The Impending Big 3 Bailout

The Big 3 chiefs are in Washington today for hearings before Dodd’s Senate Banking Committee (which you can watch on CSPAN or CNBC) at 10:00 a.m.

They’re going to get raked over the coals.

Of course, this is just the show. Harry Reid is saying he doesn’t have the votes to pass a bailout, but the Big 3 automakers will get their money. It might come from the $25 billion they’ve already been promised or from TARP. It doesn’t matter.

I have bought Ford and GM (sell on the rally after they get their money).

The question isn’t whether they’ll get a bailout, the question is will it do any good. My opinion? No way. GM is heading for bankruptcy, no matter what. They are one of the most poorly run companies in the world. Their cars are ugly and unreliable and they have run their business abysmally. They’re burdened by a group-think bureaucracy and insane UAW giveaways. I am a union man, but the UAW really has gone too far (and is now paying for it). Blame the CEOs because (despite the lessons of the Bush Administration) that’s where the buck stops.

Case in point: Read this article about Saturn. A great idea that GM royally screwed up.

As for Ford, I think they may have a shot. I’ve seen some decent looking cars coming from them, and if they can figure out how to convince people that Detroit doesn’t produce unreliable autos, who know? They are better positioned financially and are saying the right things. Plus, they have interesting foreign brands (for sale or otherwise).

And Chrysler? They’re dead. Let ’em go.

The bottom line, this saga will continue well into 2009 and presents, in my estimation, a good stock buying opportunity (with eyes open about the risks). Today’s hearings should be fun.


One Response to The Impending Big 3 Bailout

  1. Mike says:

    I am disgusted by all of these bailouts but how can the Congress give literally trillions in guarantees and loans to Wall Street and not give the car companies a relative pittance? I agree. They’re going to get the money. But America really is in a world of shit.

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