The Obama Vivisection of Chrysler

Joined: 22 Dec 2007 Posts: 461

www.reuters.com/article/newsOne/idUSTRE54C0XY20090513

So much for that "two months" that Obama stupdily said. Bankrupcy like I said earlier takes quite a long time.
Up to two years....

ok here's the other problems with this

1) bob nardelli the ceo of this company STILL gets paid as long as they are in bankrupcy!! So where's the incentive for management to get them out?

2) The union can't go on strike until 2015...assuming they last that long too

www.bloomberg.com/apps/news?pid=20601103&sid=a5dC6O3Z2H.Y&refer=us

3) The advertising budget is being cut in half...why...because there hired agency is owed 58 MILLION!

www.tribbleagency.com/?p=5035 maybe
So who realistically is going to buy a car from a company that could shutting down for nearly two years and who's advertising budget is being cut in half? Who would buy cars after that? I'm sorry but if you give someone two years off they'll forget a chunk of things...it's somewhat normal in the auto industry for things to shut down for weeks...maybe a month or so...but years? Come on...

4) The new CEO's might get around those obama pay recommendations by labeling these employees under the Fiat name

www.freep.com/article/20090513/BUSINESS01/905130318

5) the UAW ends up owning 55% of this

http://online.wsj.com/article/SB124087751929461535.html

6) dealership employee payroll checks have bounced!

www.recordonline.com/apps/pbcs.dll/article?AID=/20090512/BIZ/905120311

Joined: 26 Aug 2008 Posts: 306

Some counter points.

Nardelli will have zero say in how long the bankruptcy goes. There isn't anything he can do to drag it out. Once you declare, you are under receivership of the court until the bankruptcy proceedings are over. All negotiations are between owed creditors and the court, or possbile 3rd parties like Fiat. All time schedules are set by the court.

2 months is actually pretty close to how long it will take for the majority of the decisions to be done that allow the company to continue. The remaining time involves assets that no one really wants, and negotiations on how to divide those, and for the court to put it's final discharge stamp on it which can take months even though everything has been settled much earlier.. In the article they pretty much say as much. You kind of headline picked and didn't get to the meat of what was said. Heck even in a personal bankruptcy is over in basically 1 day but, everything settles, but the court's final discharge isn't given until months later.

Can't strike until 2015. So what? Without the concessions, the union would have nothing to strike against. Chrysler would be put into receivership and dissolved. Is that a better answer? Fiat would not have stepped forward without the contracts redone. Pick your poison.

Advertising Budget. They are going through bankruptcy! The company is being stripped, drawn and quartered. It will not be the same sized Chrysler that emerges. Royal Crown Cola can't spend on Advertising like Coca Cola can, Carl's Jr doesn't have the advertising budget Mcdonald's has etc. The Chrysler that emerges from bankruptcy won't be the same company. Part of their problems was their huge advertising budget. Seriously, when a major creitor you owe money to is a advertiser, but you want to spend 134 million over just 9 weeks... i am beginning to see just whay they are in bankruptcy in the first place.

The union owning 55%. Ok now wait, just above you are complaining that the union can't strike until 2015... make some sense man! Why would the union want to strike against itself? Again, these are all concessions that the union themselves made. It's not ideal, but where is the other option other than total liquidation?

Exec Pay. Fiat's CEO made about 4 million last year. Look up what Nardelli's Pay package has been. Heck, look up what Ford and GM paid in previous years.

Dealership payroll checks. That link doesn't talk about dealership checks bouncing?

Joined: 06 Jul 2003 Posts: 8379 Location: Central CA

I think the key to Dovell's post can be found in one word... "Obama". It's "Obama's vivisection of Chrysler" after all.

Both Chrysler and GM have been headed for this since the fricking 1970s...long before I ever heard of Barack Obama and I'm pretty sure Dovell knows that... he just chooses to conveniently forget it when attempting to make a case against the current administration... else why put Obama's name in there in the first place?

