GM Death Watch 180: Bail!

GM Death Watch 180: Bail!
http://www.thetruthaboutcars.com/gm-death-watch-180-bail/

Detroit's not flying the white flag just yet, but you can hear the
unmistakable sounds of unfurling. Post Black Tuesday, GM CEO Rick
Wagoner set about painting General Motors as a victim of unforeseeable
circumstances; the switch from truck to car sales was faster than
"anyone" could imagine. Chrysler CEO Bob Nardelli simply said
everything's fine– a sure sign that nothing is. And earlier today, Ford
President Mark Fields pleaded for government intervention to
protect/create a domestic electric vehicle battery industry. Clearly,
finally, The Big 2.8 are thinking ahead. To government bailouts.

Chrysler will be the first to file for Chapter 11. Ironically, the
ailing automaker's also the least likely to receive government
assistance. Yes, the feds bailed out Bear Stearns. Yes, the U.S.
government provided Chrysler with hundreds of millions in loan
guarantees the last time ChryCo was up against the wall– and received
handsome rewards for Lee Iaccoca's rescue. But that was then. This is now.

Chrysler owners Cerberus don't want an auto company-shaped millstone
around their neck. Any pretense that the private equity firm bought
Chrysler to run as a going concern will disappear the day they file.
Cerberus will use C11 to break-up the company, sell what it can, sue
Daimler, settle out of court and run in the opposite direction. You want
federal subsidies/guarantees/loans/whatever to keep this sucker afloat?
YOU get ‘em.

No doubt Chrysler's new new owners will receive some kind of public
assistance. But the idea that the entire company can be saved will be
jettisoned by everyone except the unions– who'll take what they can get.

Even if the Chrysler's dissolution gives GM and Ford a dead cat bounce–
and frankly, who could tell in this market?– GM will crank-up its
lobbying efforts for government assistance. Massive hybrid tax credit
for the electric - gas Chevrolet Volt? It's a given. Credits for
"resurrecting" old factories will also reappear. In fact, all the
creativity that should have gone into GM's cars will flow into shaping a
massive, green-tinged begging bowl.

And then, catastrophe. All these bail-out band aids cannot staunch GM's
wounds. The company will have to file. At that point, the tax-funded
pity party will REALLY start.

While America doesn't need a nationalized automobile industry any more
than England did, there's no question GM will find a willing partner in
Washington. For one thing, bailing out Detroit will mean bailing out
Michigan. The state is [still] too large and too powerful to let sink
beneath the Great Lakes under the weight of a total GM failure– despite
massive complicity. For another, the political narrative is pretty
compelling. It's not just Detroit that's on its knees (so to speak),
it's AMERICA! Let's keep America rolling! (Again.)

Of course, the southern states, where the transplants frolic, will be
none too happy watching their patrons' profits attacked by
federally-subsidized domestic competition. So there will be conditions
placed on these subsidies/guarantees/loans/whatever. Lots and LOTS of
conditions.

The days of excessive trough snuffling (i.e. Rick Wagoner's $14.4m
annual pay packet) will be finished. Pay will finally be tied to
performance. Current management will get a bit of a tongue-lashing on
the Hill by the aforementioned southern reps, but the Powers that Were
will drift off on their golden parachutes with their money and yes,
pride, intact.

The unions will demand– and receive– job guarantees. The feds will
stipulate that none of the money provided can be spent building cars
overseas, including Mexico and Canada. While GM will sleaze this–
building overseas cars here, importing parts– this stricture will
condemn GM to complete oblivion. But hey, you can't fight the will of
the working man.

And if that's not enough to turn a mediocre car company into an entirely
non-competitive corporate entity, there will be enough embedded green
initiatives to plant a good-sized forest. The word "sustainable" will
echo through the loan agreement like a cannon fired in the Grand Canyon–
with about as much effect on the environment.

I'd like to think that a new GM will rise from the ashes of the old. But
it seems obvious to me that neither GM's custodians nor the feds will
have the foresight, courage or political will to do what really needs
doing: the breakup and sale of all GM's brands.

That strategy would "save" GM by destroying it. The talent locked-up
within GM would be freed from the stifling, overarching bureaucracy, to
emerge in a focused and streamlined fashion. But a life-saving break-up
would require a fundamental shift in public consciousness. A politically
incorrect recognition that the American free market cuts both ways;
helping the losers weakens the system, rather than improves it. You
can't create competitiveness through legislation any more than you can
outlaw it.

It's a lesson GM will learn soon enough, one way or the other.

