The Romney Ad, the Auto Bail Out and China

The political everybody has an opinion not based in fact pundit world is ablaze over a new Romney ad claiming Chrysler is planning on building a plant in China and making Jeeps there. The ad references this Bloomberg article, from October 22nd, which reports Fiat, the majority shareholder in Chrysler, wants to move some production to China.


Maybe letting GM go Bankrupt isn't such a great idea

Marketwatch reports that

Initial jobless claims rose 32,000 to a seasonally adjusted 637,000 in the week ended May 9, the Labor Department reported. ....

[A]nalysts have focused on the recent downward trend in claims. Claims hit a peak of 674,000 in late March.

Economists had expected claims to move higher this week. Roughly 27,000 hourly employees of Chrysler were laid off in the wake of the company's bankruptcy filing. There were also layoffs at parts suppliers.

A spokesman for the Labor Department said the government could not quantify the exact number of layoffs stemmed from Chrysler. But the increase in claims did come from the automotive sector.

In other words, take out Chrysler, and we would've been under 600,000. Not great by any stretch of the imagination, but a move in the right direction.

GM Layoffs will Boost Unemployment Through the Roof

I just has a truly frightening experience. During a conversation about the auto industry one of my colleagues who researches the auto industry told me that according to his calculations, the GM shutdown is going to send 250,000 off the job in Ohio.

This includes only the multiplier effect at auto suppliers, not any macro economic effect. For example, job losses at retail stores resulting from drops in spending are not included, nor are any further drops from other problems.

As it stands now Ohio unemployment stands at 9.7%.

Overall, the Ohio labor force stands at 5.95 million.

Currently, 578,000 are out of work, up from 409,000 in October of 2008.

Adding another 250,000 to those out of work, bumps the total number of unemployed to 838,000.

Divide this number by the labor force, and you get an unemployment rate of 13.9%, a 44% increase over the present rate.

Bail Out Hypocrisy - Manufacturing Gets the Shaft, Financials Get to Craft

The White House is in full hypocrisy mode. While Obama Treasury Secretary Geithner tries to do a massive power grab, invites financial sector CEOs to craft policy and cooperate in their multi-trillion dollar U.S. taxpayer money pig fest, the auto industry is shipped to bankruptcy court. Even worse, Chrysler is to be broken up into good cars and bad cars, yet Italy (Fiat) gets the good cars and the United States gets the bad.

Meanwhile Obama Press Secretary Robert Gibbs struggles as reporters immediately question the different standards:

GM, Chrysler - $21 Billion, 50,000 Lost Jobs

This is bad folks. Bloomberg:

General Motors Corp. said it needs as much as $16.6 billion in new U.S. loans, more than doubling the aid to date, and must get some of the cash next month to survive. GM plans 47,000 more job cuts worldwide this year.

Chrysler LLC, propped up like GM with federal assistance, said it’s seeking $5 billion more from the government and will shed 3,000 more positions.

GM says 47,000 jobs will be lost world wide. GM is selling Hummer, shutting down Saturn, bankrupting Saab (which Sweden is going to salvage and return to it's nation), and shutting down 5 additional U.S. plants. It is completely not stated which countries and plants will lose which jobs. It looks bad that most of the losses will be against U.S. workers and other nations where they pay living wages.

GM Hummer Division to be Sold to Chinese Defense Contractor?

GM is talks with a Chinese firm to sell off its Humvee division with financing from a private equity firm.

A Chinese company is said to be in advanced talks with General motors over the $100million (£69.4million) takeover of Hummer - the fuel-thirsty, four-wheel-drive vehicle modelled on the US military's Humvee.

News of the unnamed bidder's interest came days after it emerged that another big Western carmaker, Volvo, may be sold to the Chinese.

Ford is in talks to sell Volvo to Chinese tycoon Li Shufu's Geely carmaking business. insiders say a private-equity firm is also involved in the proposed Hummer deal but would not reveal its identity.

The buyer is likely Dongfeng Motor Company, a Chinese defense contractor.

It's a Friggin' Christmas Miracle: Bush Comes through for the Auto industry?

It's a Christmas "Miracle", George Bush came through. $13.4 billion for the auto industry. Or maybe, not so fast. This is a stay of execution, not a pardon.

The troubled U.S. auto industry will receive emergency loans of $13.4 billion from the federal government in return for an extensive restructuring of its outstanding debt and labor costs over the coming year, according to administration officials.....

Funds for the loans will come from the Troubled Asset Relief Program initially set up to aid the financial industry. An additional four billion will be available in February.

But the money will come with some extensive strings attached. Though the White House will not appoint a "car czar" to oversee the industry going forward, the companies will have to restructure their wage agreements so that they are competitive with foreign automakers by the end of next year. In addition, by March 31 of this year the companies will have to show they are financially viable and able to repay the government -- a requirement that may, for example, force them to renegotiate outstanding debt and other agreements.

Be afraid, be very afraid. Although this money is going to push the industry through till March, a whole new set of challenges await the President-elect come March. First, let's set lay down a few facts to start the discussion.

The Big Boys Are Threatening to do..... What Hitler Couldn't Do

Sunday Morning Comics - Oh the Horror, Bail Out Now Redux Edition

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From an interview with the Dilbert creator:

Q. If Dilbert were real, would he still have a job?

A. No. I'm drawing a series right now where he gets laid off and he has to go through a really tough bunch of interviews to try and get another job. At one point he is asked whether he would take a bullet for a prospective employer and they make him go to a firing range to prove it.