Thursday, December 11, 2008
Auto Bailout dies in Senate; Black Friday expected on Wall Street; Treasury could use bailout money; Chapter 11 for GM now?
The $14 billion bailout for GM and Chrysler collapsed in the Senate tonight. Although for a while it sounded like there was a bipartisan deal, the United Auto Workers refused to go along with Senate Republican demands that UAW accept wages cuts to bring them down to the level of Japanese auto makers. We have a karma problem, don’t we. Technically, Senate Republicans have a filibuster and the 60 votes needed to break it are not there.
Anderson Cooper (who has his "Culprits of the Collapse" naming names exercise that would have pleased Randy Shilts) announced this on his 360 Program on CNN just after his own “Planet in Peril: Battle Lines” film ended but said little about UAW. But Harry Byrd (D-WVa) gave an impassioned speech about what the reaction on Wall Street would be Friday. Maybe they’ll have to stop trading, or at least stop the futures.
Ford does not need the bailout yet, but Ford dealers (at least Koons) have been emailing owners of older cars offering trade ins for newer used cars with cash back.
CNBC had pre-market DOW futures down -329 at 11:37 PM Dec. 11.
The CNBC story is here.
Some observers say that the Treasury Department has the authority to use the $700 billion bailout money indirectly.
Maybe we need a “forced coma” Chapter 11, with sale of assets of GM to Japanese companies to keep the businesses running with more or less the same workers at the new industry average pay. Chrysler is a basket-case, with the ill-conceived and reckless leveraged buyout.
Is the GOP going for "union busting"? Does the auto industry need to become a "right to work" business? Or is this like the 1975 "Ford to City: Drop Dead!" regarding the New York City financial crisis then. At that time, the Teacher's Union had to give it.
Update: Dec 14
No, there was no Black Friday after all. The market believes that the Bush administration will intervene. It seems that many of the Republican Senate "no" votes came from states with plants owned by foreign auto manufacturers.