George Bush Spent $4 Billion to Kill Chrysler–on Obama’s Watch

I’m convinced. George Bush just spent $4 billion (of your money) to kill Chrysler.

In his speech announcing the auto relief, Bush claimed he didn’t want to leave the auto crisis to his successor:

… there’s too great a risk that bankruptcy now would lead to a disorderly liquidation of American auto companies. My economic advisors believe that such a collapse would deal an unacceptably painful blow to hardworking Americans far beyond the auto industry. It would worsen a weak job market and exacerbate the financial crisis. It could send our suffering economy into a deeper and longer recession. And it would leave the next President to confront the demise of a major American industry in his first days of office.

He implied he had provided enough to GM and Chrysler to give them three full months to stave off bankruptcy.

First, they will give automakers three months to put in place plans to restructure into viable companies — which we believe they are capable of doing. 

Yet he also described giving them enough money to enter bankruptcy in orderly fashion.

Second, if restructuring cannot be accomplished outside of bankruptcy, the loans will provide time for companies to make the legal and financial preparations necessary for an orderly Chapter 11 process that offers a better prospect of long-term success — and gives consumers confidence that they can continue to buy American cars.

But he didn’t give Chrysler enough to stave off bankruptcy. 

Bush gave Chrysler $4 billion, all on December 29. Just one payment. Unlike GM, Bush is not giving Chrysler a second and third chunk of money after the new year (GM will get $4 billion on December 29, $5.4 billion on January 16, and $4 billion on February 17).

That already suggests that Bush doesn’t imagine Chrysler will be around after the New Year. Furthermore, that $4 billion is $3 billion less than Chrysler said it needed to remain viable (and to pay its suppliers). 

Now, it’s possible that Bush gave those amounts anticipating that GM would eat up Chrysler. After all, Bush actually gave GM more than what it asked for. GM had asked for $4 billion in December, another $4 billion in January, and $2 billion in February (with the possibility of coming back for another $8 billion later next year). So Bush has given GM $3.4 billion more than it asked for over the next three months–not far off the $3 billion Chrysler asked for but didn’t get. The reports from last Wednesday that GM and Chrysler had restarted merger talks would support this notion: that there’s an unspoken understanding that GM will absorb Chrysler, and in exchange, it will get Chrysler’s requested funds for the two months after a merger (presumably) would be in process.

But there are a couple of problems with this scenario, aside from the obvious fact that GM absorbing Chrysler–with its 3,300 dealers and 3 brands–is the exact opposite of what it should be doing to stay afloat, which would be to shed dealers and brands. Also, Chrysler’s decision on Thursday–the day after merger talks were reported and the day before Bush announced the loan–that it would idle all its plants for at least a month could either be a sign it sees those merger talks as failing, or simply an effort to idle while a merger goes through.

Then there’s the fact that, during earlier merger talks, GM had said it needed $10 to $12 billion to absorb Chrysler. Sure, it looks to get $13.4 over the next three months, but much of that will need to cover worsening market conditions since October, when it was looking for $10 billion.

And, finally, consider the fact that on the day Bush offered the loan, Cerberus offered the UAW and its creditors its entire stake in Chrysler’s manufacturing business. It couldn’t well be offering that if it was, at the same time, offering its entire stake to GM, could it?

In other words, Bush gave Chrysler $4 billion, apparently with no clear vision of how it would turn that $4 billion into viability. The only thing that is clear is that it is not enough to avoid Chrysler’s demise early next year–either through a bankruptcy that most experts agree would quickly turn into a Chapter 7 liquidation, or because it had been forcibly thrust onto GM.

Bush gave Chrysler $4 billion claiming it’ll prevent Chrysler’s demise "in [Obama’s] first days of office." But the only thing it appears it will do is ensure that its demise happens during Obama’s first days in office, rather than right now, on George Bush’s watch.

Now, maybe GM will agree to absorb Chrysler, calculating that the effect of a Chrysler bankruptcy on the supply chain will be more damaging than the trouble of having to shed many more dealers and brands than it already must already shed.  That’s about the only way that Bush’s $4 billion loan will lead to anything but the demise of Chrysler. But it seems highly likely the $4 billion you and I just paid to Chrysler serves primarily to shift the blame from Bush to Obama. 

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79 replies
  1. BoxTurtle says:

    Had to read that post three times.