I rate that right up there with "Obama's war" and "Obama's recession" and all that other "Obama is responsible for every chickenshit thing that's happened since the Clinton administration ended" bullshit spewed on talk radio and the Sunday morning bobble head shows.

Chrysler did this to Chrysler. In fact, Chrysler has pretty much been an unmitigated failure since the 1970s-80s. They had already been bailed out once and sold, first to a foreign company, then to a flipping hedge fund where they were run just like hedge funds run everything... straight into the ground while any revenues there might have been wound up in one of those tax free island states with 40 miles of road where, according to Dovell, they supposedly do a lot of business (sell lots of cars?) every year. Uh huh, right.

You can twist and spin and dodge (no pun intended) around the real issues until the freeping cows come home but you can NOT escape that simple fact. Chrysler had thirty... damned near forty by now... years to get it's act together when it became readily apparent that the old time business model wasn't going to work anymore and they didn't do it. Daimler couldn't turn them around, Cerebrus couldn't turn them around (and probably had no desire to in the first place)... they were fricking toast.

Trying to blame that on Obama? Bullshit! Especially since the only alternative would appear to be total liquidation.

Joined: 22 Dec 2007 Posts: 461

Well if it's been dying then why even have the government involved in it to begin with?

http://www.heraldonline.com/684/story/1342693.html
"Obama also is requiring that the new Chrysler-Fiat partnership manufacture more, smaller fuel-efficient vehicles in exchange for more than $10 billion in U.S. and Canadian aid. "

I'm not claiming that the company was run perfectly by any means. But the idea that the government is forcing a company to make a deal with another let alone the fact it's a foreign company is odd to say the least. Fiat isn't even paying one cent for this...

In Europe for example France had some ownership of Renault...but it's shrank as time goes on. Why the government has to have a ownership of two car companies is beyond me.

Trying to invoke AIG again isn't going to get your argument anywhere. I won't defend AIG but as mensioned before they ran a number of insurance companies in california.

Joined: 06 Jul 2003 Posts: 8379 Location: Central CA

Chrysler wasn't "forced" to do jack shit. You just don't get it, do you? Chrysler failed Chrysler... not once but twice.

And this time, when the failed... They had the same choice any other company that's been run into the ground should be getting... we'll help your sorry ass out one more time but this time you're gonna have to do things differently than you the last time your inept management got you into trouble.

Other THAN your so called "Obama Vivisection", they had the same option(s) that any other company has when they are functioning solely on fail... accept the terms of restructure or liquidate.

One simple question: What kind of terms do you think they would have gotten from a BK referee, Dovell? They apparently chose what was to them, the lesser of three evils and all you can do is STILL try to bash Obama with it? Give me a break. I'm not screamingly happy with the guy either but you're really stretching it.

Thanks by the way, for verifying that your main goal is to blame Obama for the whole sorry debacle. I was afraid you'd try to bloviate that to death, as is often your wont.

My PERSONAL opinion is that the taxpayers shouldn't have been involved in doing jack for Chrysler but since the government has decided to try to preserve what few remnants are left I'm goddamned glad that they're setting some rules for how our fricking money can be used.

And I'm also glad you won't defend AIG (any more) but am puzzled as to why you keep trying. Given that statement... why you would in the same breath feel the need to point out that they ran insurance companies in California?

If you're not defending them, what the hell ARE you doing and what the hell does California have to do with anything anyway?

Joined: 22 Dec 2007 Posts: 461

Hello McFly is this thing on?
"Chrysler wasn't "forced" to do jack shit"
O really?
"President Obama's auto task force in March REJECTED Chrysler's restructuring plan and gave it 30 days to make another effort, including a tie-up with Fiat. "

www.cbsnews.com/stories/2009/04/30/business/main4980040.shtml

I'm against the government funding this but on the same note Obama violated the rules of bankrupcy. How can the president reject the debtors claims?

Explain to me why this can't enter bankrupcy court?

www.cbsnews.com/stories/2009/05/07/politics/otherpeoplesmoney/main4997900.shtml

"These creditors, by the way, represent something of a cross-section of America: the University of Kentucky, Kraft Foods' retirement fund, the Bill and Melinda Gates Foundation, pension funds, teachers' credit unions, and so on. "

Heaven forbid that teacher credit unions and pension funds should get paid their fair share from this. According to Obama their claims don't matter.

