The Obama administration has forced out General Motors CEO Rick Wagoner on Sunday, and threatened to allow Chrysler to go into bankruptcy if it cannot reach a deal with Fiat.In a summary of its findings, the government's automotive task force suggested that the best chance for success for both GM and Chrysler
"may well require utilizing the bankruptcy code in a quick and surgical
way."
While the forcing out of Wagoner marks one of the most dramatic
interventions in the private sector by the government, the verdict
remains even worse for Chrysler.
After a month of analysis, the government said it would provide Chrysler with capital for 30 days to cut a workable arrangement with Fiat SpA. If a definitive agreement is met, the government would consider investing $6 billion in Chrysler.
If Fiat and Chrysler cannot reach an agreement, the company would be allowed to collapse.
Meanwhile, the Obama administration used the threat of bailout money to remove General Motors CEO Rick Wagoner, as well as most of GM's Board, from power.
The auto task force said it will provide for 60 days worth of funding, during which a more rigorous restructuring plan will be put to work. Bankruptcy is still very much a possibility for GM, with one official labeling the move as a "quick rinse" that could rid the company of much of its debt and contractual obligations.
[Wall Street Journal]
After a month of analysis, the government said it would provide Chrysler with capital for 30 days to cut a workable arrangement with Fiat SpA. If a definitive agreement is met, the government would consider investing $6 billion in Chrysler.
If Fiat and Chrysler cannot reach an agreement, the company would be allowed to collapse.
Meanwhile, the Obama administration used the threat of bailout money to remove General Motors CEO Rick Wagoner, as well as most of GM's Board, from power.
The auto task force said it will provide for 60 days worth of funding, during which a more rigorous restructuring plan will be put to work. Bankruptcy is still very much a possibility for GM, with one official labeling the move as a "quick rinse" that could rid the company of much of its debt and contractual obligations.
[Wall Street Journal]
Unions. Gotta love them.
I never really had a distaste for Wagoner until he said that the unions have nothing to do with our present situation. I feel most of the problems with GM's bad press are exactly that, Bad Press. Of all the GM products that I have owned I have had no problems with any of them. Except for the Hummer because they should never had bought them. AM General made a great product and GM ruined it by building a lesser vehicle, the H2. The H3 has promise but the original was the greatest vehicle and the worlds most noticeable vehicle with the least amount of advertising. I hope the government fired Michael DiGionvanni (sp?)
@
Yet another ignorant jab at the UAW. Do yourself a favor and educate yourself.
This is a joke. Until Barney Frank and Chris Dodd are given the boot for their contribution to this global crisis, Wagoner should stay. This is just like Atlas Shrugged- Nationalization.
Nothing, and I mean nothing, will be positive from this. They should have gone bankrupt and reorganized a few months ago, with Wagoner at the helm.
And 1 more thing: Look at how Pelosi flies in her private jet with the economy as AMAZING as it is. Then Congress criticizes these execs for taking a private jet to the meetings. Hypocrites.
And don't get me started at the Gov'ts AIG "outrage." I can't believe I'm going to say this: I miss George W. (or at least Bill Clinton).
Obama blamed failed leadership from the past...
Um, don't we all know it was the Democrats that supported the Unions??? Don't think we are that stupid! Go ahead, blame everything on BUSH, right? Next he will blame Global Warming on him as well, right?
Geeeze.
Not one mention on the union, and it's impact on the US auto Market?
What an idiot!
Oh, and by the way, Where are the screenshots of the "soon to be released" iPhone app? Advertising? Hype? Nothing?
Today would be the perfect day to release a couple of screen shots. It would be a HUGE help to attract investors, and have them notice that SiriusXM plans to NOT be tied to the auto market.
The American People had better take back their country while they have one left. Electing this individual was a horrible mistake and anyone who cannot see it by now is beyond blind.
In four years time he will have totally destroyed the United States as we knew it.
Ron Paul would have fixed things!
...this will be good for subscribers...
Funny how this whole recession was started & made worse under Dubya, yet everyone blames Obama for it ;)
Figures you signed as oprah. Do ME a favor and tell me how the UAW has NOT contributed to this mess. They build quality cars. I understand that, that is why I buy them BUT how much does it cost to build a car in this country by Ford or GM compared to the japanese companies who only assemble cars in this country.
How come Buick can do so well in China but not in the USA?
