Why Chrysler Needs to Declare Bankruptcy 34 comments
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If Chrysler does come to some kind of agreement with its banks — which is by no means a foregone conclusion — then why would it still want to declare bankrutpcy next week? The WSJ gets half of the story when it says that bankruptcy “would let Fiat pick and choose which operations it wants”, but then goes and confuses matters by saying that Fiat is interested in Chrysler “in its totality.”
The answer is that it’s all about the dealers — which are the reason why I said GM should declare bankruptcy as long ago as last July. Detroit is hobbled greatly by its legacy contracts with its dealers, and bankruptcy is the only way of getting out of those contracts. In many ways, I suspect that the dealers have the most to lose from bankruptcy proceedings. Lucky they don’t have a particularly strong and unified lobby, I guess.
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On Apr 24 02:24 PM jack kreg wrote:
> I so look forward to a severe BK that re-sets union wages to reality,
> that is max'ed out at low 40's including benefits, like is comparable
> to the real world salary's paid in the mainstream economy.
> Then, with the Chrysler unions in line, the rest of Detroit will
> have to buckle, and union workers will discover the real (zero) value
> of their unions and thoughts of how the "bought and paid for" Omaba
> presidency will take care of them.
Huge car makers are not going to sway the market pretending that they are making what the end user "really wants." There is just too much surplus capacity for that mindset now. The dealers, too, will have to make what they are seeing available to the supplier, in this case Chrysler. I'm sorry it's too late.
On Apr 24 10:57 AM Jed J wrote:
> Easy for you to say. Dealers, regardless of your personal opinion
> of them, have millions of their own dollars tied up in facilities
> and other assets based on promises the manufacturer has made to them
> over the years.
**** Being a conservative means that government shall fulfill the needs of the people as stated in the Constitution. We will have a fair governing body, protection from harm both foreign and domestic and the pursuit of happiness.
**** We will not belong to a national church and will have the right to worship or not.
**** Government will be run at the least cost and will not interfere with our lives and monies collected will be respected as belonging to the taxpayers and should not be either squandered or used to support non citizens or ideals that we object to that do not suit the majority.
(Quote)
**** It is important to keep government small so there is less chance of abuse of funds as well as abuse of power.
**** It was decided for the public good that education would be supported for children and that would come out of our taxes, Social Security is a fact of life however if money was put aside for each child born, say $10,000 at birth, repayable when the child earned money as a teen or paid back by twenty six or so Social Security as we know it may be unnecessary. We would each have an investment in the Government that we could live from when we are sixty five. (Unquote)
If you subscribe to these principles of our Founding Fathers, and, based on the above comments submitted so far that the pending Chrysler bailout is clearly speculative at best, you would arrive at the conclusion that any action of the Obama administration to do so would be contrary to the wishes of our Founding Fathers.
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People without symptoms could be stricken suddenly and within hours be too weak to walk; many died the next day. Symptoms included a blue tint to the face and coughing up blood caused by severe obstruction of the lungs. In some cases, the virus caused an uncontrollable hemorrhaging that filled the lungs, and patients drowned in their body fluids (pneumonia). In others, the flu caused frequent loss of bowel control and the victim would die from losing critical intestinal lining and blood loss.
On Apr 24 02:22 PM Car Guy 1999 wrote:
> Ever heard of NADA? The automotive dealer's trade association is
> one of the oldest and strongest of all. Please reseach your subject
> before making blanket statements.
The problem is, that unlike the union, NADA can't enforce an agreement on its members, and unlike the bondholders, each dealer has wildly differently situated, and protected by one of 50 different sets of state franchise laws.
To those who wonder why this is a problem, there are two main reasons. The first is that closing down a whole model line requires payouts to dealers.... making the elimination of unprofitable brands prohibitively expensive. Further, excess numbers of marginal dealers hurts the amount of dealer-financed promotion, investments in service, and requires more inventory financing, all of which ultimately hurt the automakers.
