Obama: No Friend To Automotive?

Posted by Equity Private, Nov 21, 2008, 1:08pm

Well, that was quick.

If Bloomberg is to be believed, Obama and crowd are already setting up pre-packaged bankruptcies for the Notorious B.I.G. 3 who will, true to their namesake, continue nonetheless to spit out ~~albums~~ automobiles long after their violent death. Really, when automotive can't count on Obama to keep it out of bankruptcy, it really is time to throw in the towel. The move also puts Obama at odds with the fiscal and financial genius of Nancy Pelosi, who ruled bankruptcy out entirely yesterday. (Oh yes, we are going to enjoy the next four years).

We must admit, we have been rooting for the automakers to take a pair amidships for some time now. The entire interaction the Notorious B.I.G. 3 have with the world parallels the rich kid at school, constantly in smarmy negotiations with the professor over lost, missing, eaten, incomplete or outright wrong homework. Always some bargain, some way for an "F" to meld into an "I"ncomplete. Always the thinly veiled threat that UAW-hat wearing, blue-collar uncle (the younger, more bitter brother of that generation) would come over and wrap a wrench around the neck of suede-elbow-patch professor if some compromise favoring our anti-hero was not reached.

We, to start with, are sick of their shit.

So, now Congress gave them homework. It's definitely time to shut their traps on how many children will die of starvation in the streets of some small Ohio city if taxpayers don't write a multi-billion dollar check right the fuck now. Either do the work or take the F and we'll see you at summer school.

Obama Team Said to Explore `Prepack' Auto Bankruptcy [Bloomberg]

Comments

Posted by guest , Nov 21, 2008 1:12PM

Biggest problem I see with this scheme is that Congress will also be 'grading' the homework.

Posted by guest , Nov 21, 2008 1:13PM

The structured BK is the way to go. Unions will be taken care of and Daihatsu would be a good candidate to manage all three of the Detroit doofii.

Posted by Lowly Assistant , Nov 21, 2008 1:15PM

ADVICE Biggie 3: kick in the door, wave in the 4-4.

---my car goes 160, swiftly

Posted by guest , Nov 21, 2008 1:15PM

Shut down Big 3.

Millions of overpaid and unskilled workers go unemployed, lose homes, become homeless.

Long harsh mid-western winter comes, kills off homeless.

Unemployment falls, S&P rebounds, crisis solved.

Posted by guest , Nov 21, 2008 1:17PM

Obama broke rank. It's a good day.

Now if he could just somehow untangle himself from appointing Hillary as Sec State before someone really starts shooting at her.

Posted by guest , Nov 21, 2008 1:17PM

EP this article sucked...

Posted by guest , Nov 21, 2008 1:18PM

I am all for keeping the workers employed. But you must pay them GOING RATES. Like what the Japanese pay their American workers at the Toyota and Honda plants. NOT inflated, union-extorted, $25/hour + health + pension, with job descriptions written tighter than Nicole Kidman's forehead.

Keep them employed - it's a great idea. But at "real world" wage rates - and you have a direct comparison if you look South.

Posted by guest , Nov 21, 2008 1:19PM

6
right back at you

Posted by guest , Nov 21, 2008 1:20PM

They are going bk...they are not smart enough to give a plan...they never had one and never will. They went to DC and just figured they would try and use alarmist language and scare tactics to get the 25B but never said what they would do with the money - just "we need it to survive the next year" well what about after that year?

i love Wagoner hasn't been removed because he did a great job negotiating with UAW on concessions? Lot of good that did. Demote his ass to VP of Union Relations and get someone in there that can slim them down.

I wouldn't give them a penny or dollar. If the big 3 were on fire i wouldn't piss on them to put them out.

Posted by Anal_yst , Nov 21, 2008 1:22PM

Holy goat balls batman, if Obama actually stands tall on this, wow, I mean, speechless, although I'm curious how he's gonna spin the decision to his supporters

Posted by guest , Nov 21, 2008 1:23PM

It's Friday. I want my Mordechai Chang.