    I’m operating on the assumption that BushCo has one or more of the following goals:

    1) Bail out their GOP buddies at Cerberus.
    2) Delay any failure of Chrysler until after noon on 1/20.
    3) Hurt enemies.

    Available data suggests that Cerberus is out of capitol, except for the bailout funds. Unless they’re sitting on a nest egg of CDS’s naming Chrysler, I see no benefit to them in a liquidation.

    Chrysler had already announced a January shutdown, so BushCo already had their delay. Frankly, I don’t expect Chrysler to restart. No benefit to Cerberus here, either.

    So I’m guessing that a GM assimilation of Chrysler is the plan. Naturally, GM would assume Chrysler’s debt and that would bail out Cerberus. Then GM would die under the weight of its obligations once the Government gave up on cash assistance, resulting in Obama being blamed. And destroying the UAW in the process.

    Boxturtle (what do I win?)

    • emptywheel says:

      Cerberus benefits from a liquidation because it takes CHrysler off its books. Anything it can do to stave the losses on Chrysler at this point, it will do.

      And right now, it doesn’t even seem to be on the hook for the $2 billion to backstop the loan.

  2. geewhizbang57 says:

    Chrysler is not the same as Ford or GM. It was ailing a long time ago, which is why they agreed to merge themselves with Daimler (Mercedes Benz) in Germany.

    The merger was not successful for either company, and Daimler has now sold off Chrysler to Cerberus.

    Judging from the cars Chrysler has released since they were spun back out from Daimler, Daimler sold Cerberus a pig in the poke. The styling is stiff. A review declared one supposedly new and improved model considerably worse than the previous model, managing somehow to have both a worse ride and very sloppy handling.

    I suspect that the best engineers and stylists from Chrysler still work for Daimler. The company is a hollowed out shell.

    Chrysler had to merge with another company because they have very little business outside the United States. Daimler was unfortunately the wrong parent as they really don’t understand how to market and design high-volume moderately priced cars.

    Both Ford and GM have international subsidiaries that are very profitable, and they are now finding that the US market is ready for some excellent cars that they have been making in these markets. They need a couple years to retool to build these cars over here, since importing them is too expensive.

    It costs enormous amounts of money to design new models, and to stay competitive it has to be done about every 4-6 years. This means that it is vitally necessary to sell the same designs all over the world to get the investment back.

    Chrysler can’t do that unless it gets absorbed by a partner with international reach. GM would be a much better fit than Daimler. Nissan/Renault would be a much better fit too.

    • emptywheel says:

      I agree with everything you say–except that GM is a good fit for Chrysler. Chrysler overlaps with GM in every segment in the US, so it just exacerbates GM’s existing problem with a surfeit of brands (though, arguably, it’ll be easier to keep Jeep as a viable company than to keep GMC, so it might offer GM more flexibility of how to shed brands). And, unlike Reneult/Nissan, there’s no upside for GM for Chrysler’s network of dealers.

      In short, there is no sane reason for GM to take Chrysler except 1) to get Jeep, which is more valuable than GMC, IMO, 2) get some of the factories in the US that are more efficient than GM factories (note, GM will also get NAFTA factories, which is a threat to UAW), and 3) to minimize supply chain woes from a Chrysler bankruptcy (those supply chain woes are already starting, btw, as some of Chrysler’s big suppliers are idling along with Chrysler for part of next month).

      But my bigger point is that Bush is spending $4 billion, but he is not going to achieve what he said he was going to achieve. That’s BS, IMO.

    • bmaz says:

      Outstanding comment. Exactly right. Except, as EW notes, the merger bit. In different times, or a year or two when they get healthy, GM might would work well (they could use Jeep); now is not such a point in time though.

  3. JohnLopresti says:

    A model A ford in various colors may be the new look Chrysler of the future. Bush’s administration did the usual Republican things, has continued to do so. I am not sure Iacocca did much in 1979, but what nice machines they were, though the company survived. Look for telcos to go the same way, into the IP wireless swamp, forget renting customers cradle phones for $12. month fee. I wonder if Congress will find the way out of the car company as car loan company morass, either, before Hades’dogCerberus skitters over the mountain pass with a few BN U$D, that was yesterday already, literally, looks like. Lada the Russian car mfg may be willing to help bail Chrysler, though it may be too soon for firstworld manufacturing intermingling of that proportion.