--
Civis Romanus Sum

"Jim Higgins" <gordian238.RemoveThis@hotmail.com> wrote in message
news:RqmdnWUwqML_Fs_VnZ2dnUVZ_rPinZ2d@posted.eaglecomputertechnology...
> GM Death Watch 180: Bail!
> http://www.thetruthaboutcars.com/gm-death-watch-180-bail/
>
> Detroit's not flying the white flag just yet, but you can hear the
> unmistakable sounds of unfurling. Post Black Tuesday, GM CEO Rick
> Wagoner set about painting General Motors as a victim of unforeseeable
> circumstances; the switch from truck to car sales was faster than
> "anyone" could imagine. Chrysler CEO Bob Nardelli simply said
> everything's fine– a sure sign that nothing is. And earlier today, Ford
> President Mark Fields pleaded for government intervention to
> protect/create a domestic electric vehicle battery industry. Clearly,
> finally, The Big 2.8 are thinking ahead. To government bailouts.
>
> Chrysler will be the first to file for Chapter 11. Ironically, the
> ailing automaker's also the least likely to receive government
> assistance. Yes, the feds bailed out Bear Stearns. Yes, the U.S.
> government provided Chrysler with hundreds of millions in loan
> guarantees the last time ChryCo was up against the wall– and received
> handsome rewards for Lee Iaccoca's rescue. But that was then. This is now.
>
> Chrysler owners Cerberus don't want an auto company-shaped millstone
> around their neck. Any pretense that the private equity firm bought
> Chrysler to run as a going concern will disappear the day they file.
> Cerberus will use C11 to break-up the company, sell what it can, sue
> Daimler, settle out of court and run in the opposite direction. You want
> federal subsidies/guarantees/loans/whatever to keep this sucker afloat?
> YOU get ‘em.
>
> No doubt Chrysler's new new owners will receive some kind of public
> assistance. But the idea that the entire company can be saved will be
> jettisoned by everyone except the unions– who'll take what they can get.
>
> Even if the Chrysler's dissolution gives GM and Ford a dead cat bounce–
> and frankly, who could tell in this market?– GM will crank-up its
> lobbying efforts for government assistance. Massive hybrid tax credit
> for the electric - gas Chevrolet Volt? It's a given. Credits for
> "resurrecting" old factories will also reappear. In fact, all the
> creativity that should have gone into GM's cars will flow into shaping a
> massive, green-tinged begging bowl.
>
> And then, catastrophe. All these bail-out band aids cannot staunch GM's
> wounds. The company will have to file. At that point, the tax-funded
> pity party will REALLY start.
>
> While America doesn't need a nationalized automobile industry any more
> than England did, there's no question GM will find a willing partner in
> Washington. For one thing, bailing out Detroit will mean bailing out
> Michigan. The state is [still] too large and too powerful to let sink
> beneath the Great Lakes under the weight of a total GM failure– despite
> massive complicity. For another, the political narrative is pretty
> compelling. It's not just Detroit that's on its knees (so to speak),
> it's AMERICA! Let's keep America rolling! (Again.)
>
> Of course, the southern states, where the transplants frolic, will be
> none too happy watching their patrons' profits attacked by
> federally-subsidized domestic competition. So there will be conditions
> placed on these subsidies/guarantees/loans/whatever. Lots and LOTS of
> conditions.
>
> The days of excessive trough snuffling (i.e. Rick Wagoner's $14.4m
> annual pay packet) will be finished. Pay will finally be tied to
> performance. Current management will get a bit of a tongue-lashing on
> the Hill by the aforementioned southern reps, but the Powers that Were
> will drift off on their golden parachutes with their money and yes,
> pride, intact.
>
> The unions will demand– and receive– job guarantees. The feds will
> stipulate that none of the money provided can be spent building cars
> overseas, including Mexico and Canada. While GM will sleaze this–
> building overseas cars here, importing parts– this stricture will
> condemn GM to complete oblivion. But hey, you can't fight the will of
> the working man.
>
> And if that's not enough to turn a mediocre car company into an entirely
> non-competitive corporate entity, there will be enough embedded green
> initiatives to plant a good-sized forest. The word "sustainable" will
> echo through the loan agreement like a cannon fired in the Grand Canyon–
> with about as much effect on the environment.
>
> I'd like to think that a new GM will rise from the ashes of the old. But
> it seems obvious to me that neither GM's custodians nor the feds will
> have the foresight, courage or political will to do what really needs
> doing: the breakup and sale of all GM's brands.
>
> That strategy would "save" GM by destroying it. The talent locked-up
> within GM would be freed from the stifling, overarching bureaucracy, to
> emerge in a focused and streamlined fashion. But a life-saving break-up
> would require a fundamental shift in public consciousness. A politically
> incorrect recognition that the American free market cuts both ways;
> helping the losers weakens the system, rather than improves it. You
> can't create competitiveness through legislation any more than you can
> outlaw it.
>
> It's a lesson GM will learn soon enough, one way or the other.
>
> --
> Civis Romanus Sum

GM cut there own throats again. If gas rises to $5 a gallon it will more
than likely snuff out GM. GM cut there own throats by being in self denial
regarding fuel consumption. With the slowly rising fuel prices they
continued producing gas hogging trucks, SUVs and now they have ust retooled
to build the new v8 retro Camaro. A big mistake. The 60s are gone along with
60's gas prices. While prices were rising slowly they should have been
focusing on performance oriented V-6 engines. As much as we all like the
sound and performance of the V8, its days are numbered. GM and other
American manufacturers need to be focusing on V6 and yes 4 cyl. performance.
Yes we all hate the annoying sound of the japanese so called 4cyl rice
rockets. Though the v6 sound is much more tolerable. Now that gas is no
longer slowly increasing but dratically increasing GM and friends are now
left with holding tons of on sellable steel at dealers across the nation.
How can they recoup this lost? That's the problem, they probably can't. If
just a few years ago they had taken the time to focus on quality, very
stylish more fuel efficient vehicles as opposed to trying to bring ack the
60s with a big engine retro Camaro or manufacturing the overstated excessive
road hogging Hummers then perhaps they could have prepared themselves for 4
or $5 gas prices. As it is now they don't have to much to sell that people
will want to spend $60 to over $100 for a fill up.