What kind of terms? An actual real bankrupcy in court. I'm sick of this "too big to fail" or "soft landing" mentality. We might not like the law but at the very least we should respect it.

Joined: 06 Jul 2003 Posts: 8379 Location: Central CA

Yeah, really. Up until the point that they decided they could do better leeching from the taxpayers they HAD the option of Chapter 11, same as any company that screws itself into the ground. A damned good time would have been a year ago when it had become obvious that they were spiraling downward and before any of this other stuff... including the advent of the Obama administration had even happened. They chose to hold out for what they assumed was going to be another government bailout.

You're all hung up on what happened to them because of circumstances they themselves created and you brush off the fact that they put themselves in the barrel all by their little selves... for the SECOND time... and all you've got is talking point indictments of Obama and what HE did as a result of their having done this to themselves.

Those creditors and shareholders you're so concerned about were perfectly happy all those years when they were sucking down all those extra revenues generated by outsourcing production, cutting union jobs and investing in offshore infrastructure instead of our own, weren't they?

They were perfectly happy building huge billion dollar plants to produce their most popular models in Mexico while American plants were stuck trying to pass off gas guzzling behemoths that all of a sudden... during a major fricking recession... nobody wanted anymore, weren't they?

Only too glad to take the money and reward the company's leaders for their "exceptional performance" with bonuses and incentives and limousines and corporate jets.

And nobody ever saw the fricking train bearing down on them, right? Bullshit! If you believe that then have I got a deal on a bridge for you! They saw it coming... they just thought it would work out for them like it did last time.

Trouble is, it was apparent that this time, there was no plan on the table... and that's why their restructuring plan was rejected... it would NOT have provided any assurance that they would be able to pull a rabbit out of their ass and pay us back this time because it was a hell of a lot worse this time than it was then.

People who do business with these corporations... should be required to do so at their own risk and that includes the creditors and shareholders of Chrysler. They CHOOSE to play the goddamned game and they're willing to take the loot and run if they win. It's not up to the damned taxpayer to insure that they don't lose anything if they fail.

Forcing people who DON'T gamble their fricking futures on the performance of some greedy little trolls in some boardroom somewhere to pay the bills for those who do sucks a hell of a lot more to me than seeing the company turned over to someone who MIGHT be able to run it at a profit and regain some of the losses down the road.

Hell, it's my understanding that we're STILL saddled with the fricking Troll In Chief, Bob Nardelli, whom they hired in spite of the fact that he's never done ANYTHING but run companies into the ground. If that's so, I might even give you a little piece of Obama myself but he did NOT create this situation.

Joined: 26 Aug 2008 Posts: 306

First off I think the auto companies should have been allowed to fail in the first place before any money was ever pumped into them.

The government got involved because the auto industry asked them to. Simple. Should they have is a different question.

Dovell, the deal was forced because if they didn't do it, the result was going to be the liquidation of Chrysler, and liquidation of YOUR tax dollar. So forced? Yea I guess, but no one "forced" Chrysler to beg the government for the money nor did anyone "force" Chrysler to accept it, or the conditions attached.

AIG? Who has said anything about AIG in this thread?

As far as requiring Chrysler to make smaller, fuel efficient cars... umm that's what Fiat is known for in europe. It's why they were brought to the table. Let's look at this. The 2 US automakers in danger of becoming extinc have no small passenger car model to hang their hat on unlike Ford. GM has tried recently, and has the Volt in the pipeline, but Chrysler mad a half assed effort with the Caliber, and failed because it looked like and drove like a piece of shit. They were very late to the party on the cross-over market. The got bailed out once before, and have failed again. Their business model failed over and over. Requiring them to produce smaller, more fuel efficient cars was just part of the bargain. Why let allow them to fall right back into the same old habits? Why not force them to change, specially since the government (you and I) have a huge stake in all of this.