  4. geewhizbang57 says:

    GM may be as good as it gets even though it isn’t an ideal fit. While Nissan/Renault may be better, I doubt that they really want to take Chrysler over. GM probably doesn’t either, but if the government pays for it, maybe that would be better than letting Chrysler die anyway. There really is no hope for Chrysler without a merger.

    While they sold a lot of cars a few years ago they were very unreliable, so there will be few people wanting to buy a Chrysler product ever again.

    I do agree that GM needs to shed brands. The cost of duplicating its product line over so many nameplates has to be billions per year. Badge engineering doesn’t work, so each model has to have expensive differences that just increase the costs.

  5. plunger says:

    Wouldn’t it be interesting to see Cerberus develop into another form of Madoff debacle? Already, those with funds invested in this mess have been informed that redemptions are going to be tightly restricted for at least a year.

    I learned today of just some of the carnage left behind by Madoff in Aspen. One who lost the majority of his money is a friend of mine, and the list of names that have yet to be publicly revealed will sadden many. On the day the story broke, 15 Aspen homes went on the market for sale. Rumor has it that two local businessmen served as a conduit for Aspen’s wealthiest to funnel monies to Madoff’s fund. The wife of a very famous singer (since deceased) has lost everything.

    Anyone who remains stuck in Cerberus is feeling very nervous that they may be next. At that level of wealth, they all know someone stung by Madoff.

    • readerOfTeaLeaves says:

      Interesting comment; I just clicked here from this article at TPM on the brewing conversation that Madoff could not possibly have acted alone:
      http://www.talkingpointsmemo.c…..madoff.php

      I’m not making any connections between Madoff and Cerberus, but it’s certainly looking like Obama’s team may have a chance to rethink a great deal of the economic structure.

      I read these posts and sometimes can’t tell what the real story is; as Mike Barnacle asked on MSNBC.com a few days ago, “Is this a money story? Or is it a crime story?”

      But thanks, EW, for confirming what I thought that I’d seen in the news reports — that Chrysler was only getting **one** payment. That struck me as the kiss of death, but I haven’t yet spotted a news report that calls the question the way that you’ve done here.

      • plunger says:

        Oh, it’s definitely a crime story. My contention is that what Madoff did is just exactly what the entire financial services industry did. The only way that Madoff’s Ponzi Scheme was finally revealed is when enough people insisted on getting their money back.

        Picture all the “money” that “investors” believe they have in this thing called the “market.” If there were no penalties for withdrawing ones money at will, it would already have been revealed that the entire market is no less a Ponzi Scheme than was the Madoff operation.

        All of these confidence (con) games are only designed to function in one direction. There is no “market.” It’s all just smoke and mirrors.

        • readerOfTeaLeaves says:

          When the ’shadow market’ becomes bigger than the ‘real market’ — if, in fact, the CDOs and CDS’s are valued around $45 Trillion — then things are bound to implode. I agree we’re in the realm of smoke and mirrors. Probably with some crack, meth, hookers, and a lot of booze tossed into the mix.

          The Plantation Caucus is trying to frame the auto bailout as a problem of bad management and greedy unions. In fact, the problems originate in the large ’shadow marketplace’ with destabilizing ‘financial instruments’ like CDOs and CDS’s, with some corruption and criminal conduct on the side.

          Which means that, as Krugman points out, bailouts can’t possibly be anything more than band-aids. At this point, the whole economic system needs to be restructured.

          Given the flagrant criminal conduct we’re seeing, IMHO Krugman’s case seems pretty strong. And things like banks telling the AP they don’t have to disclose what they’ve done with TARP money does at least three things:
          1. Strengthen Paul Krugman’s argument
          2. Strengthen Barak Obama’s hand in creating new structures
          3. Expose the Plantation Caucus as tools of the ’shadow market’, some of whom (yes, I mean Richard Shelby and the Bush family retainers) were deeply involved in creating this mess.

          So there are three silver linings, IMHO.

    • victoria2dc says:

      Question: Isn’t GMAC in trouble with the credit default swaps… and is that the reason that Cerebus is trying to get out?

      I’m pretty clueless about this car stuff, but it seems that it’s the financial speculators again. No?

