government, in that they are calling the shots?? Pulling the strings?

I have never believed that the Nader attack line, about not a dime's worth of difference between the Repubs and Dems, was accurate. I believed there were substantial differences, albeit not adhered to by all Dems. In this New Dem version? Well....

With the takeover of the Democratic Party by the Obama crew, I don't know if I can still say that. There are islands of real Democrats who still adhere to Democratic principles, but they are being marginalized more and more by Team Obama. Team Obama works to marginalize even Speaker Pelosi, who's not even that firmly in the Democratic wing of the Democratic Party but, apparently, too close to it.

Per the Black Agenda Report post by Bruce Dixon on Obama declaring himself a New Democrat (see comment below), this corporatization of the Dems has been going on since the '80's under the DLC. (I'm still resisting that Clinton was a true believer in the DLCer approach, but I'm beginning to actually question that.... OMG! Say it isn't so!)

Is there hope for the Democratic wing of the Democratic Party? For DFHers?

Workers, who have made incredible concessions, must do more. Along with others.

11 AM market numbers:
11:00 ET Dow -270.73 at 7505.45, Nasdaq -56.03 at 1489.17, S&P -28.43 at 787.51:

I wonder how this will be received.

(BTW, Obama seems to have the 3 teleprompters for this speech, but he still spends very little time facing audience directly. Much more than with the two teleprompter set up. I think they're trying to reprogram his TV speaking head movements.)

out of his campaign speeches. Appointing some kind of director to oversee support for auto workers and related industries....

Tweety just said "What a stirring statement." Then, said it looks like it was a goodbye to Chrysler.

Some kind words about GM, none about Chrysler.

Chuck Todd called Obama "President Goodwrench"!!! They're wondering if GM will start quoting this in their ads.

Richard Wolf is on now saying we don't know size of hybrid market. Guess what, guys: If some of the trillions had been used to help people buy hybrids at lower prices, we might actually have a huge market for hybrids.

Tweety now saying Obama seeking middle way on most things.

Brings to mind the commenter at Talk Left who said we elected a Mediator in Chief.

That would be wrong.

But it's perfectly OK to cheat blue-collar workers and retirees out of what they were promised because keeping its promises would be inconvenient for management and might impact the sacred bottom line.

Jawbone, what from I can see, big money has always called the shots in this country, and pretty much every other country too.

hold Democratic coalition together, get Team Obama through a rough two years.

Since I don't watch Tweety, anyone know what he's talking about?

Said Obama added the stuff about working famiies, help for autoworkers bcz administration is afraid workers will be angry at Obama (ya think?). Then there was the comment about the Clintons* working behind the scenes to keep workers OK with the administration.

Is that why, for some reason, those remarks about workers had a different feel to how Obama spoke them? Not really his ideas? Just conjecture.

*Damn, remember that SNL skit about the 3AM phone call, where Obama calls up Hillary at 3AM about what to do on some foreign affairs emergency? Gee, must be tough to have to be Secty of State and do the domestic side as well....

A Song by John Rich:

My daddy taught me in this country everyone's the same.
You work hard for your dollar and you never pass the blame,
When it don't go your way.
Now I see all these big shots whining on my evening news,
About how they're losing billions and it's up to me and you
To come running to the rescue.

Well pardon me if I don't shed a tear.
their selling make believe and we don't buy that here.

Because in the real world they're shuttin' Detroit down,
While the boss man takes his bonus paid jets on out of town.
DC's bailing out them bankers as the farmers auction ground.
Yeah while they're living up on Wall Street in that New York City town,
Here in the real world they're shuttin' Detroit down.
Here in the real world they're shuttin' Detroit down.

Well that old man's been working in that plant most all his life,
Now his pension plan's been cut in half and he can't afford to die
And it's a crying shame, cus he ain't the one to Blame.
When I looked down to see his calloused hands,
Well let me tell you friend it gets me fightin' mad.

Cause in the real world they're shuttin' Detroit down,
While the boss man takes his bonus paid jets on out of town.
DC's bailing out them bankers as the farmers auction ground.
Yeah while they're living up on Wall Street in that New York City town,
Here in the real world they're shuttin' Detroit down.

Yeah while they're living up on Wall Street in that New York City town,
Here in the real world they're shuttin' Detroit down.
Here in the real world they're shuttin' Detroit down,
In the real world they're shuttin' Detroit down.
they're shuttin' Detroit down.

Didn't have time to track a video down. Looks like there may not be an official one.

and then have them declare themselves to be profitable like the big banks did in Jan. and Feb.? The auto industry will be healthy again, just like the banks are. Problem solved.

Reagan destroying PATCO. Probably was planned during Nixon, maybe further back than that. Thing is you gotta keep the serfs from gettin' uppity. Doesn't matter what color they are; just matters that they don't forget their places in life.