Nice. Several dozen billions of dollars tossed down a hole only to delay what shoulda been done before a dime of our (yes, "our"; we're the ones who're gonna foot the bill when it comes, not the Obamas and the Dubyas who got us on the hook for all this coin) money was tossed away.
On the bright side, those terrible deals SXM had been locked into (paying hundreds of dollars and guaranteeing free subs just to get their radios into vehicles) could conceivably be renegotiated.
How can you say you miss the guy who's the cause of this entire mess?
Sure a lot of money is being spent but there's
no blueprint for this. They're trying to save as many jobs as possible. It's easy to just say, "Oh let them fail." You don't have to suffer the consequences.
Not every choice is going to fix things right away. There will be trial and error. And if certain parts of the plans do fail, at least we are seeing where the money went, unlike the enormous amount of money that was wasted over the past 8 years and we have no idea where it went.
ykw,
Think you mean the Chinese's money right now, and our grandchildren's money down the road.
I am no fan of unions, but blaming them for the problems of GM or Chrysler is not correct in total. Unions only have the power that a company gives them. In this case, the seeds of this debacle were set long about about 1946, when the USA was the only industrial country that was intact after the destruction of WWII. The American car companies were fat with orders from post war consumerism, and had literally no competition. So they got lazy, and gave the unions huge benefits along with huge salaries. They produced stagnant technology with only cosmetic changes.
That all changed with the introduction of Volkswagen, but they didnt respond. Then came the Japanese along with the first oil crunch, and they were caught with their pants down. People enjoyed the little cars, with their reliability and great gas mileage, and Detroit simply didnt have an answer.
We got out of that when oil collapsed in the 80's, and gas guzzlers showed up again. Detroit got lazy, and they never addressed the labor issue, these huge legacy costs started piling up.
Now there are simply too many car makers in the world. We have yet to see the Indian or Chinese cars show up, and they are on their way. Detroit can no longer live up to these contracts, and they cannot sell the cars they need to to provide for them. In the end, they are going to have to go bankrupt.
So I dont blame the unions, they simply represented their work force as they normally do. They are guilty of not realizing that the good days were limited, and start to prepare their members for hard times, but by definition a union gets the best deal it can for its members. No, the blame lies with decades of lazy management that simply refused to make the hard decisions and take the risks to learn to make small fuel efficient cars.
Herr Hitler ooops I mean Obama isn't content until the economy is destroyed and he is new the dictator ooops I mean life-tenured President. Unfortunately too many americans won't notice what his "change" really means until it is too late. Even if they do, they will just listen to Obama when he blames 100% of his mistakes on Bush, even if they have nothing to do with him.... Oh well, America was nice while it lasted at least.
I voted for Jimmy Tide.
Amazing how 9/11 happened only 9 months into George W. Bush's term and somehow Clinton skates by without a scratch. He knew what was going on but figure ah I'll let it go it won't be my problem soon. cough USS Cole cough
Amazing how only a couple months ago Clinton said that the current housing market problem could have been fixed by the Dem's in 2005 but they couldn't let their egos do anything about it. Now Clinton denies saying it or better yet NO news media will publish such info.
Amazing how during campaigning Senator Clinton was in PA talking about Wind Power with her supporter Gov. Rendell but now after obama's taking credit for PA's wind power industry. Gamasa USA (worlds largest wind producer) came to the United States, years ago, to tap into the US job and business markets. They came to Pennsylvania because of Gov. Rendell. BUT obama acts like it was his idea.
Volkswagen was around before WWII as was MB, BMW, Porsche, Audi. Who do you think made all the vehicles for the German Army.
Second the unions could have thought ahead also and thought that if they do not renegiote they are going to be out of a job. How many times in the last 10 years has GM and Ford (the Big 2)had to renegotiate a union contract. GM and Ford should have said FINE we are closing and moving to Mexico, now where are you going to work.
BTW, I exclude Chrysler because they only recently became an American Car company again. They were a German company for many years. cough MB.
Since people are bringing up old news how is obama's relationship with William Ayers. Did obama give him a job yet or is he going to wait a couple of months first.
George W. might have been horrible in the business world but at least he has held a job. Doesn't matter who he got it from. Obama has never held a job in his life. He was running for president 2 out of 4 years he was a senator.
There one reason the auto industry is failing and one reason only. A horrible product.
Consumers lose faith in your product because you use inferior parts and technology. It's not the workers fault. Even the best actors can't do much with a crappy script. Hopefully they will now be foreced to offer a better, more efficient product that the customer can rely on.
