I just moved into Park Slope in Brooklyn and I have a couple of days before my internship starts. I'm watching CNBC and all the anchors are JIMP'ing about the stock market rally. In 50 minutes, Obama will be having a press conference about what's going on with GM. For all the idiots that live under a rock, GM filed for Chapter 11 bankruptcy at 8:00am Eastern and the US Treasury owns 60% of the company.
11:10 - Kudlow is JIMP'ing about all of the economic indicators that say everything is butterflies and sunflowers. OMG durable goods OMG transportation index up OMG consumer discretionary up. BTW the guy he's interviewing has too much blush on.
11:13 - Kudlow keeps repeating "Little green cars that nobody wants to buy," likely talking about the fuel-efficient cars that Obama is going to force GM to manufacture.
11:16 - Steve Liesman says that Geithner emphasizes the imporance of China in laying the foundations for the global economic recovery. No vein popping out just yet, though.
11:20 - Will China keep buying US Treasuries? "Clearly the world is shifting its views on US debt, Chinese are very concerned about US debt, they said so at the beginning of the year, but what do you do with a bad position? They're long US dollars and long US Treasuries. At some point the Chinese have to let everyone know they're not going to keep buying these things".
Note: The chick keeps asking questions that try to hook in the Joe Sixpacks: "How does this affect the average investor looking to buy Treasuries?" "But isn't China's economy fundamentally linked the the American consumer's demand?"
11:28 - Reporter in Victorville, CA, VICTORLINVILLE????? "What do dealerships do now?" "We keep selling cars to the best of our ability. It's all we can do. It's all we know how to do."
11:30 - Dealer subsidies are huuuuuuuuuuge, that's why they are getting shut down left and right
11:35 - Schatz of Heritage capital: "This rally is sustainable, I think we're going to at least 9,000, maybe 9,500, maybe 10,000"
11:36 - Kudlow: "Construction up 3 straight months, nobody thought that was possible"
11:37 - Long term bearish case: "We're setting the stage for inflation, we don't have the bullets to kill inflation, how is the Fed going to stop inflation if we have to keep rates low to continue housing recovery?" The bitch: "What is long term? Labor day? End of the year?"
- these companies were facing a crisis decades in the making
- relied on loans from the previous administration (potshot at Bush)
- i would not put any more tax dollars on the line if it meant perpetuating bad business decision
- not permanent wards of the state
- recognize the importance of the well-being of our auto industry to the well-being of the country
- collapse of these companies would be devastating for countless Americans and be devastating for our economy
- good for American workers, manufacturing, good for economy
- if GM and Chrysler stakeholders were willing to sacrifice for the company, then the US government would stand behind them
- earlier plan did not not the necessary restructuring
- after consulting with my auto task force, I became convinced if they were allowed to undergo a restructuring and form a partnership with a global car company, they could get a new lease on life: new Chrysler is poised to complete its alliance with Fiat. Court has approved the Chrysler, Fiat alliance, emerging from bankruptcy in few more days
OMG STOCK MARKET RISING WHILE OBAMA SPEAKS
- people were wrong about a quick bankruptcy being impossible, people were wrong about car sales dropping off a cliff when Chrysler went bankrupt
- GM is different; much larger, much more complex, needs to streamline brands, clean up balance sheet, GM and its stakeholders have produced a viable, achievable plan that will give this iconic company a plan to move towards profitability
- GM will start building a bigger share of cars at home, including fuel efficient cars***
- Deal that has worked out is tough, but fair: Unions take pay and benefit cuts
- Shareholders give up remaining value of their shares
- unsecured bondholders get substantially more than if the government had not intervened
- executing plan will take substiantial money that only the government can provide
- the governments of canada and ontario will help to provide an investment
- government of germany has reached an understanding for the sale of an overseas stake
- We inherited a financial crisis unlike any we have seen in our time. Survival ane success of our overall economy depends on it. "Reluctant shareholders"
- US government will not make decisions for GM
- US government will get out quickly.
- Fleet modernization subsidy???
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