As we follow the continued struggles of the US auto industry, the events this weekend may signal a real turning point. But is it a turn for the better, or the worse? Obama asked Wagoner to resign, and he did. Wagoner was Mr. No Bankruptcy. Now he is gone. THe president's public message was to once again give GM and Chrysler limited time to come up with a workable plan before they can get more federal aid. This time, the message suggested the use of bankruptcy to restructure the deals with suppliers, unions and dealers. Based on this, I'd say the chance of bankruptcy is pretty high. Here is link to the CNN story:

http://www.cnn.com/2009/POLITICS/03/30/oba...utos/index.html

 

Not to sound political, but it's pretty darn scary to me when the government can hire and fire corporate executives. That should be left to the stockholders.

 

Technically, the President did not fire him. He asked Wagoner to resign, and Wagoner did. Based on all the bail-out money we have given GM, I'm not sure who the controling interest is at this point. It may well be the Federal Government.

 

isn't the US the stockholders now?
I've been trying to reconcile a lot of issues on this.

First, is I think corporate governance may be reaching a crisis in this country.
I have been struggling of late with Wall street.
There seems to be to much of a disconnect between investing, speculating and stock values.

I have been seeing more and more ads on TV of late teaching people how to "trade" using trends analysis and statistical models.

Trading does have value in that it provides liquidity to the markets and I don't mean to diminish the value of that but.....
Spec trading is parasitic to stability in the markets and puts a large number of shares into the hands of investors who have zero interest in the long term returns of the company.

 

You may have missed it, but the government now is the major stockholder. Otherwise the company would be bankrupt already.

 

I think Mr. Obama is sending a strong message to the auto makers and their unions. Concessions MUST be made and they have to be impressive AND across the board. Obama is threatening withholding bail out funds and forcing them into bankruptcy. The automakers obviously want to avoid that. Who wants to buy a car from a bankrupt company? Bankruptcy may give them a clean slate to work from, but at what cost? Perhaps the knowledge that the lid on the cookie jar is closed until they have a better plan will help.

The gov of Michigan was on the news this AM. Obviously she is of the opinion that to not help the automakers survive would be more costly than allowing them to fail. Since we have a personal stake in this, I would tend to agree.

I still wonder why AIG did not have to "dance for their supper" the way the automakers have. Could it be that AIG has a lot to do with the pension for federal government employees?

I just found this on line.

Chrysler LLC has reached an agreement on a framework of a global alliance with Italian automaker Fiat SpA (FIA.MI) that has the support of the U.S. Treasury, Chrysler's CEO Bob Nardelli said on Monday.

Maybe bankruptcy is not in the cards at this time.

 

Lainey,

That deal has been under discussion for months now, Fiat was waiting to see how much $ the US govt. was willing to chip in before it signed. Fiat is not putting up any money. I'm not sure Fiat is even getting an ownership interest in Chrysler. That is why they are calling it an alliance.

 

I was under the impression that Fiat was to "purchase" up to 35% of Chrysler.

There was a comment that surfaced about Barack during the campaign, the comment was from Biden, and the essence was that Barack had steel in his spine. I think what you are seeing is just that. I think that he believes that it is time to play hardball with the bail-out funds. Perhaps I am wrong, it's happened before and it will happen again.

Jumpy, as far as the government telling a company what they must do, it seems similar to the way that Venture Capitalists work. "You want the cash, here's our requirements", if you don't meet them, you don't get no stinking money.

I have had my share of experience with their lot, and to see Barry-O take that tack with GM seems quite natural. That's how "money" guys do business.

(An aside, I have seen them walk into operating businesses, shut them down and sell of the assets, I also see We the People as the money folks, and I would like to see my money back.)

 

I know that Bill. I've also heard they were not putting up any $, though other reports stated otherwise.

If their alliance helps to keep things going, I'd say let them give it a try.

Hey I had an Alliance one.....it was a Renault.

 

I'm all for it, but without money, it may take to long to do any good. The idea is to sell fiats with chryslers at the dealerships, thus rounding out the brand. It would be a one stop location for crappy cars of all sizes.