[Excerpted from Bill Cara's Daily Report]
If the White House believed that what the capital markets needed to recover was a full-out public relations exercise from Obama, Bernanke and Summers, as we saw yesterday afternoon, they were mistaken. After these leaders addressed the nation, the US equity market dropped over -1%.
On a day that started badly, and then got worse, not even extensive TV coverage of the A-Team was able to turn things around. Do you recall the Bush years after I started blogging five years ago when markets almost always got pumped when the President spoke. I used to say that it must be his network of Rangers hitting the Buy button because there was an amazing correlation between TV appearances and higher prices. Not so today.
On another front, I see that the Fiat CEO is demanding concessions from Chrysler’s workers before they invest 20% in the company. Wouldn’t bankruptcy change the playing field anyway, and without the help of the US taxpayer isn’t the company basically bankrupt?
I have suggested this before; no hand-outs from government or concessions from workers or suppliers. Force bankruptcy. Then, in the case of Chrysler, have the Ontario and/or Canadian government buy the assets. They could then spin off the non-Canadian units of Chrysler for the Canadian units of General Motors. Then, set up new management and new labor agreements, and underwrite the Dealer credit until the international credit markets start to work on their own. That would stabilize the situation.
You see, not for a moment do I believe that there are too many auto manufacturing plants – just too many that are badly managed, or OPI-managed (ie, in Other People’s Interests). Moreover, with the HB&B-initiated economic problems that have overwhelmed the world today, it’s doubtful that any North American auto manufacturer could survive on its own.