Folly Writ Large.
Speaking Sunday 16 with John Tamny, editor of the thrillingly overwhelming RealClearMarkets, re the imminent opera of the Big Three car-makers. Mr. Tamny argues that GM is best let go into bankruptcy, to reorganize in some fashion, perhaps in the hands of 
another owner. He also argues that it is folly writ large for President-Elect Obama and his allies Mrs. Pelosi and Harry Reid to pour public monies that are needed elsewhere into a company that has wrecked itself with bad decisions over decades and is still so deeply in denial of its fate that it will stage cheesy, ludicrous, futile marketing of the grotesque Cadillac in South Korea (right)."In the end, the state of Michigan and the U.S. automobile sector are struggling not due to back luck, but precisely because they cling to a company that investors no longer value. And with GM shares near all-time lows, those with capital are stating loudly that so long as GM remains as is, the funds necessary for job creation will continue to flee."
Three Dollar Stocks.
A senior financier told me the fate of GM is already in the stock price, and all the arguments about Michigan, the supply chain, the speading gloom are a waste of breath. "Three dollar stocks don't survive," he said, and no more. I blinked and looked around the table of sophisticated, well-informed intelligentsia gathered at the Knickerbocker Club for supper and remarks by bold Muslim women working to educate Moslem college children. All the others were nodding. No one at the table owned GM or wanted to own GM. From a year high 0f $31, the decline was now terminal at $2.95 today. Not if but when and how GM is fragmented and sold off. Since I recognize the absolute firmness of this judgement, I also can see that it is what the Obama administration will refuse to see. Instead the Democratic majority will ignore the market judgment and perform money-printing tricks to ride out the recession. Barney Frank's Financial Oversight hearings on the fate of GM, Ford and Chrysler, which start on Wednesday 19, will provide clues as to which way the Obama team
will go in January. Public opinion is the gate-keeper, and Mr. Obama does possess that email chain of ten million cheerleaders for commanding miracles on the scale of the oceans stop rising and the Jihad boys make peace and General Motors cuts labor costs. There will be banal TV ads for the unwanted, ineffective, grossly expensive electric car Volt, bought and paid for by the unimaginative Congress with the winking collusion of GM's clueless Rick Waggoner (right). Mr. Tamny's dry, persuasive opinion that GM is finished, and the confident nonchalance of my supper companions that GM is finished, convinces me that the end of all this will be GM in the grave. But not yet. First we will witness the walking death of GM through the first Obama term, administered by industrial undertakers and union ghouls and their cheerless PACs.
Many reports of Hillary Clinton getting Secretary of State post- a deal made way back when?
John -
Back in the day when you were on ABC Radio nightly, your series of interviews with Lou Ann Hammond about hybrids and ethanol and where GM was in development of the hydrogen fueled cars as compared to Ford's success in Latin America etc. convinced me then, in 1995, that GM was already doomed. If it was so obvious then, shame on the Michigan Congressional delegation, the Michigan governor, the Michigan legislature, the unions and GM management for deluding everyone.
One can only hope that saving GM et al. will be the first of many overreaches by the Democrats.
Needed: an edit button for posts.
Of course I meant 2005, not 1995. It's been a long year . . .
Dateline: Brasilia/DF – It appears to be the opinion of most Brazilians that Obama will govern the same as Bush has: in America’s self-interest; i.e. continued domination and exploitation of its South American neighbors. They take their cue from their own President Lula who promised much, but has been unable to deliver due to his inability to make a clean break from the North American colossus.
On Sunday, I visited the chamber of the (Brazilian) Lower House and sat in one of the seats of the members of the popularly elected body. The room was impressive as is everything in this shiny new city that sprang up from nothing barely 50 years ago. I noted that this was where fortunes and power change hands by the simple push of a button. There are three: the green one stands for “yes”; the red one for “no”; the white one for “abstain”. As all the votes are likely bought and paid for in advance, the choreography of debate is but a formality. The real strings are pulled in Washington, they say.