Here's another one. I would love to live where you were for the last 8 years while the country was being torn apart slowly. Please tell me the directions to Fantasyland.
Look around buddy, the economy is destroyed. It's not like it was ok, Obama got elected, and now it's crap. Go write history books for the Nazi's if that's what you think. George Jr. inherited the biggest surplus in American history and bankrupted us. Just one more failed business in his long line of failures. Except this one affected all of us.
Enjoy your giant bowl of crow after Obama actually has at least a year in office and gets the country back on track after suffering the worst president in its history.
It's scary the kind of talk we are hearing from the Right (comparing Obama to Hitler in the comment above me). The last time that Right was this angry was not long after Clinton took office and it even drove one of them to blow up a Federal building in OK City. They are so consumed by hatred that they feel the need to interject it in stories which are unrelated, such as on a satellite radio website.
Surplus is easy when you care not to at least try to fight terrorism.
It's scary. They are illogical and make up facts or skew them depending on how it will help their argument. And even after all that they still sound like raging lunatics.
Someone said in a comment way above, that Obama never had a job in his life. When you write erroneous statements like that, don't expect for anyone to put a molecule of value into anything you have to say.
This has very little to nothing to do with right or left, and everything to do with a simple concept. 99% of us aren't worth what we think we are. Not just in what was in our investment accounts, but whats in our skill sets, our resumes, our companies, our cities.
This issue isn't unique to auto makers, and anyone casting stones in their directions better look in the mirror, because no one's safe from the ongoing reassessment of America's true worth. If we succeed going forward, it will be because we can, not because we once could.
Just wanted to say big ups to my fellow liberals who are trying to combat all this right wing non-sense. Big ups, Jason and co.
Big ups to Oprah, Martha Stewart, Bob Edwards, and every other xm/sirius host who makes the right wing people go crazy.
F the car industry.
Also, I agree with the poster who asked about the iphone app. What's the deal? Are they even working on this thing?
Side note, almost everyone who posted on this story had no point and just wanted to get out some rage. So big ups also to the few people who made sense.
There's not much left to destroy after 8 years of that chimp running this country into the ground. One more year of bush and he would've been successful - at bankrupting this country like the other businesses he ruined.
Yes Ron Paul would be the best but it would require a complete overhaul of our political system as none of these long timers would allow Ron and his team to do what needs to be done.
Why are Right winged people so full of hate? That is exactly what is dividing this country! If the American auto makers built a quality product, they may of actually had a ahance.
Running for public offices and not working in the private sector is kind of what that means. He's been running for president since he was in college. The dem party got the ball rolling during his campaign to be a city councilman or whatever he was before senator.
I will say this, as my president I hope he does well but blaming everything of george w. and being out to prove him wrong doesn't sit well with a lot of citizens. Just do the job and stay off leno and espn.
employment free choice act- and WOW this is going to be a great thing for small businesses. Ones that are struggling as it is are going to go out of business.
anyone that has "i love oprah" in their name is very biased pro-obama. please.
Read up on fascism...learn about history, what fascism actually is, it's about Nazi's anymore:
"An extreme totalitarian political regime ideologically based on centralized government, violently repressing any criticism or opposition of the regime, leader cult and exalting nation-state and/or religion above individual rights."
Some (read "The American Way of War") believe that even FDR during WWII resembled a fascist regime.
Centralized Government: Check
Repressing Criticism: Check (Joe the Plumber, Rush Limbaugh, Jim Cramer, I could keep going)
Leader Cult: Check (read 1984, look at how people look towards Obama like they look at Big Brother in book 1).
True, Bush did not help anything. I don't like Bush, but this is scary. And notice he has NOT repealed the Patriot Act. If he did that his first day rather than close Gitmo I would feel better.
To those who keep repeating the worn out "American automakers don't build a quality product" mantra, consider updating your viewpoint to reflect current data, such as the recent J.D. Power quality study that has Buick beating out Lexus in a tie with Jaguar for the top spot.
The problems of the auto industry are complex and are not the fault of either Bush or Obama; they are largely the result of building a relatively labor-intensive product in a high-wage country that packs the cost of health insurance and retirement benefits into the product, which is something the competitors overseas don't have to do. Yes, there are some Japanese and Korean plants in the U.S., and they have young workforces with no retirees and low health care costs. Give them 30 years and things will change.
