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Saturday, May 2, 2009

Motor City shakedown

I was reading about the upcoming Chrysler bankruptcy last night, and several aspects of the news held a bad vibe. First and foremost, the new company's going to be owned by the workers' union and Fiat. The union's getting stock instead of the cash it was entitled to; Fiat, as we know, stands for Fix It Again, Tony. Somewhere Mussolini is laughing, but our World War II vet Teamster dads are rolling in their graves.

Another dynamic is that a sly change has been worked to our bankruptcy laws. Now that the TARP program has many of the big banks at the mercy of the federal government, the majority of the creditors in the bankruptcy will do as the feds want -- they don't have much choice. Which means that the other creditors -- the ones who haven't gotten any TARP money -- will also have to go along, as they're outvoted. They're not happy about that. And they shouldn't be. Wall Street deserves all the bashing it gets these days, but something tells me that some day this twist is going to come back to bite us.

Comments (14)

Worries me too.

Just don't get caught using the "S" word to describe the direction we're heading or they'll start calling you a paranoid rightwing kook.

There's the direction, and there's the destination. We were overdue to move left -- especially after the Paulsons and other robber barons raped the country under Clinton and the Bushes.

If you want capitalism to succeed, you're going to need ethical people running it. The American executive class appears to have run out of that type of person a long time ago.

There is an article in Fortune this week that gives a list of things that need to happen for the USA to prosper. #1 on the list was having the CEO's of the companies that did this confess their sins and take responsibility for what they did.

The author seems to believe that won't happen, and I would tend to agree.

I sure like those "S" word streets and highways, and those "S" word police and fire depts that respond to 911 calls, and how those "S" word sidewalks and bridges and those "S" word public schools (admittedly, they were better in the 60s and 70s) and how about those "S" word clean and water standards (oh, before Bush gutted those depts) and how about that "S" word FEMA (oh yeah, that's another agency that Bush gutted) and that "S" word agency the FDA and CDC, that used to be effective before they too were gutted... we see what happens when the free market principles take over by looking at the SEC and how they just didn't see what was in front of them because they didnt want to harm their chances at being scooped up for a gravy job at one of those big investment banks or brokerages or hedge funds they were supposed to be overseeing (How about the Madoff oversight)... I'd settle for a little "S" word here and there mixed with a little capitalism that has oversight... the way its been for many years before the last 8 when oversight became just a 9 letter word...

It started with Bush 1, not 2. And Clinton went right along with it.

I don't own a Fiat and haven't studied the company closely, but there's certainly been a lot of chatter that its products are greatly improved of late. I note that in that article you link to, Time says "many older Americans joke that it really stands for Fix It Again Tony"...

I owned a Fiat once -- bought it new in 1969; after four years, it was rusted out. On the other hand, I rented one last year and drove it 1500 kms or so -- it was an excellent car, leagues ahead of any Chrysler product I've rented.

I too owned a Fiat in 1969, and it was a Piece of S*** (different "S" word).

My dad's had a couple of Fiats lately. They are tinny but surprisingly reliable. However, looking to Italian management to save you is not a good sign.

I bought a 92 Dodge a while back because it has the best engine ever put in a pickup truck...the Cummins 6BT turbodiesel.

After reading this, I may just haul it out of there with my cherry picker, find a good solid old GM or Ford truck with a blown engine, get some motor mounts and a tranny adapter, and stick the Cummins in that.

My dad bought an imported Fiat in 1968 and at that time there was only one guy in Portland who would work on them. He was located somewhere on SE Division around 102nd or so.

Except for the inconvenience of getting it serviced, that Fiat was a great car. He liked it so well that he bought a second Fiat which turned out to be a piece of s**t.

I haven't know anybody that owned one since.

Well it is going to be interesting to watch. The company will be owned by the UAW and the US gov. Fiat isn't putting any money into the deal but they'll probably be able to name the management team.

It isn't a done deal yet since the bond holders are being screwed so badly that they'll most likely bring legal action. If the legal action delays things very long the company will just get liquidated. Obama says that the bankruptcy will only last 60 days but Delphi has been in bankruptcy for about 5 years now and that was a smaller and simplier company.

If the company does make it out of Chapter 11 I can only imagine what a mess the UAW and Feds will make of it. Just trying to imagine the UAW running something makes me laugh.

The management team at Toyota is following the golden rule of business: "don't interrupt the competition when they are destroying themselves."

As an auto enthusiast, I've been following this Chrysler story for some time. The details; which have been laid out in the Detroit newspapers do not bode well for Chrysler or it's workers. Given how the UAW has done a good job of driving all of the domestic auto makers to the brink of bankruptcy, I have a hard time seeing them running anything like a business.

...especially after the Paulsons and other robber barons raped the country under Clinton and the Bushes.

I've got news for you, they're not finished.

If you want capitalism to succeed, you're going to need ethical people running it.

Yes, and now we have the "man of system" and several holdovers from the Clinton Era running things, along with the UAW. I'm pretty nervous, how about you?

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