GM, Chrysler Need "Considerably" More Money

In what should come as no surprise to anyone but the auto executives, GM, Chrysler May Need �Considerably� More Aid.

General Motors Corp. and Chrysler LLC may need �considerably� more government aid than their request for as much as $21.6 billion, said Steven Rattner, the U.S. Treasury�s chief auto adviser.

�It could be considerably higher, I won�t deny that,� Rattner said, when asked whether U.S. aid sought could rise to $30 billion or $40 billion.

My Comment: Change "could be" to "will be" and you have an accurate sentence. Every month, and sometimes twice a month, someone makes a determination that GM needs more money. And every month, like clockwork, the buffoons in Congress and this administration want to provide it.

Rattner and President Barack Obama�s auto task force are assessing proposals from GM and Chrysler and deciding whether to recommend additional aid or tip the car companies into bankruptcy. Rattner said the task force will give its �sense of direction� before March 31. Chrysler and GM have received $17.4 billion since December and requested more last month.

My Comment: Anyone needed this much time to understand the "sense of direction" of GM and Chrysler is not suited to the task.

GM�s bondholders �are looking to the government to help them solve their problem,� Rattner said. �The government cannot solve everybody�s problems, and we need for the bondholders to become part of this in a constructive way.�

�There�s no real uptick, no real sense that the company would generate meaningful amounts of cash flow on a stand-alone basis,� Rattner said of Chrysler. �We have not made a determination on whether they could exist on a stand-alone basis, but we do find their idea of partnership with Fiat a worthy idea to consider.�

My Comment: With each sentence Rattner sounds more and more incompetent. Other than repeated massive taxpayer bailouts to Chrysler there is no way it can exist stand-alone. Moreover, there is rampant excess capacity in the industry and the sooner that capacity is removed the better off everyone will be. It should not take a genius to figure this out.

Rattner said any decision about GM and Chrysler management would be tied to the ultimate configuration of the companies �and I�m not in a position to comment on that today.�

My Comment: Does Rattner have a plan? How about a plan for a plan?

GM Chief Executive Officer Rick Wagoner and Chrysler�s Robert Nardelli have been �exceptionally cooperative,� �thoughtful,� and �energetic,� Rattner said.

�They�re good guys really trying hard to run those companies,� Rattner said. �I have nothing bad to say about them.�

My Comment: They may or may not be "good guys" but they are incompetent at running auto companies. That Rattner can find nothing bad to say about them, says something bad about Rattner.

Misguided energy is far worse than no energy at all. Unfortunately, there is misguided energy everywhere you look including Congress, the Fed, the Treasury, the FDIC, and the Whitehouse.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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