ATLBob

GM's Next Last Chance

In simplistic terms: It seems to me that whenever the US has faced an economic/financial crisis, the turn-around point was always precipitated by the fall and subsequent failure of the companies who had contributed to the problems, or who were already the 'walking-wounded' as a result of the economic downturn.

In every case, there was the usual gloom and doom from the media, lots of foot-dragging, hand-wringing and pontificating from congress and the executive branch, but ultimately some entities were sacrificed on the public alter after some definitive action was finally taken. This generally resulted in the termination of the entity and perhaps a 'purp walk' for a few well-deserved individuals. Banks that went belly-up during the S & L crisis, Enron, WorldCom, etc. all come to mind.

Today it looks like GM, Chrysler, AIG, and Citigroup would appear to be the among the most likely/deserved candidates for sacrifice via a structured bankruptcy process, with the possibility of restructure and rebirth into some smaller form that is able to function and compete without a government handout.

As GM Goes, So Goes the Nation (Part 2)

Kudos for a nice article.

I don't think the United States will see the 'bottom' of the current recession/stock market deterioration, and begin the journey to serious recovery until companies like GM are forced to face the same reality that other (smaller) businesses face when they continue to make poor business decisions and lose money on a consistent basis: bankruptcy and a reorganization plan or termination of the business.

While the complexity and consequences of bankruptcy will be painful in the short run, it should ultimately allow the best managed and most financially fit companies to thrive and stop subjecting the taxpayers of the country to the death of a thousand paper cuts.

There are consequences for actions and as long as our government continues to artificially prop up poorly managed, unprofitable entities like some of our car makers and banks, the lines will continue to form at the trough for taxpayer sponsored bailouts.

Stop the Bail-Outs, I Want to Get Off

Nice article.

Political pandering aside, the new administration should not entertain any sort of bail-out for automakers, since it would only enable the continued ineptitude of Detroit and delay the inevitable. I suggest that chapter 11 bankruptcy/reorganizat... may be a painful but proper long term solution for the sustained viability of American automakers, providing that they are willing to make the changes to compete in the global economy.

The big 3 automakers problems stem from their historically inept management, failure to re-tool and innovate, and union-driven legacy costs. The big 3 can't do anything without approval of the unions, who have essentially emasculated management.

Anyone remember the 1970's and the oil embargo? Gas prices climbed radically, shortages were everywhere, and long-lines were the rule whenever you were lucky enought to find a station that actually had gasoline. American automakers talked the talk about transitioning from huge, gas-guzzling V-8's to higher quality, fuel-effecient vehicles, but they never walked the walk: they failed to deliver on their promise in any meaningful way. They made token improvements while foreign automakers offered effecient/quality/high MPG products and grew marketshare at the expense of the 'big 3'. They watched as the Japanese, German, and Korean automakers opened factories in the US and made effecient, quality cars here using American workers. Fast forward to 2008 and look around at any parking lot or look around on the interstate, and what do you see? Tons of bulked-up, gas-sucking big 3 SUV's and pick up trucks.

Einstein once said that to continue to do the same thing repeatedly and expect a different result was the definition of insanity. If the new administration and Congress provide a bailout for Detroit, then we'll know that Forrest Gump's Momma was right: Stupid is as stupid does.

Citibank - On Guard! - Cramer's Stop Trading! (9/12/08)

IMHO, Sears Holdings is more of a real-estate play than a retail play, since both Sears and KMart are well-worn and past their prime in the retail world. Eddie L is a pretty smart guy and picked up lots of commercial property at 'blue light special' prices when he took charge.