GM and Chrysler.

For how long, dude???

How many here would buy a new car from GM or Chyrsler under these circumstances? Firesale prices? Closeout prices? But, still, what about the ongoing support for parts? If not that many are sold, parts prices tend to be much higher, so cost of ownership could go up.

Yves at Naked Capitalist posted on the auto plan last night:

...we are of the school that putting the big automakers into bankruptcy, despite its attractions (being able to restructure debt and dealer networks; the UAW contracts are far less significant economically than the media makes them out to be) misses out on one crucial element: you don't have a business if you don't have customers. And a GM bankruptcy would be a protracted affair. Even if consumers believe the company will make it, what about their local dealer? If they worry they might have to schlepp to get their car serviced, is it worth it?

In typical backwards American deal and contract focused thinking, the officialdom has not spent enough time assessing the single most important issue: how would customers react? If GM and Chrysler were to lose as many as 20% of sales they'd otherwise get as a result of a bankruptcy filing, that it is a very big change in outcomes. And the drop could be considerably higher than that.

I worry that this punitive move will wind up being Lehman redux. Recall that bailout disgust was running high post Bear and Fannie and Freddie, and Someone Had to Suffer to show the Administration was made of real men. Now since no one even dares bitch slap a bank (the bonus stuff is mere Punch and Judy), all the hostility is channeled at Big Auto. And the danger is going into overkill literally, not just figuratively, to make up for being too easy on the financiers.

And if GM or Chrysler were to be liquidated, the knock-on effects would be grim. They are important to quite a few parts suppliers. If those suppliers fail, it threatens the viability of the foreign transplants.

driveway is a '95 Jimmy.

Didn't fall for the Toyota/Honda hype. Didn't have the $$$ to buy a hybrid.

Maybe getting rid of cars will have a positive effect on the environment, but it's probably too late now for the polar bears. Don't see the President going after Toyota (the new truck they're building dwarfs my 12-year-old Ram 1500, btw).

So when do we get the windfalls down here at our end of the economic spectrum?
When do we get HEALTH CARE for everybody?
When do we get DECENT EDUCATION for kids whose parents can't afford Andover Prep?
When do we get TAX BREAKS for moms and dads trying to save for college for their kids?
When do we get all that CHANGE?

Oh. I forgot. Those were campaign promises.

Did Bill Gross overplay his hand?

Like those pesky, messy, nasty CDS's...and I'll bet there are plenty of side bet naked CDS's around on GM, as well.

...then there's the nearly $1 trillion in CDS that will trigger. There is no accurate way to know what the net exposure is on those, but I'd take the "over" on $100 billion, focused in you-know-where.

LINK

If you're there, check out the posts on credit card exposure as likely Next Big Thing and the AIG Scam.

of GM. BTW, I read earlier that a GM bankruptcy would not affect its holdings outside of the US, so in some ways not so terrible for the company. Just really, really bad for the unionzied labor force.

Updated with correct link.

President Barack Obama believes a quick, negotiated bankruptcy is the most likely way for General Motors Corp. to restructure and become a competitive automaker, people familiar with the matter said.

Not much about the unions in this piece, but implications are clear.

An auto bankruptcy may push production low enough to wipe four percentage points from U.S. gross domestic product in a single quarter, Deutsche Bank analyst Jim Reid said in a note yesterday, citing the bank’s economists. One-third of the three million people employed in the industry could also lose their jobs, Reid said. The bank’s price target for GM is zero.

How fast can this be done? Depends on what kind of bankruptcy, but to do it in time frame Obama announced, it would have to be a strip and sell.

The government probably is considering putting GM and Auburn Hills, Michigan-based Chrysler into bankruptcy and then quickly selling their best assets to form new companies, Rod Lache, a Deutsche Bank analyst based in New York, said in a note to investors on March 30.

The process, a “363 sale” that refers to a section of bankruptcy code, would be a way to keep the automakers from sitting in a prolonged bankruptcy that might undermine sales of their vehicles, Lache said.

“The administration is a bit more focused on a structured, or prepackaged, bankruptcy than some might think,” Representative Candice Miller, a Michigan Republican, told reporters yesterday. “There would be an outcome that would almost be predetermined, that could happen very quickly, and it would be much about renewal rather than destruction.”

GM has a contingency plan ready for a new company that would split off its best assets into an entity that might later be sold, advisers to the company and Obama’s auto task force said.

Dissident Creditors

Stakes of any dissident creditors, including bondholders, would be “crammed down” or forcibly reduced in a bankruptcy, according to the advisers, who declined to be named because GM and the government’s plan remains private.

