Congratulations, fellow American, you and I are now part-owners or at least managers in absentia of two of the most crippled manufacturing companies on earth--that being General Motors and Chrysler. Should we urge a merge? How many more billions of dollars will we fork over before this nightmare either ends or becomes a happy dream?
What's the deal? GM and Chysler today were granted loans of up to $17.4 billion dollars and a life-extension of three months to get their #*&^ together. Whaddaya think?
Some of the issues to be decided by federal government overseers: How many concessions from union workers. Does Chrysler, like the cheese, stand alone? New managers or keep the old gang? How many cars should they be building? This translates into shutting down plants, firing lots more people. Projected sales for 2009 are looking very slender at this point. Formal bankruptcy? What models do they make? For our purposes: does the Volt make it to the salesroom floor?
Chrysler's privately owned and will be granting equity to labor unions and creditors to lower its outstanding debt. The loans are supposed to force UAW wages to be reduced to match those at non-union factories run by foreign-owned automakers. That has displeased the union and its supporters in Congress. So, essentially this whole mess just moves on the down road and will be sitting in the parking lot when Obama's moving van arrives. Welcome to Washington, can we save Detroit?
In typical Washington logic, the two borrowers have until March 31 to show they can profitable at some unpsecified future date. If they can't succeed in somehow meeting that ill-defined standard of profitable or viable they have to repay the federal loans. Of course, they'll be broke and no private lender will give them a dime so how are they going to repay the taxpayers? By selling off their assets like excessive factory capacity and hot real estate in booming markets like Detroit, Flint and other rust-belt places. t is not clear what legal status all theseloan terms have, can the next President just unilaterally change all the terms of these loans? We shall find out in another month.
Remember, at the Senate hearings there was testimony that it would take as much as $120-billion to save the Detroit Three. And we all know how accurate all government price estimates have been so far, right? The Wall Street bail-out, loans to AIG, Iraq invasion, Katrina clean-up, Star Wars missile defense system--all brilliant investments still paying huge dividends to taxpayers like you and me. Aren't you being pestered by all the banks wanting to lower the interest rate on your credit cards? Ummmm...