Tuesday, November 18, 2008

Big 3 Bailout

Executives from Ford, GM, Chrysler and the United Auto Workers union descended on Washington and testified before the the Senate Banking Committee today. The discussion was one of the financial situation that lays before the three American automakers.

They are looking for an additional $25 billion funding to lift the current burden that the financial worlds collapse has leveled upon them. Earlier this year, Congress authorized a $25 billion loan program focused on assisting the companies with retooling for the implementation of fuel-efficiency technology.

GM's best option currently would be following through with chapter 11 filings, which would allow them to re contract with the nearly 7,000 dealers that they have stretched about the united states.

With the current credit lock down in place the Big 3 have little chance of moving enough units to make them profitable. Out of the 3 only Ford and Chrysler are properly positioned to return to profitability with in the next 18 to 24 months. Return? become would be more appropriate. It has been a long time since any of the 3 were profitable in truth. Ford had just started to move into profitability during the first quarter of this year. Just in time for the credit market to shut down any chance of maintaining the gambit.

But the chances of the Big 3 tagging themselves onto the TARP program are slim to none and the chance of them establishing another so-called bailout are not good. The Senate Republicans and the White House stand united against such a plan.

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