If this is true, Obama may have been closer to right after all when he declared that he had visited 57 states during his campaign. Somehow I missed his visit to Brazil; but then there is skype. It remains unclear whether or not Obama has been sufficiently schooled in the art of Pavlovian politics (both at home and abroad) to affect strict obedience with respect to the policies he intends to impose –or, if his own preference for red will override reasoned nuance and thereby plunge the world into dog’s eye shades of gray.
Yesterday, a European stock analyst rated GM stock
at $0. That seems about right. I am always amazed when I see Rick Waggoner interviewed on TV that he isn't wearing
a paper bag on his head. How is it this guy is not embarrassed to appear in public?
Bankruptcy will give the big three the chance to re-organize, shed legacy health care and pension liabilities, and get rid of the layers of bureaucracy GM has built.
UAW and Democrats are adamantly against this. Loss of generous benefits to the Dems most loyal voters will hurt donations over the long haul. Michigan is an large important blue state, if UAW is castrated, it will be harder to mobilize.
If the investors in Lehman were hung out to dry, why should there be any difference for GM and Chrysler?
Americans will soon tire of bailouts, everyone needs to economize and take care of themselves and stop looking for a handout.
The GOP lost so badly because of fiscal irresponsibility. Let's see what happens when the Dems start spending money like drunken sailors on shore leave.
MJ said: If the investors in Lehman were hung out to dry, why should there be any difference for GM and Chrysler?
Because the market and analysts in general now realize that letting Lehman fail was a monumental mistake and actually caused much of the dislocation that has roiled the market for 2 months now. Nobody wants to see that happen again. In one sense, it's a Cuba proof: i.e., both represent text-book cases of why one doesn't want government bureaucrats (including Congress), even US government bureaucrats, (and maybe especially US government bureaucrats, who tend to be free-marketeers regardless of political persuasion) making critical decisions about economic winners and losers in what's left of our market-based economy. They are naturally incompetent in doing it. They don't have good insight into the operations of the market; they can't get reliable data timely; they have to coordinate with too many people to move adroitly; and they can't accurately model the outcomes of their decisions before they make them. The laboratory is too big and too complex to tolerate the kind of intervention government is capable of. The chaos principle will invariably make fools of them.
I would favor the bailout IF I thought we wouldn't be in the exact same spot at the end of 6 or 12 months, with the same companies and unions standing on the corner with their tin-cups and their earnest speeches about calamity befalling the US if they aren't rescued once again. Jim Cramer is convinced that if the auto companies are allowed to fail, the ripple effect thru job losses, more mortgage defaults, and consumer buying collapse will indeed create a second Great Depression. I don't know. I don't think anyone knows. The question is Harry Callahan's, Do you feel lucky? Well? Do you?
I don't know if it's just because the election is over or what, but it does seem like Congress is beginning to exercise just a wee bit of restraint again. When Paulson announced that he wasn't going to buy "toxic" assets as previously agreed, Pelosi et al sent him a message of "Not ah say NOT so fast there, Son". The Dems are already announcing that they "doubt any bailout of the auto companies will happen before January". They are somewhat half-heartedly blaming the Republicans for being able to block the type of bailout package they (the Dems) envision; but I don't believe that's the real reason. I must admit I don't know the real reason ... when I try to figure out how Democrats in Congress "reason" I get about as much traction as trying to predict what the gorillas will do next at the Zoo....
Comment to PK: Well, of course the U.S. will govern in its best interest. In whose best interest does Brazil govern in, Mozambique's? If we didn't govern in our own best interest it would a kind of global socialism at a State level, which would make me kutz about as readily as the kind of national socialism (pun intended) I believe Obama believes in ...
