Big Amusing 3
Did you hear, did you hear? Something amusing happened today. The CEOs of the Big Three automakers went to Congress to ask for a $25 billion loan and were chastised for flying in private jets. A congressman made the analogy how absurd the situation was. Coming to Washington from Detroit in private jets with a tin cup, asking for a loan with taxpayer money.
Anyways, bad news. GM is most likely to go bankrupt now. The credit crunch we're seeing has made it more difficult to get car loans, the demand for profitable gas guzzling SUV and minivans has tanked since gas price skyrocketed, and the United Auto Workers (UAW) tight lock on the car industry has made it difficult for American auto manufacturers to become competitive in the global economy. From what I know, GM doesn't try to produce more fuel efficient cars because they're more costly to manufacture and the incurred costs make them too expensive for consumers.
This $25 billion "bailout" will be money thrown into the furnace unless GM's business model is completely restructured. It's current negative cash flow doesn't exude confidence that it will be able to pay it back. Chapter 11 bankrupty might provide the restructuring needed to provide stability. There's a fun problem though. There exists few lenders who are willing to give the debtor in possession (DIP) loans that are given to restructure a firm when it goes bankrupt. A judge might order some assets to be liquidated to satisfy creditors or the worse could happen; Chapter 7 bankruptcy, total liquidation.
I totally forget about Chrysler, but I read too much about GM uniquely. I'm not worried about Ford, though. It'll be okay. It's got good sales overseas and a 60 mpg car.
I need to investigate the answer as to why environmentally friendly and high mileage cars are not profitable.
Anyways, bad news. GM is most likely to go bankrupt now. The credit crunch we're seeing has made it more difficult to get car loans, the demand for profitable gas guzzling SUV and minivans has tanked since gas price skyrocketed, and the United Auto Workers (UAW) tight lock on the car industry has made it difficult for American auto manufacturers to become competitive in the global economy. From what I know, GM doesn't try to produce more fuel efficient cars because they're more costly to manufacture and the incurred costs make them too expensive for consumers.
This $25 billion "bailout" will be money thrown into the furnace unless GM's business model is completely restructured. It's current negative cash flow doesn't exude confidence that it will be able to pay it back. Chapter 11 bankrupty might provide the restructuring needed to provide stability. There's a fun problem though. There exists few lenders who are willing to give the debtor in possession (DIP) loans that are given to restructure a firm when it goes bankrupt. A judge might order some assets to be liquidated to satisfy creditors or the worse could happen; Chapter 7 bankruptcy, total liquidation.
I totally forget about Chrysler, but I read too much about GM uniquely. I'm not worried about Ford, though. It'll be okay. It's got good sales overseas and a 60 mpg car.
I need to investigate the answer as to why environmentally friendly and high mileage cars are not profitable.