Fiat just won't be held responsible for the debt to US taxpayers. Nothing really different in the deal than BoA got for Lehman, Jp Morgan Chase got with WAMU etc.

Going back to why is the government involved in the auto industry. I've said all along they should have been allowed to fail. The financial sector should have been allowed to fail. We are past that point now and are at the question of "now what?" rather than being at "why?". Since we're into it, and they have proven twice in the past of being incapable of being relevant, you bet we should regulate them. It's our money.

Joined: 22 Dec 2007 Posts: 461

"You're all hung up on what happened to them because of circumstances they themselves created and you brush off the fact that they put themselves in the barrel all by their little selves... for the SECOND time... and all you've got is talking point indictments of Obama and what HE did as a result of their having done this to themselves."

I know they put themselves in their own position. I just find it odd that a 3rd party of the government comes in and starts making all these arrangements.

"Those creditors and shareholders you're so concerned about were perfectly happy all those years when they were sucking down all those extra revenues generated by outsourcing production, cutting union jobs and investing in offshore infrastructure instead of our own, weren't they?"

Outside of USA, Canada and Mexico I don't think that much of theirs came from other countries at least for the US market
http://www.allpar.com/corporate/factories.html They do make cars in other countries but that's because they are sold there. Technically yes in the 80's there were some brands that clearly were other makes.
http://en.wikipedia.org/wiki/Diamond-Star_Motors
this really isn't that different from what GM did with Toyota at the NUMMI plant
http://en.wikipedia.org/wiki/NUMMI

"Trouble is, it was apparent that this time, there was no plan on the table... and that's why their restructuring plan was rejected... it would NOT have provided any assurance that they would be able to pull a rabbit out of their ass and pay us back this time because it was a hell of a lot worse this time than it was then."

Then it should have just been allowed to fail. I just don't see realistically how these plans are going to save anything.

"People who do business with these corporations... should be required to do so at their own risk and that includes the creditors and shareholders of Chrysler. They CHOOSE to play the goddamned game and they're willing to take the loot and run if they win. It's not up to the damned taxpayer to insure that they don't lose anything if they fail."

I agree with the taxpayer issue. However creditors do have rights in bankrupcy court. For obama to imply as if they don't matter goes against more than 200 years of history. There's never been a bankrupcy of this scale lasting only two months.

"Forcing people who DON'T gamble their fricking futures on the performance of some greedy little trolls in some boardroom somewhere to pay the bills for those who do sucks a hell of a lot more to me than seeing the company turned over to someone who MIGHT be able to run it at a profit and regain some of the losses down the road."

I understand that.

"Hell, it's my understanding that we're STILL saddled with the fricking Troll In Chief, Bob Nardelli, whom they hired in spite of the fact that he's never done ANYTHING but run companies into the ground. If that's so, I might even give you a little piece of Obama myself but he did NOT create this situation."

I agree with you on Nardelli. if this guy ran a company on the basis of performance he would have died of starvation years ago.

I just view this fiasco being totally illogical. You have a company with management and union employees. Adding a 3rd party that dictates things doesn't make much sense. It seems like we are saving just a name rather than anything else.

There are some names here like Polaroid that really aren't what they were. The name still exists but that's just slapped on some other product. who knows maybe we'll see Chrystler blenders and toasters in 20 years!

Joined: 06 Jul 2003 Posts: 8379 Location: Central CA

I'm gonna forego a reply to the cute little "McFly is this on reference" retort this time except for this: If you think the rest of us are stupid or obstinate for not falling all over ourselves to acknowledge your expertise and superiority in the matter of things financial/economic then it shows your ignorance. Nobody else's

You really need to forget how things are supposed to work or how they actually worked in the pre-Reagan, pre-deregulation era and look around you at how they're actually working these days. Unfettered Capitalism is nothing but another form of Socialism and redistributing the wealth upward is no better than redistributing it downward and given the effect it's had on our economy, probably worse.

I can't imagine how putting more money in the hands more people who would actually have to spend it instead of hoarding it in offshore tax shelters could possibly have produced the depression we're entering into today, but I suppose that's another subject.

