Stop The Auto Bailout Campaign - Phase Three

By: Mike Shedlock | Thu, Dec 4, 2008
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The automakers have made another push for money, now asking for $34 billion when two weeks ago they only needed $25 billion. It's time once again to let our representatives we want to stop the madness.

Stop The Auto Bailout

We need to Call, write, and Fax Congress and tell them we are tired of bailouts. Most of the ideas for this campaign come from Auto Sales Plunge To Lowest Level Since 1982.

Here is the first thing I want you to do:

Call your representatives and say ....

"I DO NOT support any bailout of the auto companies. It is a waste of taxpayer money. Two weeks ago they wanted $24 billion, now they want $34 billion and next month they will need $50 billion.

The best option is a restructuring to eliminate some of their debt. The airlines survived restructuring so can the automakers"

Next it's time for a Fax Campaign.

Congressional Phone And Fax Numbers

Click Here For Congressional Phone And Fax Numbers

Click Here For MetroFax Compatible Fax List For All Congress

Message For Congress

Fax Title: Say No To Auto Bailout Moving Target

Dear senator/congressional rep

Two weeks ago, the automakers said they needed $25 billion to survive. Now they need $34 billion. How much will that be next month?

GM alone needs another $6 billion now ($4 billion immediately) than it did two weeks ago. How much will it need next month?

Can anyone believe anything the auto executives are saying?

Ford Profitability Schedule

Flashback June 22, 2006: Ford to be profitable in 2008

Ford Motor Co. said it was on track to meet its goal of making its North American auto business profitable by 2008 and remained committed to that target. Mark Fields, Ford's president of the Americas, announced the company's upcoming vehicle line-up and a push to offer more fuel-efficient vehicles.

Flashback November 8, 2007: Ford To Be Profitable in 2009

Ford said it was on track to meet its goal of being profitable in North America and in all of its automotive operations by 2009.

Flashback May 22, 2008: Ford To Break Even in 2009

Ford said Thursday it likely will not hit its target to be profitable in 2009, but will just break even said Ford CEO Alan Mulally. "Overall, we expect to be about break-even companywide in 2009 -- with continued strong results in Europe and South America."

Flashback December 2, 2008: Ford sees at least breakeven in 2011

Ford Motor Co said on Tuesday it expects overall and North American automotive business pretax results to break even or be profitable in 2011.

From GM's latest 10-Q

Short-term borrowings and current portion of long-term debt.
September 2008: $7.21 Billion
September 2007: $5.26 Billion

In one year's time, short term borrowing and interest on long term debt has gone up by $2 billion per quarter, $8 billion per year!

If Congress loans GM money, interest on its debt will rise yet again.

GM has $36 billion in long term debt and has a negative net worth of $60 billion.

Is $34 Billion The Beginning Or The End?

I wrote you just two weeks ago asking if $25 billion was the beginning or the end. If you did not know the answer then, you do now.

GM is begging for taxpayer handouts, going to the negotiating table with no contingency plans needing $6 billion more ($4 billion of it immediately) than it did just two weeks ago.

CEO Rick Wagoner keeps insisting that the company has "no contingency plan" should Congress decide not to bail it out.

What kind of CEO has no contingency plans with bankruptcy on the table?

World Will Not End If GM Goes Bankrupt

The very best thing that can happen to GM and Ford is they go bankrupt. The sooner the better. Congress will then see that the world will not end. Both companies will reorganize. Both companies will keep making cars.

The airline industry did not stop flying when it went bankrupt and the auto companies will not stop producing cars if they go bankrupt. In fact, bankruptcies will eliminate the debt on the books decrease interest payments and make the companies more competitive, if and when they ever get around to producing autos that consumers want instead of what the manufactures want to produce.

Coming out of bankruptcy debt levels and interest on debt will be lower. GM and Ford will be more cost competitive.

Not a single job will be saved by propping up GM. In fact, jobs will be lost and money will be wasted if money is thrown at the problem. GM and Ford are suffering under a burden of debt and interest on debt with no conceivable way of paying that debt back.

Bankruptcy Is The Best Option

Bankruptcy is the best option for the Auto industry. If the union disagrees, let it pledge its pension money as collateral, and let Wagoner pledge his personal wealth as collateral for a loan.

Remember ...

In one year's time, short term borrowing and interest on long term debt has gone up by $2 billion per quarter, $8 billion per year!

In addition, GM's burn rate is $2 billion per month. GM loses money on every car and truck it makes.

There is no hope for GM other than bankruptcy and a restructuring of that debt!

The first order of business under any restructuring should be to get rid of GM's management team, lock, stock, and barrel, starting with CEO Rick Wagoner.

I urge you to vote against any bailout for the Auto companies. Any bailout effort would be a further waste of my hard earned money.

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Mike Shedlock

Author: Mike Shedlock

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/

Mike Shedlock

Michael "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility.

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