atlasman

The Detroit Syndrome of Economic Failure

Interesting analogy. How about adding this one:

-GM going CH11 because it could not afford the wages, USG going bankrupt due to the country cannot afford its entitlements.

The solution to GM is simply cutting wages. The solution to US is cutting entitlements. We all have to work our way out of this jam. If we do not, both wages and entitlements will be cut to zero anyway.

-AM

Why Chrysler Needs to Declare Bankruptcy

I am hoping a BK will severly cut the price of a used Viper.


On Apr 28 10:08 PM Ames Tiedeman wrote:

> A better topic would be, Why Chrysler Should Stop Building Cars.
> Bankruptcy or no bankruptcy this is a company with little appeal.
> Their Dodge truck brand and the Jeep brand are all that has any value
> here.

Why Chrysler Needs to Declare Bankruptcy

LOL, you really slept soundly last night if you had that dream. No chance in hell Obama will let that happen as it would end his chances for a second term.
-AM


On Apr 24 02:24 PM jack kreg wrote:

> I so look forward to a severe BK that re-sets union wages to reality,
> that is max'ed out at low 40's including benefits, like is comparable
> to the real world salary's paid in the mainstream economy.
> Then, with the Chrysler unions in line, the rest of Detroit will
> have to buckle, and union workers will discover the real (zero) value
> of their unions and thoughts of how the "bought and paid for" Omaba
> presidency will take care of them.

Why Chrysler Needs to Declare Bankruptcy

I honestly do not get the electric car movement. We barely have enough electricity to make it through the summer. Where will we get the juice to power this new type of transportation. On the positive side, if we figure out the power issue, electric cars are much simpler to make as things like transmissions are not needed.
As usual, politics blocks the only real way to do this by preventing nuclear power.

_ AM

On Apr 24 01:24 PM James Rickman wrote:

> Electric Car Manufacturers Inspire New Paradigms (article) -- Think
> Global, a Norwegian based company funded by Rockport Capital Partners,
> Kleiner, Perkins, Caufield & Biers (early successful investors
> in Google (seekingalpha.com/symbo...), AOL (seekingalpha.com/symbo...)
> and Amazon.com (seekingalpha.com/symbo...) to name a few)
> and General Electric (seekingalpha.com/symbo...), is planning
> to introduce its partnership: Think electric cars in the U.S. market
> by the end of 2009. Price tag: about $25,000, made from 95% recyclable
> materials with a top speed of 65 miles per hour and range of 110
> miles per charge.

Why Chrysler Needs to Declare Bankruptcy

GM is getting rid of its weak dealers by withholding financing. They do not need to break contracts.
- AM

The Falling Real Price of New Cars

This is another good example of the impact globalization has had on the economy. It just isn't socks sold at Walmart but products of all sizes and types. You can argue all day long as to whether it is good or bad for the US economy but it does not really matter since it is the reality we face. The real question is how do we combat global competition. We can protect ourselves via tarriffs, import regulations, and other protectionist ways or we can work to make the US more competitive. I would argue that the latter option is the only real solution. Gov bailouts do not solve the root problem.

Obama Gives Ultimatums to GM, Chrysler: Rick Wagoner to Resign

Nothing like a political solution to a business problem to save the day.

Washington's Dismal Record as Investment Manager

Other than fighting wars, Washington has a dismal record in just about everything that it does. And lucky us, we get even more of their incompetence moving forward.

Nine Bailout Surprises from GM and Chrysler

303820 -

The reality is that we live in a hyper-competitive global economy. There is nothing that can be done to unwind this fact. US became the largest economy in the world because it could build better things more economically than anyone else. The big 3 became the big 3 because their products yielded more value than any other car company. Sadly this is no longer the case and the the result is unless they make significant changes which does not appear to be the direction they are headed, they will either end up in CH11 or be nationalized (Ford may be an exception). I consider CH11 the better of the two inevitable options as I do not want my children to have to further subsidize them.

Instead of focusing on favored industries or favored constituencies (i.e. car industry and people that bought mortgages that they could never afford), my preference would be for the Government to think about changes it could make that would make all US-based industries more competitive. This does not involved trillions of dollars like the Obama administrations (and Bush before him) is pursuiing. I believe this whole mess can be mitigated by sensibly reviewing and suspending all of the laws that make doing business in the US more difficult than it need to be. The most obvious examples include Sarbanes-Oxley and our current tax system. However there are hundred if not 1000s of laws and regulations that were designed to fix a specific problem but instead just made life more difficult for everyone else and make us in the end a little less competitive.

Believe me, as someone who has a retired father living on a pension which is at risk and who has worked in an industry that has been devastated over the last decade, I am not unsympathetic to the plight of people effected by global competition. However, I am very realistic about the reality we all face and strongly disagree that further subsidization is the solution. We compete and win, or die. Just like our forefathers.

Nine Bailout Surprises from GM and Chrysler

Nothing a simple CH11 cannot fix. It worked for the steel industry and airline industry (multiple times), it will work for the car industry. Government ownership is by far the worst possible solution.

There is this arguement that CH11 would decimate sales as people would avoid car companies in CH11 for fear of warranty and resell price issues. I got news for Chrysler and GovernmentMotors, they are already in this state and people will continue to avoid them until there status if fully resolved.