GM to kill Pontiac, Chrysler to declare bankruptcy

[Japher]

There goes Chrysler... Guess we'll be seeing a lot more Fiats here in the US.

[Japher]

The other auto play I like is TTM. I'm in at 4.90 and again at 6.94, the closed at 7.62. When they announce how many Nano's they've sold I would be surprised to see them around 10. Unless they some how screw up their debt structure to buy Jaguar and Land Rover like they are trying to do. Still, if they do take the extra debt they will probably still be a 8-10 stock.

[Wiglaf]

[OzzyKP]

[DanS]

I actually expect that to invest in ford, 20 years from now you will have made money.

The definition of insanity is to do the same thing over and over and expect different results.

[Bosh]

Looks like there's a deal in the works to have the union get a majority steak in the company. This sort of thing sometimes happens as a refuge of last resort of failing companies. The company might be able to hang since the there's just one big union and not a bunch of squabbling little ones, which has caused problems elsewhere.

[DanS]

Chrysler to file for bankruptcy today.

[KrazyHorse]

The unions are the major stakeholders in the auto companies right now (given retirement and health coverage, as well as pay premium over other unskilled labour). It therefore makes sense that they should control the company.

This is what should have been done 6 months ago BEFORE the government ponied up 10s of billions in handouts which will likely not be repaid.

[KrazyHorse]

Chrysler to file for bankruptcy today.

Sweet. According to my calculations that makes my Jeep an antique.

[Barnabas]

Whats the meaning of joneses?

[KrazyHorse]

Did somebody use that term?

Usually you would hear that as part of "keeping up with the Joneses". It's a phrase which means that you want to maintain your standing relative to your neighbours (whose last name is Jones).

[DanS]

That's arguable, KH. In the case of Chrysler, the debt is secured, and therefore senior to the union's claims. Chrysler should be liquidated, if that's what the creditors want. Of course, now the gov't has the most senior claims because their loans will become debtor-in-possession financing.

GM is more complicated. The claims against them are unsecured and the union's claims are unsecured. The gov't claims are most senior. The bankruptcy court should sort out the claims.

Both of these companies have been run according to the interests of the employees even though they were not the owners. That's not right.

[KrazyHorse]

That's arguable, KH. In the case of Chrysler, the debt is secured, and therefore senior to the union's claims. Chrysler should be liquidated, if that's what the creditors want. Of course, now the gov't has the most senior claims because their loans will become debtor-in-possession financing.

The presence of government loans is certainly messing things up. How much of the company's debt is secured? Is there strict seniority between secured debt and whatever retirement/health benefits are still owed by the company?

GM is more complicated. The claims against them are unsecured and the union's claims are unsecured. The gov't claims are most senior. The bankruptcy court should sort this out.

I really doubt the government is going to press its seniority versus a bunch of retirees. They couldn't even hold off on handing 25 billion dollars over to what was obviously a money pit.

[KrazyHorse]

Both of these companies have been run according to the interests of the employees even though they were not the owners. That's not right.

It's not, but it's management's fault for caving all these years. A union shouldn't be blamed for asking for more than is reasonable. There are TWO sides to a negotiation. The union was taking care of ITS side.

The companies were deliberately back-loading their pay to employees to maximize profits then at the expense of the long-term health of the company.

Like they were the only people in the world who knew how to build cars.

[DanS]

The presence of government loans is certainly messing things up. How much of the company's debt is secured? Is there strict seniority between secured debt and whatever retirement/health benefits are still owed by the company?

All of it. Yes. That's why the creditors aren't playing the government's game here. They are in a strong position. Why should they have to give up anything in order to pay the union?

I really doubt the government is going to press its seniority versus a bunch of retirees. They couldn't even hold off on handing 25 billion dollars over to what was obviously a money pit.