Posted by guest , Nov 21, 2008 1:27PM

Dump em. Throw them all into ch 11 bankruptcy, cancel the union contracts, and force them to merge. Don't give them a penny of taxpayer money or it's never gonna be seen again. Any 4yr old can figure this out. Darwin at his best.

Posted by guest , Nov 21, 2008 1:28PM

Hard to justify letting go of an industry employing 3 mil people while piling $$ onto AIG for massages, manicures an pedicures.

Posted by guest , Nov 21, 2008 1:29PM

Obama/Romney 2012!

Posted by guest , Nov 21, 2008 1:29PM

right so obams is not a commie now? ok comrade

Posted by Clown Capital , Nov 21, 2008 1:31PM

Wow. I actually got a little teary-eyed reading this. It's like watching my unborn son utter his first words.

Our President-Elect is finally starting to take off the training wheels...

Posted by guest , Nov 21, 2008 1:33PM

Wasn't there another president who got the unions to deliver an election and then told them to go fuck themselves? Seems I recall someone shot his dumb ass.

No way the democrats are going to turn on the unions. Worst case (for them) they end up with all the equity after a filing and a bunch of capital to pay themselves $200 an hour.

Posted by guest , Nov 21, 2008 1:34PM

@13...AIG was a fuck up to. They should've been Bk'd too.

But ol' Hank changes his mind depending on what he has for lunch. BUying assets, not buying assets buying preferred stock, backstop for JPM w/BSE, no money for LEH, money for AIG,

NO FUCKING CONSISTENT APPROACH OR EVEN REASONABLE ADAPTATION TO SITUATIONS AS THEY ARISE.

Hank has just put band-aids on bleeding arteries thinking it will work...

AND FUCK MORDECHAI CHANG - RATHER HEAR FROM MUFF DOG.

Posted by guest , Nov 21, 2008 1:34PM

@7 - I'll say it one more time..
You first capitalist Pig-Rig Nabob from on high.

Posted by guest , Nov 21, 2008 1:35PM

@ 13 - Go back to the yahoo message boards. 3 million people fired? You do realize they'd still be making cars in bankruptcy, right? AIG stayed solvent not to save the jobs at AIG, but to keep the markets from breaking in fucking half.

Put the big 3 into bankruptcy and let the government provide debtor-in-possession financing. Longer term, this saves everyone a whole hell of a lot of money.

Posted by guest , Nov 21, 2008 1:37PM

I'm an educated man but I can't explain that 10 year treasuries are down to 3.188% but mortgage rates are still at 6%.

Help please!

Posted by guest , Nov 21, 2008 1:37PM

I mean three guys traveling from the same place and they take three separate planes? worse yet, they don't drive their company car to DC to show how they can't even afford the private plane. Seriously, these guys are making WS look like amateurs.

Posted by guest , Nov 21, 2008 1:37PM

7 is right. These people make $75-100k/year for doing MANUAL LABOR because they have a mafia (UAW) strong arming for them. It's bullshit.

No one in those factories with out any specialized technical skill should be making more than $60k...you want to make more money go get an education and do something else.

THE WORLD NEEDS DITCH DIGGERS TOO!
THIS IS AMERICA MAKE MORE FUCKING MONEY!

Posted by guest , Nov 21, 2008 1:38PM

@18 Totally agree with you. But Hanky did his deed so how can the govt say sorry there's no money for Big 3. AIG spat on the govt's face with their pheasant hunt and Arizona spas. Once the genie is out of the bottle, it's hard to put him back. Just saying..

Posted by guest , Nov 21, 2008 1:38PM

@16

How does Obama's dick taste?

Posted by guest , Nov 21, 2008 1:38PM

Brilliant post. EP, its great seeing you post regularly on here. Are you still with that private equity firm or are you blogging now full time?

Posted by guest , Nov 21, 2008 1:39PM

@21: It's called a risk premium. B-school 101. There were no risk premia in mortgages before 2006 because, as we all know, housing was going to the moon, up every year. Now, however, banks are scared to lend, and when they do, they want a nice healthy margin to take into account that things don't work out the way they used to.

