We have for some time been concerned about the odds of a GM bankruptcy. While bankruptcy in theory offers some compelling advantages, GM is so large that only certain operations could be hived off. The thought, as with a traditional Chapter 11, is to skinny up the company and a have a new sleeker version […]
Read more...Having seen what Cerberus has done to one of its acquirees (New Page, a group of mills that produce coated paper), nothing should surprise me. But the way that Chrysler treated its dealers as stuffees, pressuring them take extra inventory and make extra investments in plant and facilities shortly before the dealerships were cancelled, is […]
Read more...Readers are probably well aware that Chrysler and GM have started the process of closing dealerships. Chrysler is shedding 789 of its 3200 dealers, and GM is excising 2600 of its 6246, with 1100 notified last week. UBS estimates that the total job losses could reach 160,000, although some dealers may be able to operate […]
Read more...It only takes opposition by 10% of the bondholders to stymie an out-of-court restructuring of GM. The FT believes that there are enough bondholders who, via being net short GM bonds via credit default swaps, have good reason to block a negotiated outcome and force the automaker into bankruptcy. And that poses risk to the […]
Read more...This post is from reader Gonzalo Lira. Although I beg to differ with him on a couple of his observations, it’s certainly colorful and thought provoking. I give my quibbles at the end. Insofar as this burgeoning Millennial Depression goes, I’ve noticed there are two sorts of people: Ones such as myself, obsessively following every […]
Read more...The New York Times reports that the Chrysler brinkmanship continues, with some small hedge funds acting as pigs in the hope of extracting yet more concessions from the government, as the bankruptcy deadline looms. The reason the funds can play such hardball is that the Administration does not want to BK Chrysler. Despite all the […]
Read more...The obstacle to a bailout of Chrysler is the still large bid and ask spread between what the secured creditors are now willing to agree to in the way of a haircut, versus what Treasury is willing to give them. The drop dead date is next Thursday. But news reports tonight differ on what a […]
Read more...We said at the beginning of April, when the idea of a “surgical” bankruptcy of GM and Chrylser was first mooted, that we assumed this was an effort at high stakes poker, because there was simply no way to make reality conform with the Administration’s fantasy. Readers may recall that the high concept was a […]
Read more...A New York Times article tonight reports that China intends to become a world leader in electric and hybrid cars: Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and […]
Read more...Is Obama’s leaked view that a “quick and surgical bankruptcy” was a “likely option” for GM and Chrysler form of bizarre brinksmanship? If not, Obama has just painted himself in a corner based on what looks to be some very bad advice. As we will explain below, the notion of a “quick and surgical” bankruptcy […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns I like the fact that President Obama has drawn a line in the sand and signaled that no more funds will be given to U.S. automakers without their presenting a viable long-term plan for restructuring. Ultimately, the automakers cannot survive merely as a result of government […]
Read more...Oh, so there was even more to the GM Wagoner resignation than met the eye. So how come no bank turnaround plans? Oh, if they were no good, the government might have to get tough with them. Can’t have that, now can we? From CNBC (hat tip reader Dwight): The announcement by the White House […]
Read more...Submitted by Lune This blog and many other authors have pointed to the large moral hazards that the federal government’s actions have created so far. It was typically expected that these moral hazards would play out in the next cycle of boom/bust, with financial players taking bigger risks for their own gain while expecting public […]
Read more...Let’s see. Citigroup has gotten $45 billion of TARP funds, and backstops on a net of roughly $250 billion of crappy loans after Ciit’s first loss and allowing for the split between Uncle Sam and Citi on the balance. And it is pretty unlikely that we have seen the end of Citi’s funding needs. GM […]
Read more...Color me suspicious (as if that would be news to readers). Fiat and Chrysler have been talking about a deal that by all appearance might get the US automaker off government life support. That is probably a good idea, because if push were to come to shove, Chrysler would be the number one candidate to […]
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