Auto Task Force: We Won't Tell GM/Chrysler What to Build

TRAVERSE CITY, MICHIGAN – General Motors, Chrysler and the auto industry — not the banking industry — continue to be the whipping boys for members of the far right who paint the Obama administration not as post-supply side Keynesians, but as unmitigated socialists. Ron Bloom, the new chairman of the Treasury department’s Automotive Task Force, tried to address that at the Center for Automotive Research’s annual conference here Wednesday.Granted, he was preaching to the choir. This crowd consisted not of socialist refugees from the old Trabant factory in East Germany, but of North American supplier executives who make up the majority of the CAR Conference’s audience. I’d venture to bet that a majority identify themselves as Republicans.Bloom addressed criticism that GM, Chrysler and the task force subverted longstanding U.S. Chapter 11 rules in giving secured creditors low priority in each filing.”Those who write of the bankruptcy rule being turned on its head haven’t read the two judges’ opinions,” he said. There’s enough case study to show “enough exception that the rule was swallowed long ago.”The quick, 43-day Chrysler bankruptcy and 39-day GM bankruptcy were designed to best maximize each “estate,” and quickly get them back in the business of selling cars and trucks, Bloom said. And any money provided to such creditors is entirely at the discretion of the debtor-in-possession creditor — in this case, the U.S. Government.So why not let GM and Chrysler file Chapter 11s privately? Bloom agrees with GM CEO Fritz Henderson’s argument that in the current financial climate, no other debtor-in-possession creditor large enough to take over the automakers was available. Paying off secured creditors would have been costly, making it impossible for the two automakers to issue stock and repay the Treasury. Bloom says he won’t second-guess Henderson’s assertion that GM can start an initial public offering as early as 2010, and start paying the Treasury about $50 billion back. Bloom believes it possible, but the size of the IPO will depend on GM’s and the market’s condition. Chrysler will need more time. He said repeatedly that the Obama administration does not want to run the auto industry, that neither he nor Barack Obama believes they can run the auto industry better than industry executives. And yet, giving the federal government a stake in each automaker is a better way to shepherd our investment. “GM needed capital. Providing capital as debt would have compounded the situation.”Of course, this is automaker country, and it would be hard to find anyone here who didn’t find Bloom’s reassurances, well, reassuring. Without government intervention, GM and Chrysler would have liquidated, bringing much of the supplier base and probably the Ford Motor Company with them. Unemployment already is 15.4 percent in Michigan, 4.9 points higher than the national level.GM and Chrysler won’t be told what kinds of cars and trucks to build, beyond what the Environmental Protection Agency and the National Highway Traffic Safety Administration already mandate for each and every vehicle sold in the United States, Bloom said. Another speaker here, Rod Lache, managing director of Deutsche Bank Securities, said of Bloom’s “government intervention” in the auto industry, “Wall Street is not as concerned about this as you may believe.”Chapter 7 liquidation for GM and Chrysler would have collapsed Ford, Honda, Toyota, Nissan — most every automaker doing business in the U.S., Lache said.”We think that GM may be profitable by 2011. Ford looks like it may do it even later this year.” And yet, even with Wall Street’s support, a small, but vocal contingent in the U.S. see any government intervention as detrimental to the very core being of capitalism. Detrimental to unbridled capitalism, perhaps. The ravages of unbridled capitalism is, after all, what exacerbated GM’s and Chrysler’s problems in the first place.Nevertheless, with most of this crowd reassured by these Keynesian efforts to rebuild the auto industry, and with it a manufacturing-based economy, on Tuesday, so-called tea-baggers loudly protested a congressman’s press conference on extending the Cash for Clunkers bill at a St. Louis dealership. Why? Because it gave government-funded rebates to get consumers back into car dealerships? Because the $1-billion Cash for Clunkers program was more successful at stimulating the economy than George W. Bush’s $600-per-taxpayer rebate last year?Why do the tea-baggers hate the auto industry so much?
Source : blogs.motortrend.com/6565968/government/auto-task-force-we-wont-tell-gm-chrysler-what-to-build/index.html