Posted by guest , Nov 21, 2008 1:41PM

I have a 2008 Pontiac Grand Prix today as a loaner for my E55 AMG that I dropped off this morning. The GP is an unmitigated piece of shit and I would have rather been given a golf cart to drive to work. As soon as I entered the car, some voice from behind the dash started barking out commands (OnStar) with no obvious way of turning it off and I had no choice but to sit there and take it. GM and Cry can go to hell, I hope F makes it.

Posted by guest , Nov 21, 2008 1:42PM

@21, I think it's primarily risk aversion. Banks are worried about defaults and asset price deflation.

It's the same story with the fed rate cuts and credit card interest rates.

Posted by guest , Nov 21, 2008 1:43PM

@24...they said no to LEH so say no to Big 3.

Harry Truman said it best, "the buck stops here."

Boom.

Posted by guest , Nov 21, 2008 1:43PM

@23 Their $75K/yr is harmless compared to the derivatives made by the extremely well educated WS money changer millionaire geniuses that put us where we are today.

Posted by guest , Nov 21, 2008 1:43PM

I hope F make it too. I love my Mercury.

Posted by guest , Nov 21, 2008 1:45PM

@21: You use the term educated lightly... it's called risk premium.

Posted by guest , Nov 21, 2008 1:47PM

@ 31 you couldn't be more wrong.

That $75k / yr killed American manufacturing.

Posted by guest , Nov 21, 2008 1:48PM

@34 and the extremely well educated WS money changer millionaire geniuses kill the whole economy..which is worse?

Posted by Clown Capital , Nov 21, 2008 1:49PM

@25,

I wouldn't know yet. Mine is still knee deep in your mother's mouth.

Posted by guest , Nov 21, 2008 1:50PM

@31 - their 75k a year includes job banks and a gravy train for life that will is on the brink of putting 3m people out of work

F the unions

Posted by guest , Nov 21, 2008 1:54PM

Posted by guest , Nov 21, 2008 1:55PM

please get rid of the henry blodgett photos on this web site. makes me wanna puke. lying sack of shit scumbag.

Posted by guest , Nov 21, 2008 1:57PM

Big 3 are finished as they stand today. this time next year they will not be the same company - someone explain why you can buy a GMC Yukon and a Chevy Suburban? It is the same fucking car made by separate companies? Why not just make and sell one of these? It is these asinine redundancies that have dug their grave.

Remember when Ford was making both an explorer and a mercury mountaineer? Why? Same car, same design just different name and paint options...again stupid ass redundancies. They stopped making them recently but it took them what - 10 fucking years to realize that made no sense?

Posted by guest , Nov 21, 2008 2:00PM

@ 35

No one on wallstreet is pretending like the status quo needs to be upheld. People recognize that regulations, controls, policy and compensation structures (among other things) have to change.

This is not so for the entitled UAW mafia. They are due money, and they'll get that money even if it comes at the expense of hard working, non-unionized folks living right next door to them. Of course, you could never make this kind of comparison in the general media because all main street sees is blue collar workers versus wallstreet fatcats.

My dad is in the UAW, as are two siblings. I grew up in nowhere, Ohio. However, I rocked the SATs, busted my ass in college, and continued to do so afterwards. So now I'm somehow an entitled, overpaid and arrogant member of the street? Trust me when I tell you that there is a bigger sense of entitlement where I came from then where I am.

Posted by guest , Nov 21, 2008 2:00PM

40
that wasn't a big 3 specific thing

all the japanese did that

toyota-lexus
honda-acura
nissan-infiniti

even

audi-vw

that is the auto business model

Posted by guest , Nov 21, 2008 2:02PM

WB goes out on a limb.

http://news.yahoo.com/s/ap/buffett_economy

Posted by guest , Nov 21, 2008 2:05PM

@41, there is a big difference between a Toyota and a Lexus. There is no difference other than the grill between a GMC and a Chevy. But they are two separate and largely autonomous divisions and two dealers competing against each other only on price.

You are such a tard, you must work for GM.

