jadziasman

Chrysler: Looking for a Miracle to Survive

Yeah, sure, a miracle (LOL!).

That miracle would be called the U.S. taxpayer.

Even if the Fiat deal falls through, it's unlikely that Obama will pull the plug immediately.

As Michael Scott said on the next to most recent episode of "The Office" - 'Everyone deserves a second second-chance.'

Bank on it.

Bear Market Over? Not So Fast

I decided to sell all my stock in my 401K today after a slight gain from the Nov 08 low. It's not much, but I work in the auto industry in metro Detroit and I cannot risk losing any money I might need soon. Can't get any equity out of my home - never did so or wanted to before and sure can't now. The Detroit area Case-Shiller real estate price index just hit 77.8 - January 2000 = 100. Prices are back to what they were when Slick Willy was finishing up his first term.

I agree with the prediction of 450-550 S&P. There's just too much uncertainty with commercial real estate, Alt A and option ARMs, consumer and government debt and the "managed" bankruptcies of GM and Chrysler. It won't take much bad news to make the market plummet again.

Once the S&P does hit 500, I'll get the chance to ride the next bear rally. When will the S&P hit its next new high? Oh, 2015 or thereabouts.

Do the Automakers Deserve a Bail Out?

I feel your pain, TURI.

Unfortunately there is no analgesic that will alleviate it.

You're probably too young to remember when the US was a cheap offshore resource for European nations burdened with expensive raw materials and labor. Later on (much much later) the NAFTA shafta was followed by the drip drip drip FLOOD of cheap Chinese imports.

As Carole King famously sang: "And it's too late baby, now it's too late. Though we really did try to make it".

Do the Automakers Deserve a Bail Out?

The leadership of the Detroit 3 and the UAW were responsible, not the thousands of non-union workers and the myriad supplier employees that do not receive the same wages and benefits as the relatively few that make $73 per hour in total compensation. The UAW rank and file voted on contracts which their leadership negotiated with D3 management. It's difficult to turn down a good contract when you can get one.

The UAW rank and file grudgingly approved a new contract in 2007 that takes away most of what they've gained in the past 50 years. Unfortunately, the new contract starts in 2010. It's unfortunate that the changes weren't made immediately.

Keep in mind that the old domestic auto industry has been shrinking for the past 30 years. Competition from the Asian and European transplants has increased quality and vehicle content while reducing price with respect to inflation. The D3 are producing better vehicles than they did in the 70's and 80's.

A bail out is not the answer. Loans to help stabilize the industry until the financial crisis is solved is what is needed. ALL of the Big Six automakers in the US had large decreases in year over year sales in October, not just the D 3. The problem won't be resolved until consumers regain their confidence. And no one knows how long that will take.

Look at the loan as a lifeline to keep the D3 afloat until the financial crisis levels off. Once everything has settled down, then pull the plug.

Accelerating the downward spiral we're already in will make it much more likely to cause a depression that even Helicopter Ben might not be able to save us from.