The Detroit automakers deserve to go broke, says Bill Bonner. They were well positioned in the biggest market for autos in the world, but still managed to squander all their money. And now they want the taxpayers to rescue them.
Currencies trade in a tight range… China… Commodity prices to blame… “Safe” Treasuries? And Now… Today’s Pfennig!
It is looking like it will be a big week for Detroit. The nation’s automakers are due back in Washington to hopefully conclude their welfare pandering.
Big media has been beating the drum that if Detroit built more fuel-efficient vehicles, buyers would flock back to their showrooms. But there is an inherent lie in this line of thinking. And if investors buy into this lie, they could end up on the wrong side of the trade when it comes to considering the major American auto makers any time in the future.
The private jets were the last straw. I speak of the chosen mode of transportation for the “Big Three” automaker CEOs last week. When the heads of GM, Ford and Chrysler made their trek to Washington, they did so in the style of fat cats. They should have flown coach.
Perhaps I am being too optimistic, but I think the government bailout of the Detroit 3 is a foregone conclusion. In the interest of the entire country and the national economy, the government simply can’t let the automakers fail. There is no denying the business model is broken, but hopefully steps will be taken to change that.
Eric Roseman says none of the “big three” automakers deserves a bailout. Even if they get one, it will only delay their inevitable bankruptcy. Letting Detroit go under will be painful. But Eric says that is better than wasting more taxpayers’ money. And it could help restore some confidence among investors.
Not every automaker CEO is down on his knees with cap in hand. Some of them are too proud to beg… and Taipan Daily won’t have to beg either with the right options strategy.
Not every auto manufacturer wants charity, you know.
While Detroit’s CEOs were up on Capitol Hill whining and begging like street junkies for a mere $25 billion to tide them over until spring, salesmen from Bentley, Lamborghini and Maserati were working the floor of the Los Angeles Auto Show like madmen in an attempt to stem their stateside sales losses.
Now don’t let their $500 suits and smooth manners fool you. These guys are hurting too. Lambo’s down 15% (pretty much a match to the whole biz’ 2008 decline). And…
The base metals were mixed on Friday. Copper bottomed below $1.48 in the pre-dawn hours, but then pushed higher until the late morning, when it came off its highs to finish at $1.5752/lb., up 5½ cents. Nickel rose from the pre-dawn hours to mid-morning, trailed off, but then rallied late to close at $4.5503/lb., up 9¼ cents.
MSCI world equity index up 0.9 percent at 192.09, Hopes for interest rate cuts cushion economic gloom, Government bonds rally; oil rises from 3-1/2 year low