On Apr 24 03:07 PM altaman wrote:
> The Obama administration is "managing" this "bankruptcy" so that
> its union supports are protected and the taxpayers are the bagholders.
> Chrysler will not be reinvigorated but will just become another captive
> ward of the state. Get used to it folks - it is called fascism economics.
On Apr 24 11:06 PM osiso wrote:
> real world salary + benefits ==> competition on a global scale against
> korea, china....it is a 50%+ wage cut that is going to impact the
> entire us economy....just saying.
On Apr 24 08:22 PM User 401751 wrote:
> The biggest problem here is the double standard, the Fed. gives 185
> billion to AIG with no accountability, same goes for all the Banks,
> but when it comes to the Auto Industry is a different ball game,
> they the Media and most of all the Politicians always blame Labor,
> why do they not check out and see how much Labor cost is tied up
> in a vehcle it is minimal, also the CEO's and the Executives keep
> raking in millions while they drive the Companys down the tube, remember
> the Unions do not make the decisions on what vehicle to build and
> the design and style, neither does the Labor force, it is done at
> the top and that is were the real blame lies, even before the Economy
> took a powder these Exec's. were allready driving these company's
> down the tube and this downturn made it worse. The biggest difference
> between the Japanese Auto makers and the Big Three is that the Asians
> and Japanese do not rake all the millions by the Exc's and they are
> not so top heavy at the top. What is killing America, the Big three
> and Governmetnt is one word (seekingalpha.com/symbo...)
> and with that word comes a lot of undisarable baggage, why you the
> Press and the Politicians put the blame were it really lies, but
> of course you have the Politicians and the Banks were they take care
> of one another, with no Accountability for their selfish actions
> and the Media just cuddles up to them. You should all be ashamed
> of yourselves, but were there is Greed there is inaccuracy also and
> Greed has no shame it just has an appetite for more. Let us get the
> facts straight and stop dietorting them.
I hear what you say - and I am all for you making a great wage - just don't ask me - the taxpayer - to subsidize it or your health care, retirement, etc...
On Apr 26 06:59 PM willow49 wrote:
> Where do you work - Chucky Cheese? I hope one day you have a job
> with a decent salary. A salary on which you pay taxes that and allows
> you to contribute to the national economy. See how smirky you are
> then, when someone, out of ignorance and spite, wants it taken away.
>
>
> On Apr 24 11:06 PM osiso wrote:
Will Fiat actually take the bait?
Counting down . . . .
On Apr 25 09:49 PM a. palmer jr. wrote:
> I don't think we need all of our automakers out of business. I believe
> they all have the capabilities of producing military vehicles which
> we might need in the near future. GM built the HumVee, and although
> I don't care for the Hummers on the road, the HumVee is quite a help
> when we're in a battle. I don't think we want China building our
> military hardware!
- AM
As usual, politics blocks the only real way to do this by preventing nuclear power.
_ AM
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-AM
On Apr 24 02:24 PM jack kreg wrote:
> I so look forward to a severe BK that re-sets union wages to reality,
> that is max'ed out at low 40's including benefits, like is comparable
> to the real world salary's paid in the mainstream economy.
> Then, with the Chrysler unions in line, the rest of Detroit will
> have to buckle, and union workers will discover the real (zero) value
> of their unions and thoughts of how the "bought and paid for" Omaba
> presidency will take care of them.
On Apr 28 10:08 PM Ames Tiedeman wrote:
> A better topic would be, Why Chrysler Should Stop Building Cars.
> Bankruptcy or no bankruptcy this is a company with little appeal.
> Their Dodge truck brand and the Jeep brand are all that has any value
> here.
As for why the car companies are not getting the same juicy deals the banks did, I'm with Jasper M. The Treasury department is riddled with ex investment bankers and they are taking care of their own and throwing everybody else under the bus. What a crock!