  6. Hmmm says:

    On the other hand…

    If Chrysler has been overlapping GM in its markets (Jeep excepted), then it sure seems that GM would benefit from Chrysler’s demise because GM would sell more units into those markets by picking up the sales that would have gone to Chrysler. This effect is independent of any changes in market size, but in the case of a market shrinkage like we’re seeing now, it sure seems like it’d be an effective way to prop GM sales up in the short term. And of course more upside when/if boom times return in the future. GM would want all of that, presuming they can eke out a per-vehicle net profit. So if we see something that looks like Chrysler the corporation being acquired by GM, and Chrysler the physical plant being offloaded to another party like UAW, well then maybe GM is buying Chrysler — maybe out of Chapter 11, or Chapter 9? — in order to kill a competitor.

    At the supply chain side I don’t understand the economics at all so I may well have this quite wrong, but at a 30k-foot level of abstraction it seems that what counts most is not the number of auto corporations nor brands, but rather the total number of vehicles sold at retail. If the same number of vehicles are sold then it shouldn’t matter so much to supply chain companies what the brand mix of the car sales are. An overall decrease in retail car sales should be far more hurtful to the supply chain than a change in the brand mix, shouldn’t it? Or are there per-auto-corporation, per-brand, or per-model net positive effects to take into account here?

    From a manufacturing POV, if GM were to sell more cars because they’re picking up sales that would have gone to Chrysler, then wouldn’t they need more workers to get them built? Perhaps more plants too? Would those needs be great enough to offset the losses from a permanent Chrysler shutdown any time soon? How ’bout longer term? If the UAW gets the Chrysler physical plant via Cerberus, can they liquidate that by selling to GM or are they stuck with a brownfielded white elephant?

    At the engineering & design side, however, I can definitely see net job losses from having fewer brands. That’s a per-brand, non-convertible activity.

    Hmmm… On yet a third hand… maybe handing UAW the Chrysler physical plant is just Dan Quayle’s sick demented parody take on the workers controlling the means of production…

    • Hmmm says:

      Also maybe Cerberus has CDS bets on Chrysler failing, and that’s how they’re making their money on the thing.

      • readerOfTeaLeaves says:

        That’s the thing that makes the most sense to me.

        CDS’s are ‘insurance’ contracts.
        No wonder American INSURANCE Group (AIG) got into such big trouble, eh?

        Look at the potential ratios of CDS payouts.
        Someone who holds CDS’s on Chrysler stands to make a lot of money, provided they bought back when this scenario seemed less likely.

        I think Buffett was correct that these are economic WMDs.

    • bmaz says:

      Chrysler is effectively a gnat compared to the Big Two; especially over the last 6 moths to a year. That is not enough gain, not even close, to offset the pain and cost of owning and operating all the plants, employees, officials etc. They just don’t need it, it is, except for Jeep, total dead weight.

    • emptywheel says:

      Couple of points.

      First, closing dealers costs money–a lot of money. It took GM 1-2 billion to close Oldsmobile, but most of that didn’t involve outright shutdowns of dealers. So to eliminate Chrysler altogether takes a LOT of money. And then, what’s the point, if we’re trying to save jobs and bring Chrysler to a soft landing?

      As to suppliers, that’s not the immediate problem. I deal with some of this here, but let me explain what I’m already beginning to see happen.

      First, because of announced shutdowns, Chrysler suppliers are heavily cutting back costs right now. They know they won’t make new delieveries to Chrysler, if ever, until February, and even then, only if Chrysler doesn’t go under. That means they won’t have a new infusion of cash after January (Chrysler owes suppliers a chunk of money–but as I said, they didn’t get enough to pay their suppliers) until around April (suppliers are paid 45 to 60 days after they deliver). Suppliers are, by and large, already close to the edge. This is likely to put any supplier who gets >40% of its business from Chsyler into–or close to–bankruptcy.

      Now, GM and Ford and the transplats will try to compensate. That’ll mean basically subsidizing some suppliers until they adjust from the Chsyler loss. In other cases, it’ll mean the manufacturers will go seize the tools (the molds and whatnot they use to make parts) from suppliers, but that gets dicey bc suppliers and manufacturers tend to squabble over who owns the tools (technically the manufacturers do, but the suppliers often don’t get paid for them). But that’s going to take some real dancing, and it is likely they won’t and can’t catch everything. Which will mean they may face shortages on parts in their own lines. This will lead to idilng of production on their own cars, which turns into lost sales and labor costs and the like.

      It’s a mess. It’s not easy to just get rid of even Chrysler, which is why we are purportedly paying $4 billion to avoid it.

