. If the economies of scale is something you decided applies that's fine, if it was Ford's reasoning I'd like some info on that. I don't need links because I'm not saying what Ford has said wrt getting loans if the others go under.


RE: Ford
By Jimbo1234 on 3/30/2009 10:00:05 PM , Rating: 2
And some suppliers would go under too. Therefore Ford would have no parts to make cars with. If you can't make a car, you cannot sell it. If you don't sell cars, you don't stay in business very long.


RE: Ford
By Hiawa23 on 3/30/2009 3:27:23 PM , Rating: 2
Ford's management looks genious now for rejecting bailout money! They're probably high-fiving each other for dodging that bullet, now they may be the only US automaker left by the end of the year if they can hold on.

The only reason Ford looks like a genius is because they started retructuring their company years ago & thus were in a much better position than the other 2 to whether this storm.


RE: Ford
By wookie1 on 3/30/2009 4:14:44 PM , Rating: 2
And because they didn't turn over the management of the company to the gov't by taking the bailout money. Once you take a little bailout money, you have completely lost control of the company. They were fortunate to not need the bailout money, and smart to not take it even though they might've been able to get it. At the time, it wasn't obvious how many strings would be attached to the money. That didn't become apparent until after AIG.


Cut out the bloat
By trisct on 3/30/2009 10:53:17 AM , Rating: 3
Bankruptcy - whether it be to restructure or sell off - is probably the only eventual answer. These companies need to cast off the union and management bloat that has eaten them from the inside. Management has become too stiff and slow to react, while the unions are just parasites, getting fat while the host company sickens. The UAW bears as much (or more) responsibility for the current mess than the company managers if you ask me.

People can't go looking to make a career out of unskilled labor these days. Do McDonald's employees expect to get a house, car and nice retirement package out of slinging burgers? No, its a summer or a filler job until they find something real. Just because you hold an impact wrench instead of a spatula doesn't make you skilled. The work may not exactly be easy, but it isn't a career either.




RE: Cut out the bloat
By Hakuryu on 3/30/2009 12:33:41 PM , Rating: 3
I wouldn't blame the regular employees for the problems of these automakers. Who doesn't want to make more money at their job?

You seem to assume all these workers sit on a line and just put together cars, but there are many jobs in an automotive plant - tool and die makers, the people that program and care for the robotic equipment, and many other jobs that are skilled. Comparing even the lowliest job at an auto plant to a McDonald's worker and claiming it isn't a career is pretty damn arrogant of you. Some people even make careers out of McDonalds... nothing wrong with being a manager of a fast food place or even a cashier at a grocery store if thats what you want to do.

I'm not saying these auto workers aren't overpaid; I agree they are. It's the unions that are to blame for that, and the car manufacturers who are to blame for their current woes. High wages didn't make Cadillac put out a car my niece's husband bought spent half it's time in the shop, and then sold for 1/4 of what he bought it for just three years later. Don't blame Average Joe for wanting a good life, regardless of his skills.


RE: Cut out the bloat
By BansheeX on 3/30/2009 1:48:43 PM , Rating: 1
quote:
I wouldn't blame the regular employees for the problems of these automakers. Who doesn't want to make more money at their job?

If you want to make more, you have to be more productive to justify the higher wage, not collude with others to fix prices. That goes for employers AND workers. Workers are supposed to be underbidding each other for the contract, otherwise the cost of what is produced is artificially high for anyone not making a union wage. My wage is $14 an hour because my company could not find anyone capable of matching my productivity below that. My leverage is my skillset relative to other people in society.

Unfortunately, entitlement and military overhead, a borrow and spend spree enabled by a fiat reserve currency status, has hollowed out our manufacturing base and transformed us from largest creditor nation to largest debtor nation. And since it's politically unprofitable to do anything about it, government will continue to run our bond market like a ponzi scheme until people stop buying our debt.


