Chrysler to file for bankruptcy for the protection of it’s interest
By Daniel at 30 April, 2009, 12:44 pm
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They are allowed to protect THEIR interests. That’s what investments and bondholders are ENTITLED TO DO UNDER THE LAW! Obama can’t just use his position to violoate contract law. Didn’t we hear that when AIG folks got huge bonuses? That the law couldn’t be violated. Right now the President is picking winners and losers and doing it all in the name of “the greater good” but, for these hedge fund managers, they are chartered with doing what’s right for their clients.
Just like the oncoming storm at GM. Why should the bondholders that invested $27 billion get a 10% stake in the company but the government that invested $10 billion get a 50% stake. As a bondholder, do the math–that’s not fair. They should go to court and make their case and they should win.
Obama and Geithner and Bernanke can’t just sit back and use the PPT to bang the markets higher or to inject billions into banks either directly through TARP or indirectly via the Fed’s off-book, unchecked programs.
And if you filet the bondholders now, if I’m a bondholder or a bondholder wannabe in the future, I’m going to demand a much higher yield if, at some future date, I could have the President forcing a cramdown in violation of my bond contract.
Ten Myths about the Big Three from an engineers perspective …
1 - Their cars are JUNK. Yes, in the eighties and nineties. In the last three years, their quality ratings are very, very close to Toyota and Nissan, some models having fewer quality problems than even BMW. I am confident that Gm and Ford cars are statistically equal in quality to Toyota and Nissan.
2 - They don’t make cars people want to buy. In 2007, GM sold 9,369,524 cars worldwide. I guess GM twisted a lot of arms to do this.
3 - They brought this crisis on themselves. Wrong, People only stopped buying big cars and trucks when gasoline prices went thru the roof in Spring 2008. The housing crisis started a domino effect, which weakened demand for everything, not just cars. So all companies started laying off, which reduced consumer demand even further.
4 - Gm and Ford don’t innovate. Absolutley wrong. The State of the art, best in the world technology are in the Chevy Corvette, Chevy Volt, Ford Hybrid ( I own one ), Ford and Gm pickup trucks, Jeep 4 wheel drives. Gm first with stability control, OnStar, 4 wheel steering, Ford hybrid SUV, SYNC,
5 - The assembly line workers get paid $72 per hour. This figure has been proven wrong many times.
“The average GM assembly-line worker makes about $28 per hour in wages, and I can assure you that GM is not paying $42 an hour in health insurance and pension plan contributions. Rather, the $70 per hour figure is a ridiculous number obtained by adding up GM’s total labor, health, and pension costs, and then dividing by the total number of hours worked. In other words, it includes all the healthcare and retirement costs of retired workers.” Source = http://www.portfolio.com/views/blogs/market-movers/2008/11/18/the-return-of-the-70-per-hour-meme?tid=true
6 - It won’t matter if GM goes bankrupt. Consider an immediate, direct loss of 150,000 jobs with another 500,000 at Tier 1 and 2 suppliers would follow within months. Still does not matter?
7 - Gm benefits are too high. GM, a company with 200,000 employees, is supporting the number of retirees appropriate for a company with a workforce of 800,000, almost triple the size.
Meanwhile, Toyota and Honda, both growing companies, are supporting a retiree base which is relatively small compared to their current workforces. In other words, not many of transplant workers have retired yet. Gm has several hundred thousand retirees, that by law, it must support.
“Definitely a case where GM is still being punished today for mistakes it made in the past.”
8 - Big Three management is inept. I agree, many mistakes were made, ( remember the Excursion, Pontiac Aztek), but they are now hamstrung by the unions, bondholders and health care costs.
9 - Foreign cars are better. Don’t confuse features with quality. Foreign car companies are quicker to get new gizmos into their cars, but is having headlights that turn in corners really worth paying an extra $800 for?
10 - Gm is a dinosaur doomed to extinction. This becomes a self-fulfilling prophecy, if enough people keep supporting Foreign Car companies, instead of the Big Three.
The SINGLE, BIGGEST decision an American can make is … do I buy an American Car from General Motors, Ford, or Chrysler;
OR do I hammer another NAIL in the COFFIN of AMERICA and buy a foreign car?
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