10/11/08

GM Chrysler Merger?
By: Mark W Adams


Back in 1979, Chrysler's Lee Iacocca became a celebrity and the government's $1.5 Billion bailout/loan guarantee to the company was one of the most hotly discussed issues of the time. A couple of weeks ago, amidst the implosion of the financial markets, AIG, Freddy/Fanny takeovers, Lehman's bankruptcy and the end of finance as usual throughout the world, Congress approved a $25 billion loan program for the auto industry with barely a hearing or headline.

Even in 1979 dollars
that's still over five times the value of Iacoca's Chrysler bailout which included caps on executive salaries and concessions from the UAW. This time, with the size of the Wall Street rescue plan dwarfing the assistence to the Detroit automakers, all that remains is writing the check. With GM and Ford looking more like penny stocks on the exchange board instead of industrial powerhouses, the fact that this sailed through is good news indeed for Ohio and Michigan, two states that have born the brunt of George Bush's economic madness the last 7 years.


Along the Lake Erie coast, we notice stuff like this no matter what else is happening. If you live within a hundred miles of Detroit, Toledo, Cleveland, Youngstown or Erie PA, you or someone in your family either works for the auto industry, works for for a company that supplies or supports a car maker, or you sell stuff to those that do. This area has been bleeding since 2001 and never felt the recover the rest of the nation talks about from the last recession. If one of the Big Three shuts down, there'll be nothing left here but scrap merchants and vacancies.

And now they're talking merger between Chrysler and GM. The history of car makers in America has been a study in mergers. Scores of independent companies are now consolidated under the umbrellas of Ford, Chrysler and the biggest amalgam of assimilated manufacturers in the nation, General Motors. Paring the Big Three down to two is epic. Indeed, with a combined 35% share of the US market, the merger would result in the Big One and the other guys.

It's no secret American vehicle manufacturers have been under fire for some time now. I've noted before that they have become health insurance providers who happen to make cars. Beyond loan guarantees and mergers, streamlining production, easier credit for buyers, and retooling for a greener, more fuel efficient and less oil dependent world, the single thing that will help Detroit and every business in the country would be a national health care plan that is at once more affordable and moves us away from employer based insurance.

You want to save businesses big and small, you want to increase the tax base, you want to put America to work, you want a better life for everyone? Health care is the answer. If they didn't have to shell out billions in premiums, I seriously doubt these mega corps would be looking for government handouts or joining their competitors.

1 Comment:

Anonymous said...

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Recently an insurance company nearly wind up....
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A bank is nearly bankrupt......filing chapter 11 protection.
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How it affect you? Did you buy insurance? Did you buy mini note or bonds?
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Who fault?
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They bailout trouble finance company, but they will not bail out your credit card bills……And the bill out of company is still not enough yet…….Should they have use the bail out $$ to pump into all different industries……You got no choice, and no point pointing finger but you can prevent similar things from happen again……
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The top management of the Public listed company ( belong to "public" ) salary should be tied a portion of it to the shares price ( IPO or ave 5 years ).... so when the shares price drop, it don't just penalise the investors, but those who don't take care of the company.....If this rule is pass on, without any need of further regulation, all industries ( as long as it is public listed ) will be self regulated......because the top management will be concern about their own pay check…… And they are still spend big money on hotel stay and luxury function……..
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Meanwhile if company was being acquired, there will be a great movement in terms of staff……eventually staff suffer also.
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So Bail out already happen, So the next question is, what regulation are they going to implement, so as to prevent similar things to happen………
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Are you a partisan?
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Whenever anywhere, anytime, there is election campaign.....We can use this to question your candidate there….. if you agree on my point, please share with many people as possible.... Finance and Media are the two only industries can shaken politics ( Maybe Hackers can ), please help to highlight also...
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