RE: Cut out the bloat
By MadMan007 on 3/30/2009 2:08:42 PM , Rating: 2
Unbalanced trade agreements are also to blame. Resolution of trade disputes through the WTO takes far too long and even if a favorable finding is reached it's often after the damage has already been done.


anti-bush movement still strong
By Screwballl on 3/30/2009 12:58:46 PM , Rating: 5
quote:
First he reportedly finalized his plans for fuel economy increases for 2011 -- the first such increases in two decades.


Yet Bush and his administration had pushed for these increases for much of his time in office, it just seems that Congress delayed and pushed back the voting so now we have Obama taking credit.

How about the bills Bush signed raising the Standard in 2007?

http://blog.wired.com/cars/2007/12/auto-industry-w...

How about a year ago when much of it was originally introduced and some of it passed:

http://www.msnbc.msn.com/id/24258714/

Or how about the fact that Obamas standards are lower than Bush's?

http://biologicaldiversity.org/news/press_releases...

Also Clinton before him added all the emissions standard requirements which was the primary cause in drop of mileage in the late 90s and early 2000s; the more emissions controls you have on a vehicle, the lower the gas mileage. Take a mid 70s truck (say a Chevy with a 350ci V8) and you can get an easy 20-25 mpg city with it, yet the newer trucks with the same engine block get 15mpg (if you are lucky and drive like a 90 year old woman).

Yet with all this, the greenies called Bush names for not going "greener" and trying to adopt higher mileage standards... yet we have not heard an anti-Obama word from them about these new "lower" standards... I think this article writer seems to be one of those hypocrites.




RE: anti-bush movement still strong
By djc208 on 3/31/2009 8:07:48 AM , Rating: 2
I also find it amusing that Obama didn't like the proposals but yet he just released the new fuel economy standards. How exactly was GM and Chrysler supposed to develop a plan for restructuring when part of the rulebook was missing?

I also tend to wonder if Obama or any of his people understand the lead time on a new vehicle? The engineers can't whip something up overnight because the new full size sedan you've spent tens of millions on developing for the last three years won't meet the fuel economy requirements that didn't exist when that project was started.

Maybe Obama should just promise to re-pay the big three for development money spent on projects the new fuel economy standards have made unusable, like that wonderful small V8 diesel GM just shelved for their 1/2 ton pickups. That should keep them running for a while.


By Reclaimer77 on 4/1/2009 10:47:24 AM , Rating: 2
I would love to defend Bush on this, but the fact that he wanted to impose ever more lumbering standards on industry than a Communist like Obama, doesn't exactly sit well with this Conservative.

I respect him a lot as a person, but this is just another example of where he was drinking the Kool-Aid.


By 91TTZ on 3/30/2009 4:14:09 PM , Rating: 5
Dear DT writers,

Please work on improving your content instead of resorting to sensationalist headlines.




Hmmm....
By MrBungle123 on 3/30/2009 10:42:18 AM , Rating: 2
How much is Ford and Toyota stock running these days?... I think I need to call my broker.




By Chris Peredun on 3/30/2009 1:17:57 PM , Rating: 2
No immediate comment from Fiat, but Chrysler is "pleased" at having struck a deal.

Of course, that's like saying a man in the desert is "pleased" to find water.




Foreign Bailouts?
By Kary on 3/30/2009 2:40:39 PM , Rating: 2
quote:
....The government suggests that Chrysler merge with Italian automaker Fiat SpA, which it already gave a 35 percent stake to several months ago.
White House officials say that it will offer up $6B USD in a one-time bailout offer to the pair if they can complete negotiations.


So, make it an Italian owned company, then lend the Italian's $6B...please..someone, did I miss read that?




Bye Bye Camaro
By rudolphna on 3/30/2009 3:57:35 PM , Rating: 2
Well, you can pretty much be assured that the new Camaro is going to get the boot. Its a sports car after all, and probably according to the administration, "sports cars, and any non electric cars are a waste of money". I was so looking forward to the new camaro too. Dammit.




change ...
By Finnkc on 3/30/2009 10:13:56 AM , Rating: 1
now what?

you let them sink and burn ... and rebuild from the ground up under a thing called reality. Every building will fall with poor foundations ... and every inch of the domestic auto manufacture's business and product foundation was cracked and patched with bullshit for the last 40 years.




