Archive for the ‘Chrysler’ Category

America Must Rebuild To Thrive; Obama Must Deliver Real, Lasting Goodies

December 25, 2008

America needs to reboot and re-invent itself.

Internationally, Israel wants a smackdown on Iran.  Medvedev and Putin want U.S. Missile Defense out of Europe.  And others are lining up too.

Americans want prosperity and jobs.  GM and Chryler want all the auto bailout they can get and the UAW wants a raise.

President-elect Obama, blissfully in the Hawaiian nirvana as we write, faces a long line of seekers looking for goodies this Christmas and next year.

Can he possibly deliver? 

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From Thomas Friedman
The New York Times

We’ve indulged ourselves for too long with tax cuts that we can’t afford, bailouts of auto companies that have become giant wealth-destruction machines, energy prices that do not encourage investment in 21st-century renewable power systems or efficient cars, public schools with no national standards to prevent illiterates from graduating and immigration policies that have our colleges educating the world’s best scientists and engineers and then, when these foreigners graduate, instead of stapling green cards to their diplomas, we order them to go home and start companies to compete against ours.

….

America still has the right stuff to thrive. We still have the most creative, diverse, innovative culture and open society — in a world where the ability to imagine and generate new ideas with speed and to implement them through global collaboration is the most important competitive advantage. China may have great airports, but last week it went back to censoring The New York Times and other Western news sites. Censorship restricts your people’s imaginations. That’s really, really dumb. And that’s why for all our missteps, the 21st century is still up for grabs.

John Kennedy led us on a journey to discover the moon. Obama needs to lead us on a journey to rediscover, rebuild and reinvent our own backyard.

Read it all:
http://www.nytimes.com/2008/12/24
/opinion/24friedman.html?em

Art Below by Steve Broder in the New York Times

Saving Capitalism No Sure Thing If “Cure” Undermines Economy

December 22, 2008

What’s good for General Motors may not ultimately be best for the global economy.

The Bush administration’s $13.4 billion rescue of GM and Chrysler is a fitting finish to a year in which governments around the world expanded their role in the economy and markets after three decades of retreat.

The intervention comes at what may prove to be a steep price. Future investment may be allocated less efficiently as risk-averse politicians make business decisions. Whenever banks decide to lend again, they are likely to find new capital requirements that will curb how freely they can do it. Interest rates may be pushed up by government borrowing to finance trillions of dollars of bailouts.

“We’re seeing a more statist world economy,” says Ken Rogoff, former chief economist at the International Monetary Fund and now a professor at Harvard University in Cambridge, Massachusetts. “That’s not good for growth in the longer run.”

It’s not good for stocks either, says Paola Sapienza, associate professor of finance at Northwestern University’s Kellogg School of Management. Slower economic growth means lower profits. Shares might also be hurt by investor uncertainty about the scope and timing of government intervention in the corporate sector.

“If the rules of the game are changing, people are reluctant to invest in the stock market,” Sapienza says.

From Bloomberg
By Simon Kennedy, Matthew Benjamin and Rich Miller

Read the rest:
http://www.bloomberg.com/apps/news?pi
d=washingtonstory&sid=aDjmuEpDoctc

Government Considers ‘Orderly’ Auto Bankruptcy

December 19, 2008

A week ago today the world was shocked when the United Auto workers refused pay and bnefit cuts and the Senate rejected an auto bailout bill.  Now the White House is seriously cosidering what is being called an “orderly bankruptcy”….

The Bush administration is looking at “orderly” bankruptcy as a possible way to deal with the desperately ailing U.S. auto industry, Treasury Secretary Henry Paulson said Thursday as carmakers readied more plant closings and a half million new jobless claims underscored the deteriorating national economy.

Cars are parked in the car park of Simon car re-import company ...
Too many cars….not enough buyers….

With General Motors, Chrysler and the rest of Detroit anxiously awaiting a White House decision on billions of dollars in emergency federal loans, Paulson said bankruptcy for Detroit automakers should be avoided if possible but that an orderly reorganization may be the best option to keep them from collapsing.

By JENNIFER LOVEN, AP White House Correspondent

“If the right outcome is reorganization or bankruptcy, then isn’t it better to get there through an orderly process?” Paulson said in a speech to a business forum Thursday night in New York.

Paulson said it was too risky to simply let the automakers fail.

