That applies at least as well to Chrysler executives. They proved they don't know how to run a car company. I am willing to give the government a chance to do better.
That applies at least as well to Chrysler executives. They proved they don't know how to run a car company. I am willing to give the government a chance to do better.
What do you guys expect.... You can't give a company a bailout without there being certain terms and conditions. Chrysler is going to have to live like a puppet on a string until they are solvent and have repaid the debts.
bamacre
Lifer
- Jul 1, 2004
- 21,029
- 2
- 81
You're right, they can.
But it doesn't make it right, nor does it make it correct, as in the correct amount of money that should be allocated to marketing. This is the second biggest reason socialism fails, government cannot calculate price. If Chrysler's own decision-making wasn't bad enough, here comes the government thinking they can do a better job. They won't. We'll just see even more inefficient use of resources, and in the long run, more losses taken on by taxpayers, either in the form of taxes, or more devaluing of the dollar.
- Oct 30, 2000
- 42,589
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Removing the management team (which is what a shareholding meeting could do) would cripple the company permanently.
Chrysler has it worse than the other two; but the government does not want it to go down the tubes. Until you can replace the management team with properly qualified people; you are best to apply pressure to get them to follow the requested course.
The need to keep brand awareness for the nine weeks of a shutdown, is a waste IMHO. A week or so of advertising to reassure the market that Chrysler will be there; then two weeks before the end of shutdown; start the marketing blitz. Unless there are going to be a special type of incentive during shutdown, that is a month that can be saved.
Fern
Elite Member
- Sep 30, 2003
- 26,907
- 174
- 106
No, bad move in Chrysler's case.
Their unsold inventory has been reported somewhere around here and it's huge.
That inventory represents a substantial interest costs to Chrysler. By cutting back on marketing and letting that inventory sit, you are transfering the cost from marketing to interest expense and depreciation in the value of the automobiles (they have a bunch '08 inventory remaining). They need to move that inventory, convert it into cash.
As far as the federal government buying shares in a company, where the h3ll is that in the Constitution?
Investing taxpayer money in corporations is something ripe with both waste and corruption.
Fern
Ok, well your "fix" is incorrect as well.
If you want to say the majority of legislators don't have any high level decision making experience at a major company, then that I'd probably agree with.
Really? Do you even work in a market that exposes you to those scenarios. I do, and I have seen it.
Is it common practice for lenders to give bridge loans with the expectation of bankruptcy?
Honest question from an ignorant.
The question is, how will they become solvent if they can not advertise that they are a good company? How will the American public buy a Chrysler if they are not told on a near daily basis that the company
1) is still around
2) makes good products
3) will honor their warranties
4) has some incentives to buy
If you don't see some ad, then how will you know?
They can give a bridge loan, especially if terms are being negotiated with a potential purchaser. This can be done to extend the operations of the company if the lender(s) get a lot out of such extension, such as enhanced recoveries and/or alternative solutions. Most times any type of loan extended will be a DIP loan (Debtor in Possession) for an already bankrupt company, which is usually senior to all other debt.
The problem with this situation was that the government was giving them time to sort their crap out (alternatives). Coinciding with that money, they had to juggle a lot of balls, both with negotiations with many constituencies (UAW, creditors (secured, unsecured, securitized...etc). Simply allowing the company to go BK would then create even more problems. For example, most securitizations (which Chrysler had tons) would then have accelerated and wound down. This would mean that *NO* cash would go to chrysler in the form of excess spread on loans sold to the securitizations.
Revolving securitizations, such as those extended for dealer floorplan, leases, and auto loans, would have automatically terminated and gone into rapid amortization. This would unneccissarily complicated an ulimate surgical BK.
I won't go as far as to say that this was the "best" scenario, because better alternatives could certainly be found and executed, but it was a decent scenario to this point. We'll see how it is handled going forward.
when the boat is sinking, you don't dump more crap on it. Now that the boat has righted itself, you can dump a little bit more on it.
edit: in this analogy, the boat is the economy is the boat and the crap is companies going bankrupt.
Fern
Elite Member
- Sep 30, 2003
- 26,907
- 174
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Here's the Commerce Clause:
IMO, it's big leap to go from "regulating" to 'owning'.
You got a (court case) cite for your assertion?
I'm doubtful you do, but I really wanna see where they place this power to purchase private business - under "Foreign Commerce"? Nah, doesn't sound right.
Under Indian Commerce? Nah.
Under Interstate Commerce? That's hard to see.
I don't see anywhere within the Commerce Clause this ability could be found.
See US vs Lopez SCOTUS Case on teh CC
Here CJ Rehnquist enumerates Congress's power under the Commerce Clause; it boils down to three areas of regulation:
But give me your cite, please
(I was expecting someone to offer the "general welfare" argument instead of the Commerce Clause, but that strikes me as doubtful after the A. L. A. Schecter Poultry Corp. v. United States case)
Fern
I just have to laugh at this point. The Obama administration expects everyone to cut back and make sacrifices but are spending money at a record pace. If they only did what they preach this country would be better off.
Fern, you are arguing that things which influence Chrysler do not influence interstate commerce. They do. Specifically the persons or things involved in interstate commerce, like say... Chrysler. (from your own citation) I'm not even aware of anyone trying to make the argument that buying shares in a company is unconstitutional outside of maybe ultra libertarian people such as the Cato institute.
The US government may nationalize industries by force and do it constitutionally, so it can most certainly nationalize industries with the consent of the owners. I'm not sure where you're getting this idea that they can't, it seems to be a very unusual understanding of the Constitution.
The US government may nationalize industries by force and do it constitutionally, so it can most certainly nationalize industries with the consent of the owners. I'm not sure where you're getting this idea that they can't, it seems to be a very unusual understanding of the Constitution.
You didn't know this? The government almost never nationalizes industries because in general it's a bad idea, but they certainly have the power to do so.
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