But to the point, this latest development is a wise move by the Obama administration, and believe me, I don't support everything they've done. The problem with the current GM restructuring plan (less so for Chrysler) is that bondholders and debt holders were not willing to give anything up. They've essentially refused to budge on the high interest and bond rates they're charging the company, holding out for the bailout they believe is coming so they can sit back and reap huge profits -- at taxpayer expense.
Now that Obama has mentioned the bankruptcy card, backed up the warranties to remove the specter of buying a car and having no one to honor the warranty, GM and Chrysler are both in much stronger positions with creditors.
This is a game of poker that Obama is helping automakers play much more to their advantage this time around. GM is definitely going to make it, and Chrysler is probably going to make it -- this can be stated more confidently now than it could have been 48 hours ago.
i agree with arielsquarefour. it's not obama's fault that the american car industry sucks right now. detroit had every opportunity for the last 50 years to make a more fuel efficient car that could last a lifetime. the executives of every single one of those car companies chose not to do so. i find it extremely hard to believe that the country that put men on the moon can't find a way to make a 4 door sedan make 50 mpg.
or rather, that those american automakers choose to not sell those cars in this country.
for that, i blame big oil, who influenced the repre$entative$ of the state of michigan to lobby against fuel efficient cars. it also didn't hurt to have oil men in the east and west wings of the white house for 8 years. how else can you explain why instead of fuel efficient cars, americans were encouraged to buy those 8-12 mpg gas sucking hummers, escalades, and expeditions?
correct me if i'm wrong, but wasn't it true that during the bush 43 years that you got a tax BREAK if you bought one of those big gas guzzling suvs.
True on the japanese automakers BUT the japanese do not build cars here they assemble them. Bringing in sheet metal parts and frames over from cheaply built japan is a nice way to save a lot of money. Staples are made in china how much cheaper can they be from there.
On another topic a lot of people are missing the point that negative information on japanese automakers goes wildly unnoticed. Toyota had a HUGE recall but for some reason my gmc pickup (which gets better mileage than its foreign competitors) gets bad press. Not to mention that it was the truck of the year in 2008 AND was the #1 selling truck for several quarters if not the year.
And on a funny note those japanese car horns are you serious. A toyota land cruiser driver just hit their horn and I thought it was a yaris. Pathetic.
1. Where and when did the representatives of Michigan "lobby against fuel-efficient cars," and exactly how would one do that, anyway? "Oh no, you can't build that, it's far too efficient -- give us another gas guzzler."
2. Americans weren't "encouraged" by government to buy anything -- they bought what they wanted. Alongside those evil SUVs sitting on lots were moderate-sized sedans -- but people chose the SUVs when gas was cheap -- and car companies were happy to sell them, given the profit on these vehicles versus what they make on cars. Check out the likes of the Toyota Sequoia, which gets worse mileage than a Chevy Tahoe.
3. There has never been a tax break for buying a gas-guzzler. On which line of form 1040 would you write that off? I file that, plus Schedules A, B, C, and SE, and I've never seen the gas guzzler deduction. I believe that piece of fiction comes from the fact that a person who uses a vehicle in the course of business could write off the expenses, and those expenses could be for the use of a larger vehicle. (But you usually do better taking the standard mileage rate than by itemizing vehicle expenses, so the person with the SUV does worse than the person with the compact car, because both write off the same amount per mile.)
4. And which company -- anywhere in the world -- makes that "fuel efficient car that could last a lifetime" that Detroit had "every opportunity for the last 50 years to make." Surely someone, somewhere would be interested in earning the kind of money they could make from something like that, but such a car doesn't exist.
Like another have said this is not a left or right thing. And why is it the right that is always wrong. How about they are both wrong.
Big Oil can not be blamed for everything, get over it. J. P. Morgan is the LARGEST oil company in the country and probably the world. Who do you think caused the increase in oil prices. Look it up.
Tim May- you should watch calling someone a chimp. If someone said that about another president you would call racism. Double standard. A Newspaper company got in trouble for doing the SAME THING to Obama that they had done to George but this PC country was up in arms about it.
How about you educate yourself? just because someone doesn't agree qith you politically doesn't mean they are crackpots like Timothy McVeigh. As far as Hitler, look up the history of Weimar and Nazi Germany. Your problem is ignorance of history. If you look it up you will see the similarities between Obama and Hitler's national socialism.
I wonder if people have these same right/left blame game arguments in unemployment lines across the country, like it matters at all. As Don King likes to say with little flags waving and a big grin on his face... "only in America!"
oops, Morgan Stanley is the largest oil company. Companies names are too close. :)
> There one reason the auto industry is failing and one reason only. A horrible product.