“When you look at the size of this industry and look at all those that it touches in terms of suppliers and dealers … it would seem to be an imprudent risk to take,” he said.

President George W. Bush, asked earlier about an auto bailout, said he hadn’t decided what he would do….

Read the rest:
http://news.yahoo.com/s/ap/20081
219/ap_on_bi_ge/meltdown_autos

Bush Administration, Auto Execs Recrafting Bailout Plan

December 16, 2008

Bush administration officials and auto executives worked Monday to try to seal a deal for a multibillion-dollar industry bailout, amid hopes that the money could be available this week.

“It seems like the planets are becoming aligned,” said Rep. Fred Upton (R-Mich.), co-chairman of the Congressional Auto Caucus, who added that administration officials indicated to him that an announcement was likely by Wednesday.

By Jim Puzzanghera
The Los Angeles Times

General Motors Corp. and Chrysler have said they are near bankruptcy, and they have crucial payments due Jan. 2 to many auto part suppliers. With the holidays approaching, the Bush administration and the auto companies would need time even after a deal is completed to process the money, Upton said.

“It has to get done in the next day or two,” he said.

President Bush said his administration was moving quickly.

“This will not be a long process, because of the economic . . . fragility of the autos,” he told reporters late Sunday aboard Air Force One during his trip to Iraq and Afghanistan. The size of an emergency loan package and what strings the government would attach remained unclear Monday as officials reviewed the complex finances of GM and Chrysler.

Read the rest:
http://www.latimes.com/business/la-fi-bailout1
6-2008dec16,0,3974615.story?track=rss

Could $14 Billion Auto Bailout Reach $40 Billion?

December 15, 2008

The Bush administration is trying to determine whether to push U.S. automakers to file for bankruptcy, or send them government funding that could be worth more than the $14 billion package that was rejected by the Senate. 

A brand new Chevrolet is displayed at Santa Rosa Chevrolet December ... 
A brand new Chevrolet is displayed at Santa Rosa Chevrolet December 12, 2008 in Santa Rosa, California. The White House said Monday it was studying options for a bailout of the US auto industry without indicating when an announcement would be made.(AFP/Getty Images/File/Justin Sullivan)
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In weighing a much larger rescue effort for U.S. auto makers than originally envisioned, the Bush administration faces a complex set of decisions over what terms to seek — including whether to push the companies to file for bankruptcy — and how to raise necessary funds.

The administration is trying to determine how much money it will take to help the car companies, and is discussing a rescue totaling $10 billion to $40 billion or more.

One possible source of funding is the Treasury Department’s $700 billion fund set up to rescue the financial industry. Only about $15 billion remains uncommitted from the first tranche of $350 billion, so the Bush administration could be forced to request the second half to cover the car companies’ needs, people familiar with the situation said.

That likely would compel the administration to outline its plans for a range of other needs, including foreclosure prevention for struggling homeowners and possibly aid for state and local governments. That could spark another confrontation with lawmakers, who are increasingly divided over industry bailouts. Senate Republicans blocked a proposed bailout for the auto makers last week.

With Detroit’s car makers facing bleak short-term prospects due to a collapse in consumer demand for vehicles, the Bush administration was rushing to determine the extent of the companies’ financial problems. Late last week, some officials thought the government might be able to provide as little as $8 billion to tide the companies over until early next year. On Sunday, a person familiar with the situation said the companies’ collective needs could range from $10 billion to more than $30 billion. The administration spent the weekend poring over the auto makers’ books to assess their financial needs.

The Bush administration must also figure out whether, and how, to try to wring concessions from affected parties, including factory workers, dealers and holders of the companies’ debt. Without such concessions, the companies are likely to need cash infusions long into the future, congressional critics say. 

Read the rest:
http://online.wsj.com/article/SB122930098160805305.html

“Bailout Fatigue”: Automakers’ Treatment May Extend To Other Industries

December 15, 2008

In punting on a $14 billion rescue plan for the US auto industry, the US Senate has signaled that the struggle over who gets federal help – and who is left to take their lumps in the marketplace – is likely to be an acute and ongoing issue for lawmakers into the next Congress.

The auto bailout now falls to the Bush administration, at least for the moment. The White House said Friday it may tap part of the $700 billion meant to buttress the shaky financial-services sector for the purpose of saving any of Detroit’s Big Three from collapse. At time of writing, the administration was deciding what mechanism to use to help the industry.

