UseMyFedTaxesInMyState

Offer Ford a Bridge Loan to Buy GM Assets

Kee is trying to answer a question that no one is asking. Why would Ford take on the unnecessary burden of reconciling the nation’s automotive manufacturing and retail over-capacity problem? By Ford’s behavior and words, they are much more inclined to “Stick to their own knitting.” Is this the typical investor advice that one receives on Stock Traders Daily?
Regarding Kee’s “Formal Proposal”:
• “Treat General Motors, Ford and Chrysler as separate entities.” – That is already what is being done – Nothing new about this.
• “Recognize that Ford is the most stable.” – Everyone already knows this – however, Ford’s stability is dependent on the rest of the industry being stable as well. Supplier- base stability is critical.
• “Offer a bridge loan to Ford”– Ford has not asked for this. Why give taxpayer money to someone who is not requesting it right now?
• “Allow General Motors to fail, and wipe out all legacy costs.” – Dumb idea. Legacy costs get transferred to Federal Government: Pensions and Healthcare costs would then be owned by the taxpayer- a “Wipe In”. In addition, a national economic disruption of this magnitude would cause many more businesses to take big hits with thousands or millions of people no longer employed.
• “Facilitate the purchase of GM assets by Ford using the bridge loan.” What specific assets would Ford purchase and for how much money?
• “The purchased assets should be lean and near profitable.” How would you specifically analyze and quantify this?
• “Ford should be able to repay the bridge loan with those revenues.” Again, specifically what amount are we talking about?
• “Chrysler should be left idle until they decide to declare bankruptcy too.” How do you quantify the economic effect of an automotive financing company, Chrysler Finance, not being solvent and it’s economic ramifications on the rest of the automotive industry.
• “Once Chrysler declares bankruptcy a similar transaction should occur.” – Are you suggesting that Ford also acquire Chrysler assets and perform a similar transaction?
In summary, most of Kee’s proposal does not make much sense, unless one wants a fairly complete unraveling of the US economy.