General Motors (GM, Fortune 500) will likely go bankrupt within months, and that Ford (F, Fortune 500) and Chrysler LLC could soon follow
So, could this be the end of the most fabled car industry in the world?
The most prominent monument of USA factoring and business - bites the dust? Or could this be, yet just another cry for a bailout. A pleading hand for money. All three manufacturers said that one of the biggest mistakes they did is produce big, fuel inefficient cars because the market was hungry for it. And that if they are guilty of something, that's chasing profits and not mismanagement. The only problem with their story is that they didn't make some profits, and that spells mismanagement. The CEO's accused government low interest rates during 2004, as well credit bubble as the biggest culprits.
Well, I guess the most obvious question is what is US government going to do? Are they going to hand them out that 25 blns they wanted or what? What's the alternative? Better yet what's the problem?
All car manufacturers are saying that fuel efficiency is the problem. So they plan to make more fuel efficient, quality products.
So, then what's the alternative?
It is more likely that the Bush administration is going to modify $25 billion in loans proposal, originally targeted for automakers to use to make more fuel-efficient vehicles.
Although most of economist agree that bankruptcy would be the best option and allow automakers to shed expensive labor contracts and reorganize as smaller, more efficient firms, it is likely that the 25 blns bailout proposal, somewhat modified is going to be passed.
Looks like it's going to happen again. Keynesian's are prevailing!