GM non-bailout
By dld542004 on 3/30/2009 11:53:18 AM , Rating: 1
Good to see that Obama will get credit for killing off Chrysler and GM and putting a lot of people out of work. Couldn't happen to a nicer guy!




So...
By Bender 123 on 3/30/09, Rating: -1
RE: So...
By DeepBlue1975 on 3/30/2009 10:05:42 AM , Rating: 5
I can't see the problem. The funds were offered, but not inconditionally. Now the companies do not seem to meet the government's conditions for releasing the money, so they don't.

Subjecting decisions to thorough analysis and tough conditions - specially when there's such a lot of money involved - looks pretty logical to me.


RE: So...
By retrospooty on 3/30/2009 10:09:39 AM , Rating: 1
Exactly... After looking deeply at it, they came to teh conclusion that many of uis saw already... GM cannot proceed as is. They absolutely have no business model that works. I am glad for this. MAybe after retructuring/BK they can emerge with a workable plan, and hopefully some decent cars.


RE: So...
By Bender 123 on 3/30/2009 10:21:27 AM , Rating: 5
Thats the point. Why did we give money to begin with? Why were they worthy 3 months ago, but not now?

All I want to see is what the plan is. Where are we going? How are we planning on getting there?


RE: So...
By chizow on 3/30/2009 10:41:41 AM , Rating: 2
Its just an extreme example of a catch 22. There is no positive outcome if the administration does nothing and lets these automakers go bankrupt. There will be a huge trickle down effect on the economy, in the short-term on auto-workers, but will also be seen all the way down the channel for suppliers, service, dealerships, etc. But this outcome will be certain without intervention.

So while slowly feeding these auto-makers "just enough" money to survive to essentially pay interest and payroll may just prolong their inevitable demise, there is still the chance they survive, which is still better than the certain prospects of no aid at all.


RE: So...
By callmeroy on 3/30/2009 10:48:57 AM , Rating: 2
I'm also at the point where I think a lot of the throwing money phase at the auto industry was because of politics...in other words -- for perception of doing something, as insanely stupid as it sounds I do believe they feel doing something and being ridiculed for that "something" is better than doing nothing and being ridiculed for doing "nothing".....welcome to the illogical dog and pony show of politics.


RE: So...
By JAB on 3/30/2009 11:31:39 AM , Rating: 2
Sad but true. Trowing money down a pit wont fix the basic problem but it looks good for a little wile. GM's only hope is to start from ground up and build a company that can stand on its own. Perpetual government support is a fate worse than death. They fought innovation too long sooner or later they were going to pay the price.


RE: So...
By TSS on 3/30/2009 11:08:53 AM , Rating: 4
i belive the new episode of southpark explained pretty accuratly why the treasury makes the decisions they do.

it should be still up at southparkstudios.com for anybody wondering what im taking about :P season 13 ep 3.


RE: So...
By Reclaimer77 on 3/30/2009 7:28:19 PM , Rating: 2
quote:
All I want to see is what the plan is. Where are we going? How are we planning on getting there?


Plan ?

Not to defend GM, but they are in an impossible situation. They have to make cars that environmentalist want, but not the consumer. They have to make a plan to please a radical president, AND their shareholders, while NOT getting rid of the unions. Oh and above all else, they have to do all of the above and MAKE a profit. Good luck ! All of this needs to happen in an increasingly hostile business environment where consumer confidence is down, and the Government has taken it upon itself to take over businesses. And make no mistake people, they ARE taking companies over. Once you let the government have a controlling interest in a company, they are visa-vi government entities.

A lot of people on DT seem to think the problem was GM asking for money, but NOT the government giving it. Excuse me ? That's a little backwards don't you think ?

quote:
Why did we give money to begin with?


Power and control. I honestly hate to say that, but at this point I can't believe there are still people out there who think this is all to "save the economy".


RE: So...
By DeepBlue1975 on 3/30/2009 12:43:50 PM , Rating: 2
It's very unfortunate to see lost of people loose their jobs because of some moronic company's decisions over the years, but that's what the market is about: if you don't do things well enough to stay profitable and keep your market share, you fall all the way down to bankruptcy and/or wait for a profitable company to come along and take the wheel so that business can be driven to profitability again.