      • Rayne says:

        I don’t have your depth in the big picture, but I have wondered whether bankruptcy wasn’t a necessity with Chrysler; it’d be the one way in which all the Chrysler dealers could be severed in one fell swoop. The entity purchasing Chrysler could pick and choose the ones they wanted to keep, if any.

        The problem with bankruptcy, though, is that it fucks over the supply chain; anybody getting payments within a specific period before the declaration is going to take a serious haircut.

        Could explain the firewalling of Nardelli, too. Don’t want him acting as if the organization is going belly up, would send an even stronger signal to panic to suppliers than they already read now.

      • Hmmm says:

        Thanks, ew. But doesn’t a whole lot of that trouble just plain go away in Chapter 11? Chapter 9 for sure. Why couldn’t GM waltz into bankruptcy court and buy the Jeep brand IP and parts without also having to take the dealer relationships?

        • bmaz says:

          The trustee will bounce the dealership contracts to sell the asset. The bankruptcy process itself will void/cancel those binding contracts.

          • Hmmm says:

            That’s what I thought. Can’t see that not happening, can you? With those encumbrances in place, Chrysler appears to be worth nothing to nobody financially speaking.

        • emptywheel says:

          You’ve got an impossible choice.

          Do you go bankrupt and make your cars toxic, bc no one will buy a car from a company in bankruptcy?

          Or do you shed dealers the hard way?

          In a sane political world, Congress would have dealt with this–there is nothing that Chapter 11 gives you that they can’t legislate (all car sales are, after all, interstate commerce). But fucking with dealers (or even finding a soft landing for them) is politically toxic for politicians, therefore we can’t do that–which would be the best thing for our country.

          • Hmmm says:

            I think we’re saying the same thing, then. If the company faces an impossible choice then viability is already gone and they’re only prolonging the inevitable. Either the company ends it all sooner or later, or else as you suggest the rules they’re playing under have to change. But any rule change has to happen soon enough that the company doesn’t succumb in the meanwhile, and there seems to be a conspicuous shortage of white knights at the moment. So if Chrysler goes Chapter 11 or Chapter 9, the dealers go to the back of the line and the pols can tsk, tsk and blame it all on Detroit knuckle-draggers and commie unions, as the Southern Bloc has been doing for some time now. Maybe some of the parts (brands etc.) get resurrected by being purchased out of bankruptcy by other car companies. Don’t know why UAW would want to get stuck with the physical plants given the possible liabilities.

  7. Hmmm says:

    @ 14, 15: I understand a CDS has a term, like any other insurance policy. That would help explain the hurry, i.e. maybe Cerberus (and/or some other entity we can’t see from here) is trying to force a Chrysler failure before their high-ratio CDSes lapse.

    • readerOfTeaLeaves says:

      I think you’ve nailed part of it – yes, like ‘term insurance’ the CDS’s evidently have time limitations.

      The other perceived threat to anyone holding CDS’s must be these:
      1. What if the seller (like AIG, or Citi, or Goldman Sachs) is now insolvent and can’t pay out the contracts?
      2. What if Obama does as masaccio — and others — recommend, comes into office takes one look at the role of CDS’s in creating momentum and force in the economic spiral we’re in and declares them illegal? Then those CDS holders wouldn’t be able to collect on their ‘contracts’ even if the firms that sold them were still solvent.

      Exciting times we live in, eh?

      • Hmmm says:

        The other perceived threat to anyone holding CDS’s must be these:
        1. What if the seller (like AIG, or Citi, or Goldman Sachs) is now insolvent and can’t pay out the contracts?

        I think that means you at least want to be first in line, so there’s another reason to rush the Chrysler crash..

        • readerOfTeaLeaves says:

          That’s what I’m thinking — and with Cerberus nearing insolvency (as I suspect), it is forcing a Chrysler crash as fast as it can in order to meet any CDS deadlines, plus as Rayne pointed out on an earlier thread may likely be trying to position itself to buy up more GM.

