Author Topic: GM and Chrysler  (Read 5285 times)

Uccmal

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Re: GM and Chrysler
« Reply #10 on: March 31, 2009, 08:27:41 PM »
Those really fine GM plants in Oshawa, Ontario, would make a nice addition to Magna International. 

Whatever anyone thinks of its founder, Magna is at the moment the healthiest, and best managed car company run out of North America.  The make complete BMWs in Europe.  It's not much of a reach for them to build a high quality GM branded vehicle here. 

BTW: The comments on this thread about the President's strategy are very interesting.  I too am now wondering if GM is going to be the test case for a few of the big financial companies.
GARP tending toward value


Smazz

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Re: GM and Chrysler
« Reply #11 on: March 31, 2009, 08:35:05 PM »
Its funny,
I was just thinking of something along those very lines.
I have experience in the assembly and engineering of power plants and vehicles are like making snowmen in comparison.

It is very easy with todays technology and sourcing to develop an efficient assembly plant (thats all they really are) in little time.  They dont even need a current plant IMO. 

If they are smart they would put some new $ into natural gas conversions etc.
This would be the easiest low hanging fruit with the shortest change curve.

SharperDingaan

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Re: GM and Chrysler
« Reply #12 on: April 01, 2009, 06:10:09 AM »

Couple of points, then we'll call it a day;

The underlying US problem is continuing denial. The current recession/depression is a temporary thing, very smart people are working on it, but ultimately it'll be business as usual & the market will return to what it was before all this started. That is how we do it here, so get used to it.

GM, Chrysler, AIG, Zombie banks, etc. exist only because we can't imagine it otherwise. 'Car' & 'Wall Street' cultures tell us 'this is how it has to be', because somehow only 'they' understand it .... & how dare you question the emperor! But ... when you have some of the most efficient plants & lowest financing rates in the world, and still can't make a profit - that is incompetence; and failing to act early on the legacy issues simply underlines it. 'Car' culture is sick, & needs surgery.

When a rich kid gets into trouble, daddy reaches for his lawyer & they argue that little johnny/jenny shouldn't be penalized because it was just a one time thing & they move in different circles; pay a fine & move on. The defence argues that on the other side of the tracks little johnny/jenny's 'one time thing' caused enormous hardship; paying a fine isn't good enough, the underlying behaviour has to change. Millions of ordinary & hard working people on the 'other side of the tracks' are being put out of work because of this incompetence, & John Q Public has had it. Behaviour is going to change.

The 'car' solutions have been fairly well 'known' for some time. They weren't implemented because it wasn't expedient to do so, & it was far more profitable to simply continue with 'business as normal'. Whatever the administration does now will be a game changer, & the fact that it was done at all will be almost more important than what was actually done.

Camelot is a great place, but stay too long & you get in-breeding. Eventually it falls to the barbarians, they get 'assimilated', & the cycle repeats itself. We're living in historic times!

SD


 
 

 


   

Broxburnboy

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Re: GM and Chrysler
« Reply #13 on: April 01, 2009, 06:31:47 AM »
SharperD:

Well said, I must agree with you that we are living through a paradigm shift, and that the world economy
will take  a dramatic turn from an unsustainable debt driven consumer/producer economy to a sustainable but
much less materialistic economy.
The writing has been on the wall for many years and the economic impact of the change has been
made worse by the inertia of the debt driven economy and unjustified feelings of entitlement at all levels.
New economic policies should be judged by whether they act to prolong the current failed paradigm or enable the coming of the new.
In the case of GM and Chrysler..Will current government assistance simply prolong existing entitlements throughout the supply chain,
or act to produce a sustainable level of production of "green" vehicles?

Smazz

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Re: GM and Chrysler
« Reply #14 on: April 01, 2009, 11:10:40 AM »
The problem:

Culture of Entitlement

omagh

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Re: GM and Chrysler
« Reply #15 on: April 02, 2009, 06:08:18 PM »
http://www.nytimes.com/2009/04/03/business/03motors.html?partner=rss&emc=rss&pagewanted=print
G.M. Willing to Consider Bankruptcy
DETROIT — General Motors stated in a regulatory filing to the Treasury Department on Thursday that it is prepared to file for bankruptcy protection if it cannot restructure out of court.
It echoes what G.M.’s new chief executive, Fritz Henderson, said this week, but marks the first time G.M. has officially disclosed to President Obama’s auto task force that it was willing to consider such a step.

Hi KFR,

Bankruptcy seems to be in the cards...The warranty guarantee ensures that this consumer liability will be backstopped by the government rather than the new equity.  I was reading these links this morning which support your theory...
http://www.calculatedriskblog.com/2009/03/government-gm-chrysler-may-well-require.html
http://www.calculatedriskblog.com/2009/03/administration-on-gm-chrysler.html

-O

Am I wrong in thinking that Obama is pre-announcing the bankruptcy of GM and Chrysler. They are telling consumers that their warranties will be backed by the Federal Government.

It seems that on several occasions, the Obama Administration seems to pre-anounce what they will be doing and then coming out and doing it a couple of weeks after.




KFRCanuk

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Re: GM and Chrysler
« Reply #16 on: April 03, 2009, 12:01:21 PM »
Saw this on Autoblog and thought it was interesting

http://www.autoblog.com/2009/04/03/gm-and-aig-why-bondholders-might-want-bankruptcy/
Quote
Before we begin, let us state clearly that this is speculation by Karl Denninger at The Market Ticker. Examining the various stakeholders' interests in General Motors, Denninger has come up with a scenario that supposes GM's bondholders might actually want the automaker to file for bankruptcy.

The bondholders appear to be the biggest obstacle to restructuring. They're not allowing GM to reach its government-mandated target for debt reduction because they would lose much of their investment in the process. According to Denninger, however, the biggest and most savvy of those bondholders could get 100% of their investment back if GM files for bankruptcy. Those bondholders would have had their bonds backed by credit default swaps (CDS), which Denninger supposes would have been written in large part by insurance giant AIG. If that's the case, then we the taxpayers are on the hook to repay 100% of those bonds because the government has agreed to fulfill AIG's CDS collateral obligations.

Thus, these particular bondholders would have no reason to help GM stay afloat by reducing its debt obligations. If GM goes under, they would just wait for checks from the government to be made whole again. Denninger goes on to say that in such a scenario, these bondholders could make even more than 100% of their investment back because the government backing takes place "even if the bonds have a recovery in bankruptcy." The only way to stop this would be for the government to decline to back any more AIG obligations, which could then bankrupt the "too big to fail" AIG depending on its ultimate exposure, but would save GM. Decisions, decisions...

This theory relies on AIG being in the middle of things, yet it wouldn't be outrageous to think that the biggest and smartest institutional bondholders went to the best known CDS paper writer for protection. As if that weren't enough, Denninger suggests that government-backed warranty work could become "a monstrous inducement" for dealers to bilk the government, a version of Medicare fraud for the car industry. The next 57 days look to be as exciting as they will eventually be costly.

So it sounds like the tax payer pays to keep GM afloat or backstops AIG to back the CDS's due to bankruptcy. Wow... Can you say weapons of financial mass destruction?