Posted by guest , Nov 21, 2008 2:06PM

This was a good article outlining what a crock the Big 3 are...

http://www.cnn.com/2008/US/11/20/honda.town/

Posted by guest , Nov 21, 2008 2:06PM

@42

You sound like you have a very strong sense of entitlement also. Otherwise you wouldn't be where you claim you are.

Posted by guest , Nov 21, 2008 2:07PM

wreck it buy a new one

ya crew run, run, run, ya crew run, run

Posted by guest , Nov 21, 2008 2:07PM

They have to change the model. Keep the high end and get rid of the low end. Tweak the high end and they will sell. People want to buy cars made in America and they haven't had a reason to do so. I mean, have you been in a mini van, top of the line recently? It is a disgrace, I tell you, a disgrace.

Posted by guest , Nov 21, 2008 2:09PM

@42..you could be right. But with WS taking bailout $$ to pay bonuses, all the banks and speudo banks bellying up to the bailout table, and AIG, the poster child of corrupted well intention by the govt, it's very hard to tell the country you have to tighten your belt while WS is not.

Posted by guest , Nov 21, 2008 2:10PM

@47...ha!

@42...those companies have two (maybe 3) car lines - GM has like 7!!!!

That is not the same structure...Toyota makes money and has for many years - GM is an utter failure.

Posted by guest , Nov 21, 2008 2:13PM

@49 here..my post was for @41 not @42..

Posted by Lowly Assistant , Nov 21, 2008 2:13PM

46 (clever one),

http://www.merriam-webster.com/dictionary/entitlement

"However, I rocked the SATs, busted my ass in college, and continued to do so afterwards."

I don't know the man from Ohio, but I certainly respect his achievements and determination, as listed above.

Posted by guest , Nov 21, 2008 2:16PM

The end:

http://www.youtube.com/watch?v=UIClfAu2MOA

Posted by guest , Nov 21, 2008 2:16PM

guess it was for @42..need new glasses..

Posted by guest , Nov 21, 2008 2:16PM

Hmmmm! Rahm Emanuel at work...

Posted by guest , Nov 21, 2008 2:18PM

@42 you need to look again. Tell me what the Lexus LS460 and a Toyota Avalon have in common? Nothing. Take away the badging and the Mercury Mountaineer and Ford Explorer are indistinguishable from each other. Does a Honda Accord look anything (inside or out) like an Acura TL? No.

With the exception of a few SUVs (Nissan Pathfinder Armada/Infinity QX56; Lexus LX/Toyota Land Cruiser) the imports generally don't have the model overlap/duplication that the domestics have historically had.

Posted by guest , Nov 21, 2008 2:20PM

http://online.wsj.com/article/SB122722835387246299.html

Posted by guest , Nov 21, 2008 2:20PM

44 stfu

look at the nissan SUV and the infiniti SUV

same car different logo

ALL car companies do it that way because parts become interchangeable (cheaper)

note: I am not defending the big 3 I think they fold - Just pointing out their failure is not because a ford explorer and mercury mountaineer are the same car

Posted by guest , Nov 21, 2008 2:23PM

@27 I'm acutely aware of risk premium, but mortgage rates are still at 6% when t-bills are at 3.888 or 3.188. What is that?...a variable contingent risk premium? Why the fuck did our government give these donkey's $ in the first place?

Posted by guest , Nov 21, 2008 2:23PM

A random thought just hit me: what will become of NASCAR?

Posted by guest , Nov 21, 2008 2:24PM

audi A4 and vw pasaat...

Posted by guest , Nov 21, 2008 2:24PM

56 You're splitting hairs. The LS460 is the Avalon with more padding, more leather. But that doesnt really matter. Its like being mad at Colgate for having 50 permutations of toothpaste. If the brand array results in greater profits then do it. For the car cos though it has resulted in too many costs, relating largely to the dealer networks being too big.

Posted by guest , Nov 21, 2008 2:25PM

haha 60 if the big 3 really were smart they would hit the national media saying "without us NASCAR dissolves"

THAT would put their agenda back on track for sure

Posted by guest , Nov 21, 2008 2:25PM

I dont understand why the viability of NASCAR is related to the survival of the big 3. And I'm proud that I don't.

