Monday, March 9, 2009

Will the Obama Administration Save GM?

I know how important the auto industry is to many in this country. For many having parents work at the auto plant was the example of middle class living and wages. Now, this industry is dying a slow death.

I have stated that I don't think the Obama Administration will save all of the big three, that they will let one fail, I think it will be GM. Ford Motors Company is far more stable financially than GM.

Is this a good thing? No. Will it create more job loss? Yes. But if the Obama Administration takes this approach to possibly let GM demise, they must take this direction for the banks in this country. We can't save them all. Citigroup, we, the tax payers now own 36% of this financial organization, which means we have money invested heavily in this bank. What about the other banks? Are we going to save them all? I don't see it. Bank stress tests much be done on these banks and decisions made.

Now the Obama Administration will have information on GM from their fact finding team. Personally, I don't think it will be good news.

The field trip wraps up nearly three weeks of fact gathering by the team since General Motors Corp. and Chrysler LLC submitted their rescue plans to the Treasury Department in the hopes of winning billions more in government loans. Ford Motor Co. is not seeking government aid.

Top Treasury Department advisers Steven Rattner and Ron Bloom, who are leading the auto task force, plan to use the day in Detroit to clarify an array of lingering questions surrounding the companies' rescue plans, which many analysts have criticized as overly optimistic. The team will also meet with the United Auto Workers union to discuss its willingness for deep compromises over wages, staff cutbacks and funding for its retiree health plan.

While in Detroit the auto team plans to tour production and engineering facilities and to test drive the Chevy Volt, GM's electric car that is the centerpiece of its technology push. The visits will feature the GM Technical Center and the Chrysler Dodge Truck Center. The team will then hold discussions with GM and Chrysler officials, as well as top representatives from the UAW.

The weeks ahead are filled with peril for both the White House and the auto makers as administration officials face a March 31 deadline for deciding whether to give the companies nearly $22 billion more in federal assistance.

Political pressure is mounting against an open-ended bailout of GM and Chrysler, with strong support in many quarters for the companies to reorganize through bankruptcy. But with the nation's unemployment rate now over 8%, President Obama and his team are wary of undermining the UAW and sending another economic shockwave through the heart of the country's industrial belt.

Again, if we don't save the auto industry and let one of the big three fail, don't continue to throw money at these banks, who were just as irresponsible in management as the auto industry. We are in a very messy tangled web, financially in this country.


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