Tags: Bailout Nation, Big Auto, GM
Just in case you weren’t sure, General Motors is in trouble. Big trouble. On top of all the other trouble you’ve no doubt heard about they are now planning to cut 10,000 jobs. Yesterday’s rumors are fact this morning as the flagging former giant begins to face the music.
General Motors Corp., the largest U.S. automaker, plans to eliminate 10,000 salaried jobs globally, people familiar with the situation said.
The situation is fluid (except for the cuts, which are solid as can be).
General Motors Is Said to Plan to Eliminate 10,000 Jobs [Bloomberg]
Tags: Big Auto, Bob Corker, Chrysler, Ford, GM, So That's Why Wagoner Has Been Walking So Funny
It says something that we credit Ford with some kind of great accomplishment insofar as they didn’t go begging for government handouts when GM and Chrysler debased themselves during Congressional Pledge Week. (“I want that bathroom floor shining in the light by morning. Here’s a toothbrush. If a sister asks, you must be able to produce $0.67 exactly at all times. And don’t let me catch you flying around in a jet. You are going to drive and you are going to like it.’) It says something else that, as it looks now, Ford might join her sisters in that ignominious sorority, which we understand is “Theta Theta Theta,” though its not clear if this has to do with the inexorable decay of members’ value with the passage of time. We hear the initiation involves nudity, a paddling by Bob Corker and the application to the left asscheek of a brand reading “Your Ass Is Mine” above the great seal of the United States.
If nothing else, last month’s dismal reports should have put the lie to this fantasy that somehow U.S. light vehicle sales will top 12 million this year (c.f. $38 crude this morning, however) the key number Ford was relying on in its smug refusal to admit the need for untold billions to keep everyone employed making the new Ford F150, and the idea that it could find reasonable off-campus housing rather than join the sisterhood.
What is it exactly that is going on with big auto, we ask you. Is it public posturing? Do these corporate leaders simply show a brave face during the day before retiring to the refuge of their curtain drawn bedrooms, head in hands, to sob in despair? (Maybe it was the shame of humiliation waking up missing key articles of clothing after that mixer/binge drinking session with ZBT/The Oversight Committee, though). Or are they really just completely deluded? Either way, should we permit them the privilege of handling any resources beyond their own checkbook anymore?
Chairman William Clay Ford Jr. told reporters yesterday that Ford’s “game plan is to keep going on our own” and not seek federal loans unless “the world implodes as we know it.”
Mr. Chairman, your false vacuum collapse has arrived and bubble nucleation proceeds apace.
Ford May Seek U.S. Help as Economy Imperils Sales [Bloomberg]
Tags: Big Auto
The longer the silence continues, the more it appears that Big Auto is facing some form of bankruptcy. Leaving matters in the hands of the current administration, rather than some initiative on the part of the legislature, certainly upped the odds that you’d see a Chapter 11esque move, but the long days of bailout silence this week (and the increasingly desperate mewing on the part of GM in particular) have solidified the probability. The New York Times picks up a few more suggestive clues:
Mr. Bush, answering questions at the American Enterprise Institute, said he was concerned about “putting good money after bad.”
Chrysler’s decision to close for a month or more because of plunging sales was seen as ominous.
Rather than worry about what might happen if the automotive industry in the United States collapses, it may simply be time to admit that the automotive business in the United States has collapsed.
I wonder what the Black Lake Golf Club would go for in bankruptcy, or is that too much to ask for?
Bush Weighs ‘Orderly’ Bankruptcy for Automakers [The New York Times]
Tags: Big Auto, FOREX
The Senate compromise looks dead at the moment. CNN is reporting that bipartisan talks have collapsed and the Senate bill looks dead.
The pressure actually falls back to Pelosi now, who played a bit of legislative brinkmanship with the Senate and has now lost (baring some miracle tomorrow).
GM will likely be the first victim, and the news will likely step up counterparty pressure on GM tomorrow.
GM is running out of options quite quickly.
UPDATE: Fox News is reporting that the sticking point was with the UAW, who were to take wage cuts to put them in line with Japanese rivals.
Republican Sen. George V. Voinovich of Ohio, a strong bailout supporter, said the United Auto Workers was willing to make the cuts, but not until 2011.
UPDATE 2: This has to be the best bit of nonsense I’ve heard on the topic courtesy of Senator Jim DeMint wherein he speculates that a bailout would equate to riots.
UPDATE 3: CSPAN: By a vote of 52 to 35 the Senate voted not to proceed to a bill to aid the U.S. automobile industry. Related?: The Dollar has hit a 13 year low v. the Yen.
Hopes that GM will last until the birth of the Obama administration are dimming, despite some pretty desperate cost cutting:
Factory supervisors who are seldom at their desks have had their landline phones and voice mail yanked. Elevators and escalators are shut down at night at GM’s headquarters towers in Detroit.
The slimmed-down choice of pens in office supply cabinets: one each of black, red and blue.
Perhaps just the red would have done fine.
Tags: Big Auto, Car Czar
“…an administrator, provisional liquidator, conservator, receiver, trustee, custodian, or other similar official for it or for all or substantially all its assets.” Sound like the Car Czar to anyone? Yes. Us too. Know what else it sounds like? The 2003 ISDA credit derivatives definition sufficient to trigger CDS default provisions. Does the mere appointment of the Car Czar trigger them? Should it?
Bank of America has been back-and-forthing on this for a pair of days now, first opining, “yes,” then “no” to the question of the week.
There is much wrangling about the details of the bailout bill wording and its impact on this question, but, at least to our way of thinking, the spirit of things, no matter the exact text, sounds more than enough like an “administrator, provisional liquidator, conservator, receiver, trustee, custodian, or other similar official” to make quibbling over the details somewhat pointless. Of course, this will be sidestepped without even the slightest hesitation.
We are the bailout. Resistance is futile.
CDS may be triggered by autos czar, says Bank of America [Creditflux via Alea]
Autos bailout bill unlikely to trigger CDS contracts, says Bank of America [Creditflux via Alea]
Tags: Big Auto, Gun Jumping
Remember how the White House had like totally tied up that bailout deal yessiree-bob? And Democrats had it all worked out and were running that endlessly annoying “breaking news” ticker on CNBC even before the White House chimed in with that victorious (if droll) press conference? Ok, well, not so much. In fact, not at all. Not that this White House had much credibility in the first place, but this about puts a fork in it.
The White House was pressing skeptical Republicans in the Senate on Thursday to back a $14 billion bill to rescue the troubled auto industry but the measure appeared in danger of careening off the road.
With President George W. Bush’s influence waning in the last days of his lame-duck administration, “no one cares what the White House thinks,” a senior Republican aide said.
The big question is who has less credibility? Big Auto or the White House? We’ll let you think about it for a bit.
Auto bailout faces rough road in Senate [Reuters]
Tags: Big Auto
Hey, uh, GM. So, this credit thing, the bailout thingy, and this running out of money thing? Well, so… I’m not sure quite how to bring this up with you, but… we’re going to need payment from you up front from now on. What? Don’t look at me like that. We really can’t afford to be financing you and your counterparty credit risk is just… huge. What? Counterparty… Cee… Oh… You… En… look, just nevermind. Cash on the barrel. That’s the deal. What? Patriotic? You’ve got to be kidding. Don’t pull that. Ok, stop looking at me like that I said.
GM Suppliers Said to Seek Payments in Advance as Cash Dwindles [Bloomberg]