If GM were smart, they'd move their manufacturing to China or some other country where labor is cheaper and the unions don't exist. The UAW must be moronic in that they remind me of the white knuckled driver going over the cliff, believing they are on the road to riches. If GM goes under, and/or Ford and Chrysler, where will they work, and for the unions, who will pay dues? With the economy the way it is, and people holding on to their money, it's not like we are willing or able to pay more to support the unions. The unions and their thugs are living in a world that does not exist anymore. GM (Ford and Dodge) needs to go east to survive.
Peter:
Does it ever get tiring that everything is America's fault? When will the puerile people of the world take responsibility for their own futures? Of course our president should look out for our best interests, just as a president for any other country should look out for theirs. How ridiculous.
JB, I don't know if this is true, but if it is, it would be interesting:
http://gatewaypundit.blogspot.com/2008/11/breaking-obama-picks-jarrett-as-top.html
Letting the assembly line fail and lose the capability of producing land vehicles? Not going to happen this go'round.
What won World War II? What wins the coming wars? Recon and Mobility
Research and Development
Resilience and Determination
At one point in time, there was a B17 Fortress rolling out the assembly line door every 63 minutes.
How strange that corporation-bashing Democrats, including our President-elect, have suddenly turned tender-hearted towards the quintessential business-behemoth GM, as well as its two ugly sisters! That's because the "auto industry bailout" is actually a bailout of the UAW, just as Nancy Pelosi, Chris Dodd, and Barney Fwank [sic] et.al., want to use most of that magical $700 billion to bail out their own disastrous mortgage socialism policies, which they obviously still intend to pursue in some form or other. What a golden opportunity McCain missed to oppose all this nonsense, separate himself from Dubya and Godfather Paulson and the rest of the Goldman Sachs mafia, and really stand up for the American people! Mac would be the President-elect today, not the Southside Messiah.
Bankruptcy will give the big three the chance to re-organize, shed legacy health care and pension liabilities, and get rid of the layers of bureaucracy GM has built.
Automobiles are expensive durable goods, the buyer expects that the manufacturer will be around long enough to provide parts and service during 5 or more years of ownership.
Who is going to buy a car from a bankrupt automaker?
Lennon/McCartney
From The Blue Album
Love, love, love, love, love, love, love, love, love.
There's nothing you can do that can't be done.
Nothing you can sing that can't be sung.
Nothing you can say but you can learn how to play the game. It's easy.
There's nothing you can make that can't be made.
No one you can save that can't be saved.
Nothing you can do but you can learn how to be in time
It's easy.
All you need is love, all you need is love,
All you need is love, love, love is all you need.
Love, love, love, love, love, love, love, love, love.
All you need is love, all you need is love,
All you need is love, love, love is all you need.
There's nothing you can know that isn't known.
Nothing you can see that isn't shown.
Nowhere you can be that isn't where you're meant to be.
It's easy.
All you need is love, all you need is love,
All you need is love, love, love is all you need.
All you need is love (all together now)
All you need is love (everybody)
All you need is love, love, love is all you need.
GM is the manufacturing equivalent to Lehman Brothers. And we have seen what happened when Lehman was allowed to fail.
There are no good options. GM will be bailed out and the can gets kicked down the road to be revisited at a later date.
A hard line Middle East policy against extremism ensures the assembly line will be preserved.
Hawkish Democrats wanting to put an end to war?
What sense id there?
Obama, himself, has referred to bridge funding for automakers as an opportunity for them to "retool"
Why do we think GM is a Chapter 11 Reorganization, rather than a Chapter 7 Liquidation?
"I think I know I mean a yes but it's all wrong
That is I think I disagree...."
(ibid)
You sir, are a complete moron. We do not need to preserve Chrysler or GM to build
just in case we enter into WWIII! Military vehicles, including trucks, are made professionally by many companies that DO NOT outsource their. Need proof? What would you rather be cruising in when traveling through IED territroy? A piece-o'-crap Hummer or the new IED-proof truck from OshKosh? You are probably 75 years old.