Joe Friday

Autoworkers' Pay Only Small Factor in Detroit's Problems

this discussion highlights the folly of the current bridge loan fiasco. The greatest part of the diffference between GM and the foreign manufacturers is their retiree obligations.

GM has something like 48B on its balance sheet as an accrued liability for retiree health care and other benefits. In Chap 11 that will be wiped out. There is no other way that GM can go forward as a sucessful company. That may be harsh and I agree it is completely unfair to the retirees but it is reality. These are the type of hard decisions and hard results that are required for successful restructurings.

Does anyone think that any Democratic government apointed "car czar" will have the political strength to do what has to be done?

The money coming from the government in this bailout is a complete waste of taxpayer dollars. In effect a transfer of wealth from the taxpayer to various creditors of GM who would otherwise not be paid. They money would be far wiser spent to fund a DIP loan for a proper chap 11.

Half of U.S. Consumers Delaying New Car Purchases

each year approximately 12M vehicles are "scrapped" in the US. Current run rates on vehicle sales (SAAR) is between 11-12M. It appears that this sales rate approximates the rate at which vehicles are being scrapped. Real growth in demand for vehicles should be consistent with population growth.
The sales rates we witnessed in the last few years of between 15-17M vehicles were unsustainable, and more of a function of insanely low financing rates then real "need". In essence, the auto industry brought forward demand, and now they will have to pay for that mistake.
it will take some time for that excess supply to work itself out of the market.

Big Three Automakers: Recapitalization or Bankruptcy?

while I agree with the premise, I believe it is naive to think that you can get negotiated agreeements with the creditors outside of the bankruptcy courts. I have been involved in these types of discussions, and they are simply not practical. Each stakeholder believes the other ones should take the bigger haircuts. It simply never works.
Chap 11 is almost inevitable for GM, in my view.