Nardellis don't just pop up out of nowhere occasionally... our business schools are churning out Nardellis in large herds and the only way for all of them to get what they consider themselves entitled to is to take it first from the "little guys" and then from each other with the "little guy" stuck in the middle. The little guy comes off badly in either event, eh?

As for how creditors can fare in bankruptcy court, I refer you to ESL's takeover of K Mart Corporation in 2003 and the manner in which a single activist investor was able to buy up enough of the company's debt for pennies on the dollar subsequent to BK filings to become the alpha creditor and then take stock in lieu of payment, thereby becoming also the alpha shareholder.

Ask all of K Mart's OTHER creditors and shareholders how many rights THEY had in the bankruptcy courts when Eddie Lampert reorganized the company into an entirely new entity and left them standing there with huge EMPTY bags.

Then do some studying up on hedge funds, activist investors, private equity operations, short selling, stock buybacks and the myriad of other ways in which markets and companies are manipulated on a daily basis by the "players" for whom the small investors are nothing but pawns to be sacrificed for even the tiniest advantage at the closing bell.

The K Mart scenario is just one example... given the "ideberg theory", there are most likely dozens... probably hundreds... of cases out there if you just bother to do a little research instead of just going off with the latest Limbaugh talking point or anecdotal "evidence" supplied by your favorite anti-Obama site.

Heck, we have a guy right here on this forum that has become somewhat of an expert at rooting through EDGAR and 10k filings and who can spot a scam a mile away now.

Dovell... there ARE no protections or rights that apply to "little" people anymore. That's what this is all about for many of us in the first place. The marbles go to the guy that already has the most marbles to start with, by hook... as in the K Mart example, or by crook... as in the case of AIG. it doesn't matter.

Hell, if the truth be known, Chrysler was already OWNED and being controlled by a damned hedge fund (Cerebrus) and hedge funds are NOTED for bleeding off every asset a company has and then blowing off ordinary investors AND creditors in favor of their large, institutional shareholders that are heavily invested in their funds.

As I said above... they simply thought they were going to get yet another "infusion of capital" (bailout) from the taxpayer and keep right on keeping on. Breaking them up and putting them under a conservatorship might be the best thing that ever happened to them in the long run.

The government's intervention... and again I'm not defending it... although I'm not condemning it either until I see what the results actually are... may at least keep scenarios like the above from playing out with Chrysler and GM.

I'm betting that had the Chrysler saga been allowed to play out to it's inevitable end barring said intervention... SOMEONE would have popped up to be the Eddie Lampert or the Nardelli in that scenario also. Oh yeah... they already HAD a Nardelli, didn't they?

Joined: 22 Dec 2007 Posts: 461

Well one might argue that fiat is the lampert here because they don't have to pay a cent and they are getting I think 30% of the company.

I personally know someone that worked at the company that makes diesel engines for dodge and jeep lines. He knows diesel engines he's worked on them for years. He told me once there's a ram you can't get in three states (mass, ca and maine) because of the emissions (it has the power to rip a house off the foundation..that's a claim he made to me but I doubt I'd ever see it tested!) Now he left the place to teach at a auto school. I'd say it's a bright move but I have to wonder how much volume is going to happen with the slowdown. They do service other companies but those are higher ended cars (benz and audi) and they might not sell as much.So even if a place closes down you do have a trickle effect going far beyond the factory.

It's just sad sometimes seeing something just end outright. Back in the day Lee Iacocca took a $1 salary and brought out the kcars (boring but at least they worked) the cavavan etc. I heard they did ok and then had that deal with benz...then it was obvious not a good deal and it ended up with Cerabus...and now. There's only so many times a nameplate can be tossed around.

Joined: 06 Jul 2003 Posts: 8379 Location: Central CA

I... actually my wife... owned a K car and it didn't work. Radiator... brand new Chrysler developed alloy according to my mechanic... rotted out in 18 months. The last really good Chrysler Product I ever had was a 1965 Dodge Coronet.