          But note the interesting comment by [email protected], which sure is interesting:

          “This time around the problems with the mortgage industry has never been a liquidity problem it has been an insolvency problem. I have for some time suspected the TARP money was intended for something other than the announced reason …the lack of transparency, from not wanting to let the public know the banks are insolvent ,,,,[and then], essentially privatize the work of FSLIC/FDIC, and make their bank friends more money, typical Republican cronyism, and if it fails blame Democrats.”[my bold]

          Looks like a classic Bu$hCo move.
          Did Congress get punk’d?
          Or is Nancy Pelosi (and Rahm) holding back some cards they don’t want anyone to see yet? (Yes, I’m a dreamer…)

          19genco, thx for that comment.
          But it sure reasons out that certainly AIG adn Citi are close to insolvent, and that must stem from derivatives. (Paulson and Bernacke seeming the least likely qualified to suss out that sort of problem, but I digress…)

          ———-
          Happy holidays to all round these parts, and here’s hoping the Wazzu Cougs will make a decent showing in 2009.

          Thanks for all the insights, remarkable wisdom… and even (taking a deep breath here) Trash Talk in 2008! Hope those with stockings get goodies, and those with Kwanza and other celebrations have a most festive time — safe journeys to all, reindeer-powered and otherwise!

        • CTuttle says:

          A couple of interesting turn(s) in events…

          First…

          Lawmakers are turning up the heat on banks that have received money from the Treasury Department’s $700 billion rescue fund after the Associated Press reported that they wouldn’t say how they are using the money.

          Sens. Dianne Feinstein, D-Calif., and Olympia Snowe, R-Maine, said Tuesday that they will propose legislation next month to force companies that receive money from the fund to report how they have spent it.

          And then…

          Fed grants GMAC authority to seek bailout funds

          General Motors’ chances of survival improved Wednesday after its financing arm became eligible to tap into federal bailout funds.

          The Federal Reserve approved GMAC Financial Services’ request to become a bank holding company, allowing it to apply for a portion of the $700 billion bailout fund and get emergency loans directly from the Fed.

          Analysts had speculated that without financial help, GMAC would have had to file for bankruptcy protection or shut down, dealing a serious blow to GM’s own chances for survival. The Fed cited “emergency conditions” in justifying its decision.

          The move to rescue an auto financing company was just the latest extension of the federal bailout program, which has designed to shore up ailing banks but has grown to include insurers and credit card companies.

          That could be why Cerbrus is wont to shed the GMAC arm…!

          • readerOfTeaLeaves says:

            Yes, but it’s weirder than that — GMAC also holds a lot of toxic mortgage debt.
            They need to spin that part off and they’re hoping the UAW will line up to take it.

            GMAC is the way that Cerberus is able to access TARP funds.
            So, a nice little package under the tree for them, eh?

          • bmaz says:

            But Tuttle, as part of GMAC getting bank holding company status, Cerberus had to reduce it’s ownership of GMAC to 15%, and GM down to 10%.

            • Hmmm says:

              Meaning that Cerberus accepted cram-downs, or that Cerberus had to sell shares? If they had to sell shares, who bought ‘em?

              • bmaz says:

                Masaccio says as to Cerberus, the distribution will be to its investors; at first that sounds horrible, but I am not sure that is so because the key is that Cerberus no longer has voting control of the enterprise known as GMAC I suppose.

  8. bmaz says:

    It’s a mess. It’s not easy to just get rid of even Chrysler, which is why we are purportedly paying $4 billion to avoid it.

    Marcy is right, in the whole comment above, as well as this last part. However, I think Chrysler is a goner. I think the 4 billion is to buy enough time to allow sufficient sorting out so as to not inflict fatal harm on the Big Two as Chrysler is being sorted out and disposed of. I am very sad to say that, I have a soft spot for the Chrysler Co. of yore; but that is the way I see it.

    • Petrocelli says:

      This is one of the few times I hope you are wrong. I think Chrysler has the chops to get turned around.

      Hyun Dai turned itself around, then turned Kia around. Consumers don’t buy price, they buy value and I hope that Chrysler gets a Board that is able to give a damn !

  9. Jane Hamsher says:

    Cerberus has gone to GMAC bondholders and told them (according to bondholders — Cerberus won’t comment) that they have to take 50 cents on the dollar equity in exchange. They’re evidently holding a gun to everyone’s head — take it or we declare bankruptcy:

    http://www.nytimes.com/2008/12…..f=business

    That will not only cut the bond debt in half, it will also get the interest payments off the books.

    Exactly what you’d be doing if you were trying to get the company in shape to sell.

  10. plunger says:

    As marketing campaigns go – this one is right up there with the best – without saying a word:



    This is what Detroit’s competition has been up to, and no amount of government intervention is going to undo it.