Stimulus We Can Believe In: More Cash for Cash for Clunkers

DETROIT – Yes, it’s an economic stimulus program we can believe in. After one week, so many American drivers have traded in clunkers for $3500-$4500 in cash toward a new car that the program is nearly out of money. The Obama administration promised Friday morning that it would fund such trade-in deals signed over the weekend, even though the government has nearly used up the program’s $1-billion funding. Dealer applications have crashed the program’s computers. Friday afternoon, The Washington Post reports, the House voted 316-109 to throw another $2 billion into the clunkers pot. The money was slated for energy loan guarantees as part of the Obama economic stimulus package.While the aptly named Rep. Jerry Lewis (R-California) complained the money was being re-directed without any input from the House Appropriations Committee, Representative Candice Miller (R-Michigan) called the original program “the best $1 billion of economic stimulus funds that the government has ever spent.”She’s right. General Motors and Chrysler have received about $64 billion in federal loan guarantees so far. The Troubled Asset Relief Program (TARP) budgeted up to $700 billion in federal loans to banks, financial institutions and AIG Insurance. And nine failing banks that received $165 billion from the government last year paid more than $32 billion in bonuses to their employees. Each of the 4793 bankers received a minimum of $1 million. They may have been the only American consumers buying cars in the past few months.So at the risk of raising the ghost of Senator Everett Dirksen (“a billion here, a billion there and sooner or later, you’re talking real money,” although the number in his time may have been a million), what’s $3 billion if it gets people in showrooms again? If the last week is any indication, the extra $2 billion in Cash for Clunkers money won’t last more than, er, two weeks. Nice problem to have: if enough of the clunkers are sputtering into GM and Chrysler dealers, the cash may help GM and Chrysler pay back their loans more quickly. We’ll know more on Monday, when the automakers announce their July sales numbers.  If they report sales spikes after the Clunkers program commenced, it had better spur the Senate (where the $2-billion extension faces stiffer opposition) to quickly pass the House bill.
Source : blogs.motortrend.com/6537301/government/stimulus-we-can-believe-in-more-cash-for-cash-for-clunkers/index.html

eBay find: Mercedes and Chrysler was never a winning combination

Posted on 11.14.2008 17:05
by
Myles KornblattFiled under:
| funny | auctionLee Iacocca, the man who brought Chrysler back from the brink in the 80s, wanted to merge Chrysler into a larger company called Global Motors. He believed that taking U.S. manufacturing strength, European style, and Japanese build quality, would make the perfect cars. This is defiantly what he didn't have in mind. This car is for those who've decided that the perfect car is one that incorporates an almost twenty-year-old German design with 80s American “we're bring quality back, really!” (…)
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Senate to take up auto bailout bill Monday

The Senate plans to take up a $25 billion bill on Monday to bail out distressed domestic auto companies, but it is unclear if proponents can muster the necessary support.
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Source: GM-Chrysler deal will wait for election

Discussions over potential government funding to facilitate a General Motors acquisition of Chrysler are on hold until after Tuesday’s election.
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GM-Chrysler deal hits an impasse

A deal to merge General Motors Corp and Chrysler LLC has hit an impasse after the Bush administration ruled out funding for it, three people with direct knowledge of the talks said.
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Bankruptcy, Mimran, and Chrysler

The 1970s oil crisis plagued sales of high performance cars. In 1978, Lamborghini declared bankruptcy. An Italian court was appointed to find a buyer, and the Swiss-based Mimran brothers took over the company in 1984, after managing the company for four years while it was in receivership. The company remained solvent under Mimran’s control, selling the Countach, the Jalpa, and the LM002 during this time.

In a surprise move, the company was sold to the Chrysler Corporation in 1987. Lamborghini at the time was working on the Countach’s successor, the Diablo. Chrysler brought its resources, including design input, pollution controls, and new manufacturing techniques, into this development. Chrysler’s experience with the design of mass market vehicles improved areas of practicality and comfort that had been neglected earlier, including noise, vibration, and harshness (NVH), engineering, and ergonomics.

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