By Gail Russell Chaddock
Christian Science Monitor

General Motors workers file out of the General Motors Assembly ... 
General Motors workers file out of the General Motors Assembly Plant in Arlington, Texas, during shift change Friday, Dec. 12, 2008. Festering animosity between the United Auto Workers and southern Senators who torpedoed the auto industry bailout bill erupted into full-fledged name calling Friday as union officials accused the lawmakers of trying to break the union on behalf of foreign automakers.(AP Photo/Tom Pennington)

Regardless, this month’s fight in the lame-duck Congress over the auto bailout is a cautionary tale for how lawmakers are likely to deal with future calls for help. Lesson No. 1 is that swift congressional action based on the premise that an industry is too big to fail – or that job losses in the absence of a government bailout would be cataclysmic for the economy – cannot be counted on.

It’s an argument that worked for the financial-services industry, which in early October extracted from Congress as much as $700 billion in government funds to save it from ruin tied to mortgage-related debt. But the way the Treasury Department has allocated the first $350 billion in the Troubled Asset Relief Program (TARP) has led to buyers’ remorse among many lawmakers – and appears to be making them more reticent to dole out dollars to ailing industries.

Read the rest:
http://news.yahoo.com/s/csm/2008
1215/ts_csm/awhyone

Auto Bailout: Not Monday: White House Mulls Option

December 15, 2008

The White House tossed out no lifeline for the teetering auto industry Sunday, although  President Bush reiterated that he was considering using money from the $700 billion financial bailout fund to provide loans to the carmakers.

“An abrupt bankruptcy for autos could be devastating for the economy,” Mr. Bush told reporters Monday aboard Air Force One during an unannounced trip to Iraq and Afghanistan. “We’re now in the process of working with the stakeholders on a way forward. We’re not quite ready to announce that yet.”

In a photo provided by the Ford Motor Co., the final Ford Expedition ...
In a photo provided by the Ford Motor Co., the final Ford Expedition is driven off the assembly line as production ends at Michigan Truck Plant in Wayne, Mich., Wednesday, Nov. 26, 2008. The move signals the beginning of the transformation of the auto plant to be retooled as a car plant to begin producing small, fuel-efficient vehicles in 2010. (AP Photo/Ford Motor Co., Sam VarnHagen)

Mr. Bush wouldn’t give a precise timetable but said, “This will not be a long process because of the economic fragility of the autos.”

White House officials said they did not expect to make an announcement Monday. The administration is considering ways to provide emergency aid to General Motors Corp. and Chrysler LLC, which have said they could run out of cash within weeks without federal aid.

Sen. Bob Corker, Tennessee Republican, who blocked legislation that would have provided $14 billion in loans to the automakers, said he had spoken with the White House early Sunday. “I don’t think they yet know what they’re going to do,” he said. Ron Gettelfinger, the president of the United Auto Workers, said the union had not held discussions with the White House.

CBS VIA ASSOCIATED PRESS Sen. Bob Corker spoke with White House officials and said, "I don't think they yet know what they're going to do."

Sen. Bob Corker

Associated Press

Read the rest:
http://www.washingtontimes.com/news/2008/dec/
15/bush-takes-no-action-to-salvage-auto-industry/

Auto Bailout: White House Has President’s Hand in the Door

December 14, 2008

As if President George W. Bush had his hand stuck after slamming it in a car door, the assembly line is moving and the White House, Treasury and Fed are trying to figure out what to do.

Bush supported and endorsed the Congressional plan, brought down by Senators of his own party last week.

Advocates now want the money to bailout the auto makers to come  from the Troubled Asset  Relief   Program (TARP).  But half the TARP money is gone and only about $15 Billion is available for carmakers.  Add to that the fact that Congress approved the TARP for purposes other than a “bailout” for auto makers.

The White House could get the money from the Federal Reserve.  But this is problematic too:  before the Congressional bailout failed, Fed Charman Ben Bernanke alread said the automakers had insufficient collateral (or ample “unencumbered assets”)  to secure a $15 Billion loan from the Fed.

In a letter to Senate Banking Committee Chairman Christopher Dodd, D-Conn., Bernanke wrote that any decision about whether to provide financial aid to Detroit is best left to Congress.

A key consideration in letting an auto company draw emergency cash loans from the Fed is whether the company has sufficient collateral or other security to ensure repayment of the loan. “It is unclear whether the auto manufacturers have unencumbered assets of sufficient amount and quality to meet this requirement,” Bernanke wrote.