With the high volume of car sales that's steadily been growing for the last few years, I can't think of any good reason as to why an automaker would have an excuse to fall other than being subpar when compared to competing products.


RE: So...
By MrBungle123 on 3/30/2009 1:26:45 PM , Rating: 2
quote:
I can't think of any good reason as to why an automaker would have an excuse to fall other than being subpar when compared to competing products


Union contracts which were unsustainable in the long term catching up with them.


RE: So...
By retrospooty on 3/30/2009 4:10:20 PM , Rating: 1
That is part of it, but sub-par cars is the bulk of it.


RE: So...
By rudolphna on 3/30/2009 4:43:48 PM , Rating: 2
Get with the program. Their cars are no longer sub-par. They havent been for years. The domestics, most notably Ford Motor, are on par with Foreign makes.


RE: So...
By DeepBlue1975 on 3/30/2009 10:44:30 PM , Rating: 3
Many people don't think the same, and whether true or not, that just goes to illustrate that once a brand ruins its own name getting a broadly bad reputation, it's very very hard to overcome that, and OK/acceptable cars and/or "comparable to other offerings" does not cut it in order to regain momentum.
After the bad fame has been earned, they really need to stand out from the crowd if they want to regain market share.

Things like cars are usually as some sort of cult, once someone gets a car from a brand who likes, that someone is very likely to go looking for the same brand when he thinks about a change. But if this person just happens to stumble upon a car of his fave brand which doesn't please him, he will then switch brands, but not after talking to all of his friends and neighbors about how bad his last experience with the brand was and how he won't touch one of those cars ever again.

Think about a girlfriend you fall inlove with, and then you find cheating on you. Your love will turn into hate almost instantly. Something similar happens with brands. Consistency and reliability through long periods of time is an absolute must to please the masses. Doesn't matter if you know their products are good now, most of the people will remember their crappy experiences and extrapolate that to every single new product coming off the same maker.


RE: So...
By retrospooty on 4/1/09, Rating: 0
RE: So...
By MrBungle123 on 3/30/2009 5:56:48 PM , Rating: 2
ummm...

Ford beats Toyota in quality rankings
Automaker takes lead spot in five of 19 segments in survey
http://www.msnbc.msn.com/id/19073071/


RE: So...
By Spuke on 3/30/2009 7:04:08 PM , Rating: 2
Buick is number one followed by Lexus. What's your point?


RE: So...
By retrospooty on 4/1/09, Rating: 0
RE: So...
By theapparition on 3/30/2009 5:46:52 PM , Rating: 1
quote:
MAybe after retructuring/BK they can emerge with a workable plan, and hopefully some decent cars .

Right,
Because a company with the highest quality brand of 2008 (Buick) and the 2008 Car of the Year is clearly incapable of making any decent cars.

Get with the 2000's and stop bitching about your ONE bad experience many, many moons ago.


RE: So...
By spread on 3/30/2009 10:08:45 AM , Rating: 2
So to you, doing something is bad, and doing nothing is bad.

o_O

This is a good step. Leave the company to fend for itself, like every other one. If it fails, they save them from bankruptcy but they have to restructure.


RE: So...
By FITCamaro on 3/30/2009 12:55:27 PM , Rating: 4
That's what conservatives wanted in the first place for the auto industry, banks, etc.

Don't act like Obama and the rest of the Democrats are for letting businesses try to survive on their own. Only government can fix our problems.


RE: So...
By FPP on 4/6/2009 7:51:30 PM , Rating: 2
Nonsense. GM has been restructuring for thrity years and they are now down to one more time.

Bush, correctly, said they'd either learn to compete or die. Obama, a socialist, is validating Bush's premise every day by basically having government conduct the Bankruptcy i.e. stock-for-debt, etc., etc.

There is nothing wrong with the domestic auto business they could not fix themselves. Obama is doing it all for votes and you are paying the tab. I will NEVER buy another GM car again...ever!


"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997














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