    By the way, how much do US taxpayers spend militarily to protect Korea – affording them the luxury to subsidize their auto industry such that it can kick our ass in the marketplace?

    • Rayne says:

      Rather stale and dated design. Looks like a cross between an older model Chrysler LHS back end and a Mercedes-Benz CL or S class front end.

      Not working for me, although I imagine the nouveau riche of the third world and the old rich here who’ve not lost their savings by way of Madoff may like this. Have to imagine design chops would be a resource foreign entities would like to acquire from American automakers.

      • plunger says:

        That’s the thing about design, you can just cherry pick the best of others without having to come up with anything new. They may have done exactly what you just said. That’s what made Toyota successful out of the chute in the pseudo-luxury market with Lexus and their other designs – for the most part, they just stole them from the Europeans.

        The two designs you just compared to the Kia both sell for more than this car’s $27K price point. Of course it’s a car for the “wanna be.” But our entire culture and auto industry was based on the aspirational. I think they’ve nailed a design and a price point that will sell all day long to those who wish to appear they are still employed and not losing their asses in the market. If you think it looks like a Mercedes coming toward you, they’ve succeeded from their perspective.

        • Petrocelli says:

          Lexus copied the resemblance of Mercedes but one upped the Germans in Customer Service and reliability.

          For that matter, Acura & Infiniti followed the same plan but fell on their faces because of lack of leadership.

          Sizzle sells only so many cars … you have to provide long term satisfaction to survive.

  11. Petrocelli says:

    To Marcy and all my fellow Wheelers … Merry Christmas, Season’s Greetings & Happy New Year !

    May the New Year bring a hundredfold increase in your wealth and happiness !

  12. Jkat says:

    i thought i’d read here at FDL .. right after the senate filibuster n the bridge loan that the Canadian gov’t was going to stpe in with 5bn$ to help chrysler … did that fall through .. or is it still out there ??

    it’s a damn shame .. chrysler has always made good cars and trucks imo .. i hate it too .. i’ve got three almost new company trucks [less than 2-yrs.-old ] that’ll become orphans .. and my next one was going to be one of of the “sprinter” high mileage box vans …

    shit … i hate chevy and ford’s trucks …

    • Rayne says:

      Yeah, you’re right about the Canadian money, may have to look and see whether the numbers all add up.

      There’s a pattern again, though; GM asked for 2.4 B, got 3 B while Chrysler asked for 1 B, requested amount not specified.

      Certainly looks like the Canadians shared notes with the Bush admin, and that GM is preferred.

      • skdadl says:

        Certainly looks like the Canadians shared notes with the Bush admin

        I’m shocked, shocked, I tell you. Where is Captain Renault when we really need him? (Oh, dear: I said Renault.)

        A warm and happy holiday to all the wonderful Wheelies and pups who have gathered here. It has been an, um, interesting year, but it helps so much to go through these times with people who have faith in clear heads and real democracy. And thanks especially to EW and bmaz — you guys are great, and I am so grateful.

          • skdadl says:

            By ze vay, deed you know there was gambling going on at the Casino?

            No! Will no one rid us of these meddlesome … [fill in the blanks]?

            I wrote a memorial to absent friends tonight, first of all because we all still miss Melanie (of Just a Bump in the Beltway and the Flu Wiki) very much. But I was thinking of Marie Roget too when I wrote it. I played a joyous Jessye Norman for them both, and for others.

  13. jdmckay says:

    Furthermore, that $4 billion is $3 billion less than Chrysler said it needed to remain viable (and to pay its suppliers).

    (…) After all, Bush actually gave GM more than what it asked for.

    I think you’re being too hard on Junior. From where I sit, grading on the curve, this is closest he’s gotten to getting anything right in 8 yrs. Heck, he’s only a few billion off this time, and he’s actually doing it in the right country.

  14. plunger says:

    Jkat:

    The Sprinter is likely to remain in production, if under some other name plate. It is not a Chrysler design.

  15. plunger says:

    Here’s a Christmas wish for the archives of history that pretty much sums up where we’re at (from the comment thread on Big Dan’s Blog):

    Merry Christmas to one and all.

    Appreciation and gratitude to those who fight for freedom, fairness, and justice and beat back corporate fascism with a vengeance and spotlight those who intend to swindle, pilfer, plunder, and bankrupt America for their personal self enrichment and that of their profiteering family and robber baron financial elite crony friends.