US Federal Reserve Bank Chairman Ben Bernanke pauses during ... 
Federal Reserve Chairman Ben Bernanke

So, President Bush is between a rock and a hard place.

Finally, the sticking point with Republican Senators remains unresolved.  They want to know the plans of the automakers and their unions to get the workers’ pay and benefit packages more in line with the pay of their competitors like Toyota.

Bush Administration people are going over the automakers’ books and some announcemnt on a bailout could come ….on Tuesday….

File photo shows assembly line workers on a Toyota Motor's ... 
File photo shows assembly line workers on a Toyota Motor’s production line at the company’s Tsutsumi factory in Aichi prefecture, Japan. Commercial rating agency Fitch Ratings have downgraded the auto giant by two notches, warning that in the current slump even the strongest carmaker no longer deserved its top rating.(AFP/File/Toshifumi Kitamura)

With Unions, Republicans Ring Death Knell

December 13, 2008

Festering animosity between the United Auto Workers and Southern senators who torpedoed the auto industry bailout bill erupted into full-fledged name calling Friday as union officials accused the lawmakers of trying to break the union on behalf of foreign automakers.

By Tom Krisher and Kimberly S. Johnson
The Associated Press

United Auto Workers (UAW) union president Ron Gettelfinger (R) ...
UASW president Ron Gettelfinger (R) holds a press conference at union headquarters to discuss the failure of the bailout plan in Congress in Detroit, Michigan. The White House said Friday that it may tap a 700-billion-dollar rescue package to save US automakers from immediate collapse, a policy reversal hailed by Democrats and a major labor union.(AFP/Getty Images/Bill Pugliano)

The vitriol had been near the surface for weeks as senators from states that house the transplant automakers’ factories criticized the Detroit Three for management miscues and bloated UAW labor costs that lawmakers said make them uncompetitive.

But the UAW stopped biting its tongue after Republicans sank a House-passed bill Thursday night that would have loaned $14 billion to cash-poor General Motors Corp. and Chrysler LLC to keep them out of bankruptcy protection. The Bush administration later stepped in and said it was ready to make money available to the automakers, likely from the $700 billion Wall Street bailout program.

Still, autoworkers remain angry with the senators who tried to negotiate wage and benefit concessions from the union, then scuttled the House-passed bill that would have granted the loans and set up a “car czar” to oversee the nearly insolvent companies and get concessions from the union and creditors. Their top targets were Senate Minority Leader Mitch McConnell, R-Ky.; Sen. Bob Corker, R-Tenn., who led negotiations on a compromise; and Sen. Richard Shelby, R-Ala., who has been a vocal critic of the loans.

Read the rest:
http://finance.yahoo.com/news/Angry-UAW-memb
ers-lash-out-at-apf-13823458.html

Pontiac G6 and Chevrolet Malibu's are shown at the General Motors ... 
Pontiac G6 and Chevrolet Malibu’s are shown at the General Motors Orion Assembly plant in Orion Township, Mich., Friday, Dec. 12, 2008. Festering animosity between the United Auto Workers and southern Senators who torpedoed the auto industry bailout bill erupted into full-fledged name calling Friday as union officials accused the lawmakers of trying to break the union on behalf of foreign automakers.(AP Photo/Paul Sancya)

Senate Fails To Bailout Automakers But Bush May Fund Shortfall

December 12, 2008

The Bush administration would consider using money from a fund intended to rescue U.S. financial markets to prevent the collapse of the nation’s auto companies, White House spokeswoman Dana Perino said.

Bloomberg

“Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms,” Perino told reporters aboard Air Force One. “However give the current weakened state of the U.S. economy we will consider other options if necessary, including use of the TARP program to prevent a collapse of troubled automakers.”

General Motors Corp. and Chrysler LLC have said they need a total of $14 billion in loans to keep operating. An aid package for the automakers failed in the Senate last night.

Bush was pressed by House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid to tap funds from the Treasury’s $700 billion bank-rescue fund.

The Bush administration had warned of a million lost jobs if the industry imploded. The Senate vote was a repudiation of Bush, who personally lobbied for the bill. Only 10 Republicans in the Senate voted to move forward on the auto-rescue plan.

Read the rest:
http://news.yahoo.com/s/bloomberg/20081212/pl_
bloomberg/avqpiejeowq