Chrysler's President: Investing More Money into the Company is "Irresponsible"!

[competentone]

About two minutes into this video, Jim Press, Chrysler's Chairman and President, says that Chrysler's owner, Cerberus, can't be "irresponsible" and invest more money to keep Chrysler going:

http://www.cnbc.com/id/15840232?video=960370824

Hmmm....but we, as taxpayers, are supposed to be forced to make an "investment" in the company, even though such an investment, if done by Cerberus, would be "irresponsible"?!?

It's like we've suddenly started living in an Ayn Rand novel. The Congress is completely ignoring the will of the people on these bailouts -- people, overwhelmingly don't want this crap.

What is going to stop this madness?

[Neilk]

I think this opinion piece sums it up nicely, especially this part

"Yes, the Obama administration will have to come back in January with a full rescue package. The package should focus on saving jobs, not stockholders or bondholders. Shareholders should lose most of their investments, bondholders should get a haircut, managers and board members should be ousted, autoworkers should have their pay and benefits trimmed to market levels, and taxpayers should get an equity stake that they could profit from."

[fintstone]

Investing in any company that requires union labor is just irresponsible. That is why these companies cannot get private financing. Might as well go to Vegas and put it in a slot machine. I don't care how good..or bad that management is; no one could make a profit unskilled labor costs $140K per year. If McDonalds used UAW workers...a Big Mac would cost a least $60. Might make it hard to compete with Burger KIng.

[widgeon13]

Originally Posted by competentone

About two minutes into this video, Jim Press, Chrysler's Chairman and President, says that Chrysler's owner, Cerberus, can't be "irresponsible" and invest more money to keep Chrysler going:

http://www.cnbc.com/id/15840232?video=960370824

Hmmm....but we, as taxpayers, are supposed to be forced to make an "investment" in the company, even though such an investment, if done by Cerberus, would be "irresponsible"?!?

It's like we've suddenly started living in an Ayn Rand novel. The Congress is completely ignoring the will of the people on these bailouts -- people, overwhelmingly don't want this crap.

What is going to stop this madness?

Typical American mentality, taking the easy way out! You say the majority don't want it yet the majority wanted Obama and he wants to lend them (Big 3) money, he thinks he knows best. Sorry to make this political.

I'm not sure what will stop it, other than it will get worse before it gets better.

Get about 20 Mil folks w/ guns threatening to walk into Washington DC and see what happens. The people need to rebel. Until the people that represent us in government feel the pain, it will not stop! They don't use common sense, they think they are smarter than the rest of use and are sure as shlt going to prove that theory wrong.

We need another Boston Tea Party!

[widgeon13]

This is not a healthy company, stock continuously declining over the last ten years, who in their right mind would invest in this??

[red-beard]

How many workers work at GM? What kind of "other" company could be setup for $15 Billion, instead of bailing out this stupid company.

In fact, wouldn't it be better to put that money into successful companies, and have them hire the out of work auto workers? Yes, it would!

This bailout is dumb dumb dumb

[widgeon13]

Give some of the money to a good management company and let them buy GM, get rid of the unions and restructure. Government behavior of throwing money at the problem w/o changing management is stupid and fruitless.

[Zef]

QUOTE=widgeon13;4359207]Give some of the money to a good management company and let them buy GM, get rid of the unions and restructure. Government behavior of throwing money at the problem w/o changing management is stupid and fruitless.[/QUOTE
Produce good cars is a nice thing to do too......

[lowyder993s]

If you look at 78% institutional ownership, I wonder how many people would change their tune and support a bailout if they knew their pension/mutual fund/ 401k held this stock. These guys need to fold up and resuurect as a leaner, more productive entity/ies.

[djmcmath]

Originally Posted by lowyder993s

I wonder how many people would change their tune and support a bailout if they knew their pension/mutual fund/ 401k held this stock.

I'm sure that some of my funds have invested in this -- and I still say it's better to take a short term loss which will yield better long term results for the country than to commit the moral hazard of endorsing these idiots by socializing the risk of auto manufacturing.

[Arizona_928]

damage control, not melt down.

[CRH911S]

While I'm a staunch union supporter I have to agree that, if necessary, any one of the big three should deal with their issues like any other company would under these circumstances. The airlines have done so for years and so maybe they could learn something from that playbook.

[Rearden]

http://online.wsj.com/article/SB122669746125629365.html

In 1993, the legendary economist Michael Jensen gave his presidential address to the American Finance Association. Mr. Jensen's presentation included a ranking of which U.S. companies had made the most money-losing investments during the decade of the 1980s. The top two companies on his list were General Motors and Ford, which between them had destroyed $110 billion in capital between 1980 and 1990, according to Mr. Jensen's calculations.

I was a student in Mr. Jensen's business-school class around that time, and one day he put those rankings on the board and shouted "J'accuse!" He wanted his students to understand that when a company makes money-losing investments, the cost falls upon all of society. Investment capital represents our limited stock of national savings, and when companies spend it badly, our future well-being is compromised. Mr. Jensen made his presentation more than 15 years ago, and even then it seemed obvious that the right strategy for GM would be to exit the car business, because many other companies made better vehicles at lower cost. . . .

Over the past decade, the capital destruction by GM has been breathtaking, on a greater scale than documented by Mr. Jensen for the 1980s. GM has invested $310 billion in its business between 1998 and 2007. The total depreciation of GM's physical plant during this period was $128 billion, meaning that a net $182 billion of society's capital has been pumped into GM over the past decade -- a waste of about $1.5 billion per month of national savings. The story at Ford has not been as adverse but is still disheartening, as Ford has invested $155 billion and consumed $8 billion net of depreciation since 1998.

As a society, we have very little to show for this $465 billion. . . . Yet one can only imagine how the $465 billion could have been used better -- for instance, GM and Ford could have closed their own facilities and acquired all of the shares of Honda, Toyota, Nissan and Volkswagen.

The implications of this story for Washington policy makers are obvious. Investing in the major auto companies today would be throwing good money after bad. Many are suggesting that $25 billion of public money be immediately injected into the auto business in order to buy time for an even larger bailout to be organized. We would do better to set this money on fire rather than using it to keep these dying firms on life support, setting them up for even more money-losing investments in the future.