Posted by guest , Nov 21, 2008 2:26PM

58/41: Give it up. You have been exposed for your stupidity. Anyone who thinks that the think the Nissan SUV and the Infinity SUV is the same as the Explorer and the Mountaineer is a total moron.

Posted by guest , Nov 21, 2008 2:27PM

"For the car cos though it has resulted in too many costs, relating largely to the dealer networks being too big"

...and the $2,000/car cost differential with the Japanese carmakers, due to unions demanding $25/hour, "job banks", no ability to move people to another position if theirs no longer works, would fit in where?

Dealer networks are a much, much smaller problem.

Posted by guest , Nov 21, 2008 2:28PM

@65

see 62

-58

Posted by guest , Nov 21, 2008 2:28PM

I love the jet thing. GM is turning back two of its leased (leased only because they could not take advantage of the tax benefits of owning, no doubt) jets. But it had nothing to do with being reamed by congress. We were going to do it anyway.

I also love how CEOs get the board to buy into the private jet scheme for 'security reasons'. As if there is no security in airports. And, have they ever stopped to compare the deaths per passenger mile of corporate jets versus commercial?

Posted by bondguy007 , Nov 21, 2008 2:29PM

They don't need no TARP, let the mutha fuka's burn. Burn mutha fuka's burn. Thanks to Jimmy Hoffa and the radicalized unions, Big 3 is finally coming to it's knees. Bess know's where Hoffa's buried. And who helped bury Hoffa?

Dick Fuld, he's good at squeezing the life out of just about anything.

Posted by guest , Nov 21, 2008 2:30PM

@58 that's one example. I don't think I have the space to list at the domestic's overlap. Anyone remember the Dodge/Chrylser/Plymouth Neon piece of garbage in the mid 90's? Same car down to EVERY feature, sold under 3 different marques. Chevy Tahoe/GMC Yukon. Chevy/GMC trucks. Eagle Vision/Chrylser LHS/Dodge Intrepid.

Posted by guest , Nov 21, 2008 2:30PM

Auto companies experiment with new technologies and create market segmentation with their luxury brands. It makes good sense to do this on the same physical platform.

But I agree with the OP, the Ford/Mercury Pontiac/Buick distinction has always escaped me.

Posted by guest , Nov 21, 2008 2:34PM

66 A lot of that $2,000 is legacy costs - that is pension and healthcare promises made to retirees that were never funded. On a current costs basis the difference is not as dramatic as you make it sound. I just hope that those hilbillies in Tenessee (or WTF they are) remember in their race to the bottom of the wage scale what happened when they did the same thing to the New England textile and shoe industries. To refresh your memory, the fun didnt last very long. There was soon a new race, with overseas workers, that ended badly.

Posted by guest , Nov 21, 2008 2:34PM

@42. Same fucking story with me. Main Street can go fuck themselves. EVERY kid I grew up with is now in Law Enforcement, or on the other side of that trade (although most of the cops are criminals too). They all have the WORST sense of entitlement of any group I have ever met.

I grew up in a single parent household with an income of $30K with two sisters. I moved out @17 worked 50 hours a week while I paid for myself to go to college and lived out of a fucking car at times. All so I could live the buy-side dream someday. I busted my fucking ass and was the fucking valedictorian of my class.

Now that I fucking make money people think I am some silver-spoon prick.

Main St can suck me.

Posted by guest , Nov 21, 2008 2:34PM

The problem with the notorious 3 is that incompetent management approved slipshod designs that were manufactured by overpaid workers subject to inadequate quality control, all of which led to products that were sold by a bloated dealer network with under-secured financing. Other than that, they are fine companies.

Posted by guest , Nov 21, 2008 2:35PM

correction non union workers get paid 25/hour at those Jap plants.

When a union worker makes 65/hour and gets paid more than an engineer, its time to say uncle and file bankruptsy.