Really, then how come 3 out of the top 5 nameplates in the '08 JD Power quality report were American? How come Buick tied for #1 (again) in '09 and Toyota just snuck back into the top 5 (which they've been out of for years) at #4?
Yes, there are crap US cars - but there are planty of well-made American cars - and GM gets better milage overall than most of the import nameplates.
This is not a left/right issue - the WANT us fighting like idiots while we ignore the fact that a US President has "fired" a CEO. Excuse me? In no way is that how a Democracy (or Constitutional Republic) works. Hence the comparisons to Hitler and the NAtional SOcialist party (NaZi's) because it clearly is nationalism.
Not only will Obama make things worse (McCain wouldn't have been any better overall) but now we have a media afraid to critise our wonderful annointed overlord Obama. In that respect it's far worse than Bush 2.....
Why is the media afraid to critize our new president? Oh wait never mind I know. ;)
http://a5.vox.com/6a0109d073e79e000e0110180a1485860f-500pi
stevew - I agree with your analysis
Also,
The number one selling vehicle in the U.S. in 2008 was the Ford F150 - A pickup truck.
The number two selling vehicle in the U.S. in 2008 was the Chevy Silverado - A pick-up truck.
If Detriot is failing becasue they don't build cars people like, then why did they flock to these gas-guzzlers with fuel at $4.00/gal. There were pleny of those little wind-mill cars around if they wanted them.
Detriot failed because the economy failed. The economy failed because of the massive run-up in home prices. The Joe-sixpack guys with thier house-flipping hysteria created a massive bubble. And as economists will tell you, bubbles always, always end badly. GM just got caught in the middle of it.
>> it's not obama's fault that the american car industry sucks right now. detroit had every opportunity for the last 50 years to make a more fuel efficient car that could last a lifetime. the executives of every single one of those car companies chose not to do so.
The problem with Detroit isn't fuel economy. It is out of control labor costs because the unions wield so much power.
And this cannot be blamed on current management; it is something that happened over a period of years, beginning with the early days of FDR.
The unions have killed Detroit, and Obama is trying his hardest to protect them. He knows full well that if these companies go to Chapter 11 the first thing the court will do is kill the union contracts; the companies simply aren't viable without getting rid of them. And the unions are a crucial element for Dems to retain their power.
So now, in lieu of solving the union problem, he chooses to use taxpayer funds to guarantee the warranties? How does that make any sense at all?
This is a mess.
Yes, the auto unions have gone overboard in some areas, but it's interesting that Americans, to our detriment, are so eager to vilify unions. Most European workers have two to three times as much time off as American workers, as well as higher pay, more job security and better working conditions -- and their economies are more productive, too. Much of this is because they have strong, effective unions that look out for employees. We've started to find in this country that, despite working longer hours and more days than our European counterparts, our economy is still a mess and standards of living are sliding. Instead of having unions to encourage better distribution of company profits, we collectively have believed it's better for most of the wealth to stay in the hands of the wealthy. And when outrage is expressed that people in charge of money-losing companies are making huge BONUSES, the indignation is tempered by people who insist the bonuses are deserved. What insane line of thinking holds that you deserve a bonus for running your company into the ground?
So, yeah, the unions have done some wrong, but they've also brought good standards of living to many people, and have brought prosperity to industries that have grown as a result of a lot more people having more money to spend.
@xcountry
There was a time when unions had a legitimate purpose. Today, they are all about power and killing the employer.
If you can't see that by looking at what they've done to Detroit, then you're missing most of the picture.
Does anyone know what the current structures in place between the auto manufacturers and Sirius/XM are currently?
And what they may be changed to with a reorganization?
Most of the auto companies pay Sirius XM a discounted rate for the introductory subscription that car buyers get when they purchase a new vehicle. I doubt this would change if any of the companies file Chapter 11, as satellite radio has been made standard or optional on most vehicles, and it's a feature that's probably not that expensive for the car company to offer. I'd bet it only costs them a few bucks more per unit to make the satellite-capable radio as compared to a regular AM/FM/CD unit.
Thank you for your insightful post. It is great to see someone who can see beyond the rhetoric and to waht is really going on. I agree with you 100%. And as far as the obama hitler comparison, I would be saying the same thing about Bush if he had pulled the same stunt with GM. The biggest problem is nationalization. I think ultimately the current GOP and Dems are leading us to the same place; one is just going very very slightly faster than the other.