Shiv Kapoor

Wall Street Breakfast: Must-Know News

Sure it is disappointing. But think about it $14 billion is not going to rescue GM or C unless the Unions accept lower wages immediately. If they do not, $14 billion might see both companies through two quarters max after which they will be insolvent once more. I do not think TARP provides a solution either, the Unions have to come back to the table and hopefully they will if it is clear that their agreement is worth diddly squat if they do not rationalze their compensation structures to parity with Japanese manufacturers in US. A proper Union agreement will greatly improve survival and perhaps even prosperity as the economy recovers. The alternative is a large increase in unemployment; should rise to 9.8% anyway but with this perhaps it could get a bit worse. Statistically, for employment to fall above 9.8% is a remote probability cause it is the level of mean less 3 standard deviation; but statistic modelling does not always work; all it can do is signal a near zero probability. An event can make 100% of that remote liklihood become reality, no matter how improbable. Not sure what the Unions are thinking here; do they want to work for another few months or a lifetime?