Posted by guest , Nov 21, 2008 2:35PM

---not disputing their redundancy

I'm pointing out THAT was not the cause of their downfall...

their entire web of labor/unions and current poor product platform did them in

-58

Posted by guest , Nov 21, 2008 2:35PM

@62 agreed on the dealer network comment

Posted by NAS Keflavik boi , Nov 21, 2008 2:37PM

@ 28 -- oh come off it - I'm calling BS no benzo dealer on the planet runs pontiacs in its courtesy fleet.

oh, and equity private - I like it when ya call me big poppa ...

Posted by guest , Nov 21, 2008 2:39PM

Obaby ain't president yet. So whats to stop the Leftie Louies in Congress from cramming a bailout thru in December making whatever Obaby decides or wants a moot point.

Posted by guest , Nov 21, 2008 2:40PM

Cheers 73

Posted by legal eagle , Nov 21, 2008 2:40PM

http://consumerist.com/5095746/buy-one-dodge-ram-get-one-free

Posted by guest , Nov 21, 2008 2:42PM

I just squeezed the life out of a one eyed snake.

Posted by guest , Nov 21, 2008 2:43PM

Remember the expression perception is reality. The perception (and therefore the reality) here is quite simple: 1) The govt bailed out the wall street fat cats therefore 2) hard working, patriotic middle American "real" people (thank Sarah Palin for that one) deserve a bailout too. The only thing standing in the way of that argument is the fact that most "real" americans dont have benefits as generous as auto workers. So if they think about it awhile, their support for a bailout might waver.

Posted by guest , Nov 21, 2008 2:50PM

59: You're right. I don't understand why Treasury paper pays so high either, nor why mortgage rates are so low.

It's impossible for the Treasury to default on their paper. They can just print more. (Assuming that the gummint doesn't prove to have shot itself in the foot in 1913 - *theoretically,* the Fed could refuse to monetize debt at some point.) There is zero risk. In my opinion 3% is way too high, unless you count inflation, but in that case, it's too low.

OTOH, you can't print houses, but we've got way, way, way too fucking many of them and with the economy doing its best Weimar Republic imitation in decades default rates are going to soar. 6% hardly seems like enough premium absent triple-A credit and a significant real investment by the buyer.

Posted by guest , Nov 21, 2008 2:51PM

@78 this is 28 here. They were out of C classes today (typical loaner) and they have an agreement with an outside company to provide domnestic shitboxes for overflow. I'd be happy to scan and post up the rental agreement which has the dealer's name on it.

Oh and 73 you can add everyone becoming teachers too (what happened to my graduating classes).

Posted by guest , Nov 21, 2008 2:52PM

78: If they were out of loaners they'd have rented him a car. Rental companies usually stock Detroit iron.

Posted by guest , Nov 21, 2008 2:53PM

PRICELESS !!! financial air fuckers going back 2 the usual business : TALKING SHIT about failing industries asking for 25B$ when their own failed-ponzi-maffia model is sinking the whole world economy and draining hundreds of billions. Go on please ! kill all the remaining industries of your country, sure you will conquer the world with the remaining financial wankers LOL !!!!!!

Posted by guest , Nov 21, 2008 2:53PM

@79, umm...GWB?

Posted by guest , Nov 21, 2008 2:54PM

Someone get @73 a drink.

Posted by guest , Nov 21, 2008 2:56PM

And the U.A.W. thought that Obama was going to blow them for the next four years!!!!!
God, there might be hope after all if The Messiah keeps growing balls next several weeks.

Posted by guest , Nov 21, 2008 2:57PM

@88, ummm remember GWB don't veto. He has already said as much regarding a Big 3 bailout.

Posted by NAS Keflavik boi , Nov 21, 2008 2:58PM

85, 86: OK guys. I'm lowering the Bravo Sierra ensign.

Posted by guest , Nov 21, 2008 2:59PM

@73

http://www.youtube.com/watch?v=312SwrjAXB0

Posted by guest , Nov 21, 2008 3:02PM

@88, fuck me. I stand corrected.

Posted by guest , Nov 21, 2008 3:03PM