And what the hell kind of market exists for a RAM that can rip a house off the foundation? Do people go around doing that?
Wink

Joined: 04 Feb 2008 Posts: 90

I owned Mopars for may decades. I still have a 1997 Dakota 4WD. It is a wonderful truck. I have had many Mopar 60's muscle cars. I loved them. My favorites were a 69 Dart GTS big block and a 70 Road Runner 440+6. I still keep my hand in drag racing with my friend's 65 Plymouth Belvedere, street driven and run a best of 8.45 seconds at 161 MPH in the 1/4 mile. I build the transmissions for it. I hate to Chrysler go down the tubes, but a Fiat with a Hemi may be fun to drive!.

Joined: 22 Dec 2007 Posts: 461

Well that's the most powerful truck you can probably buy...in terms of size there are really giant things that caterpiller makes but for actual on the road I'd say it is.

I'm not sure about the quality of Fiat...there was an old saying it stood for Fix It Again Tony. Sometimes when a brand has been gone for awhile it can take time to bring it back.

Sometimes a product within another country can be built to different standards. A Ford escourt in the USA is a real low end car...in Europe I personally know someone that drove it on the autoban! It also won the World Rally twice! In a similar compairson I was reading about a compairson between gillette's product in europe and usa. Much higher standards of quality in europe.

Joined: 06 Jul 2003 Posts: 8379 Location: Central CA

You're absolutely right Nightstalker. I wasn't trying to disparage Chrysler products... the 65 Coronet with it's 383 was my best Chrysler product and one of my best cars ever. The 318 and the 383 were two of the best and most reliable engines ever built and you've already mentioned the hemi... which I was introduced to in a big old 1951 Chrysler sedan my buddy bought at an auction back in the early 60s. That was the first hemi, 322 cubic inches, which was unimaginably huge in 1951.
Mr. Green

I just went pretty much GM and Ford pickup trucks as my personal vehicles after that. My wife picked the family cars and she was basically a Ford person. The Ares my wife bought was my only other Chrysler product and was one of my worst cars ever. It and the Coronet were two extremes and I just happened to have had both of them.

I did drive state owned Dodge pickups and sedans throughout most of my career and many of our wildland engines were on Dodge chassis and I have no problems with any of them.

MY brother was more of a Mopar fan and had everything from Grand Furies and Charger class through Challengers/Barracudas middie muscle cars and still drives a Concorde today.

I hated to see Plymouth go down the tubes just like I'm going to hate seeing Pontiac go and I don't think anybody actually LIKES what's happening to Chrysler or GM these days.

It's disgusting what Wall Street has done to iconic companies (not just car companies either) in this country over the last thirty years and I think it's disingenuous to try to make it into purely a political issue and/or the fault of any one person when it's been building toward this particular end for three decades or more.

And Dovell... I still have a 98 Escort ZX2 Sport 2-dr coupe that used to belong to my wife. Has the Zetec 3.1 litre DOHC engine. 148,000 miles, 130 hp, gets 38 mpg highway, still doesn't use a drop of oil and the only significant repair it's ever required was a replacement of the timing belt. Once.

"Low end", like so many other things... strictly in the eye of the beholder.

Joined: 26 Aug 2008 Posts: 306

One of the reasons Fiat was brought in is because of thier Fix It Again Tony reputation, that they completely turned around. Chrysler is in similar territory Fiat used to be, and Fiat has experience in changing the image of a car company.

Joined: 22 Dec 2007 Posts: 461

"And Dovell... I still have a 98 Escort ZX2 Sport 2-dr coupe that used to belong to my wife. Has the Zetec 3.1 litre DOHC engine. 148,000 miles, 130 hp, gets 38 mpg highway, still doesn't use a drop of oil and the only significant repair it's ever required was a replacement of the timing belt. Once.

"Low end", like so many other things... strictly in the eye of the beholder. "

I should have ment a straight off the shelf basic model.

that also reminds me that hemi's were even used to power sirens
www.victorysiren.com
Pretty impressive given that nothing has been made louder than it

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