    *
    z | 12.24.08 – 5:14 pm

  16. 19genco says:

    I have done mortgage foreclosure defense work for almost 30 years. This time around the problems with the mortgage industry has never been a liquidity problem it has been an insolvency problem. I have for some time suspected the TARP money was intended for something other than the announced reason because the announced reason made no sense. I think the TARP money was probably given to the more solvent deposit banks to buy the insolvent deposit and investment banks so the government does not have to. This would also explain the lack of transparency, from not wanting to let the public know the banks are insolvent to preventing the “its another form of trickle down, this time trickle down aid” etc. (lots of reasons i.e. save the panicked depositors from bank runs, prevent gov’t take-over of insolvent banks, essentially privatize the work of FSLIC/FDIC, and make their bank friends more money, typical Republican cronyism, and if it fails blame Democrats.) The plan to give money to GM to buy out Chrysler would essentially fit the same mold. Instead of bankrupting Chrysler, putting lots of people on gov’t paid unemployment, etc., give money to GM to privatize the government’s job – and if it fails blame Democrats, because the downfall happened on Obama’s watch.

  17. KayInMaine says:

    George Bush and his Cabal also stole trillions upon trillions to kill America. I mean, really, can these assholes be more hateful? I hope not. I hope they all fall down the stairs today and tomorrow. (yes I know…I’m banned now for my violent outburst. LOL)

  18. Teddy Partridge says:

    Jeep’s not all that and a bag of chips anymore, either. Chrysler has spent about 20 years ringing the equity and goodwill out of that brand; not sure the Germans left much intact.

  19. Teddy Partridge says:

    For all this talk from Bush/CheneyCo about our being in a “time of war” isn’t it extraordinary that they are letting a major part of our manufacturing base implode? These three companies should have been turning out vehicles to support Bush’s Excellent Foreign Policy Adventure, not odd specialty shops CEOed by Bush Rangers and Pioneers.

    It’s absurd to see major manufacturers treated this way — we need an industrial policy and we need it right now.

  20. ThingsComeUndone says:

    And, finally, consider the fact that on the day Bush offered the loan, Cerberus offered the UAW and its creditors its entire stake in Chrysler’s manufacturing business. It couldn’t well be offering that if it was, at the same time, offering its entire stake to GM, could it?

    No offense but the UAW does not have much cash not like the big players like the Carlyle Group, Bain Capital etc Why isn’t a GOP hedge fund stepping up to buy this company?
    Because even they don’t want it not even at desperation sale prices? GM does not seem to want it? Was the price the UAW offered even going to let Cerberus break even on the deal?
    I think Bush wants to force Obama to take over Chrysler and save Cerbreus in the process.

  21. joejoejoe says:

    Tomorrow’s WaPo, D1: Fed Clears GMAC Plan To Become A Bank

    The Federal Reserve gave General Motors a crucial boost yesterday by approving a request from GMAC, which provides funding for most of the automaker’s dealers and many of its customers, to become a bank holding company. […]

    In return, the company is subjecting itself to regulations that could force changes in some business practices and limit its future profitability. For example, GMAC will need to hold more money in reserve against its portfolio of outstanding loans. The Fed also required GM, which owns 49 percent of the company, and Cerberus, the private equity firm that bought 51 percent of the company from GM in 2006, to divest much of their ownerships stakes, because commercial companies are not allowed to own banks.

    You know Hamsher and Markos and Christy and Duncan. Digby and Bowers and Silver and Krugman. But do you recall the most brilliant blogger of all? Marcy the Red-Nosed Wolverine!

    What does this Fed move mean smurt peeple?

  22. Eric150 says:

    There is one wrinkle in this; Daimler still owns approximately 20% of Chrysler. So what happens to that share of Chrysler? And why did Daimler retain any portion of Chrysler; it seemed like Daimler wanted to completely wash its hands of the matter? To what extent can Daimler scuttle any potential deal at this point? Or would Daimler be happy to sell off its portion of the company now? I just looked up via Google what the story on this is. Apparently, Cerberus is going to sue Daimler over the original in order to squeeze more money out of Daimler.

    There is a good reason why Cerberus is named after the mythological, multiheaded dog that guards the entrance to Hades; any company that sees this figure is doomed.

    • Hmmm says:

      If Chrysler goes into bankruptcy then Daimler’s shares would be dealt with in the bankruptcy process and probably worth $0.

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