GM’s new-company plan, which the people said was ready to go, would split the automaker into “good” and “bad” entities, the advisers said. The new GM would be powered by brands such as Cadillac and Chevrolet and valuable foreign operations. Unprofitable brands, such as Hummer, contracts with surplus dealers and financial obligations would be hived off in bankruptcy court, said one of the advisers.

While the new company could be created in 30 days or less, allowing GM to operate without interruption, bankruptcy may go on much longer, focused on bad assets, said a GM adviser.

Senator Carl Levin, a Michigan Democrat, said the public focus on a bankruptcy risks bringing about that very scenario.

Impact on Sales

“The more you talk about it publicly as a possibility, the more people have doubts as to whether they want to buy the cars in that company,” Levin told reporters yesterday.

“I know what they’re trying to do is signal to the bondholders that folks, you’ve got to come to the table,” Levin said of the Obama administration. “I would have done it differently.” (My emphasis)

Not sure if this is new or not, from piece linked to above (incorrectly, will fix):

“The president’s position has not changed,” a White House official said. “He remains committed to a significant restructuring without a bankruptcy if at all possible.”

GM’s U.S. sales fell 45 percent in March, compared with the same month a year earlier, less than the 48 percent decline predicted by 7 analysts surveyed by Bloomberg News.

The automaker’s shares fell 1 cent to $1.93 at 4 p.m. in New York Stock Exchange composite trading and have dropped 40 percent this year.

Credit-default swaps to protect against a default by GM climbed 1 percentage point to 86 percent upfront, according to prices from broker Phoenix Partners Group and CMA DataVision. That’s in addition to 5 percent a year for five years, meaning it would cost $8.6 million initially and $500,000 annually to protect $10 million of the automaker’s debt. (My emphasis)

Yves says it's either 11-dimension chess--or Obama has painted himself into a corner.

Is Obama's leaked view that a “quick and surgical bankruptcy" was a "likely option" for GM and Chrysler form of bizarre brinksmanship? If not, Obama has just painted himself in a corner based on what looks to be some very bad advice.

As we will explain below, the notion of a "quick and surgical" bankruptcy for GM, and probably Chrysler too, is a fantasy. GM would be the most complicated bankruptcy ever. It simply isn't amenable to a prepack or a fast track variant. In fact, somme bankruptcy experts think a Chapter 11 restructuring simply isn't possible and a filing would morph in the courthouse into a liquidiation. That in turn would take out many suppliers, and many of the foreign transplants too.

And before you insist that Obama has access to the best legal and economic advice, I suggest you review the record on the banking industry front and think twice. The policy moves so far have been dictated by faux constraints, such as "no more Lehmans" and "we can't go back to Congress for more money" and "we don't do nationalizations". The same sort of contorted thinking that produced the public private partnership monstrosity seems to be at work here.

Update 2:00 AM. The New York Times sets forth how the Administration intends to ram a deal through, namely, by, splitting the company in two and getting "some" creditors to agree to the split. The problem with this construct, however (and BK experts welcome to opine), it appears from the long-form description of how a big complicated BK normally proceeds, that having "some" creditors agree doesn't cut it. As we recount further down, bankruptcy experts had earlier ruled out a pre-pack as being undoable due to the impossibility of getting the needed number of parties to consent in a compressed timetable, I don't see how having a structural proposal solves that fundamental problem. (My emphasis)

Now to the closing, but do read the whole thing about how complicated, how many players are involved for any kind of bankruptcy. Yves quotes at length from an earlier article about how it might be done.

It would be better if we were wrong, but this looks like Lehman redux. The powers that be are getting bailout pushback, and aren't willing to take any financial perps out, so by default it's Big Auto. And if they miscalculated, the consequences will be catastrophic. It won't simply be GM and Chrysler, but the parts makers, and the transplants will take hits due to the loss of suppliers. GM and Chrysler are not isolated players, but major components in a large ecosystem. There are no good answeres here, but the Administration does not appear to have thought this out (how many balls does Geithner have in the air, including the G20?). A miscalculation here would have major repercussions. But Andrew Mellon would be pleased.

Now, imagine the impact of the Lehmann closing on the markets and economy multiplied....

Oh, and don't forget about all the CDS's connected to a GM default, much less bankruptcy....

WILL get screwed.

Noting Bloomberg article from today,

April 1 (Bloomberg) -- General Motors Corp.’s 60-day deadline to restructure is unlikely to be extended because the U.S. won’t repay $1 billion in convertible notes maturing June 1, according to a person with knowledge of the discussions.

Denninger says, "This is basically the government telling GM that either they get the bondholders to agree to whatever is necessary, or they're dead."

Because bondholders can game the CDS system:

...in this case the winning play, if you're a big bondholder, is to tell GM to suck eggs; you'll get paid 100 cents on your CDS even though AIG has no money, because the taxpayer will make you whole on those CDS, even if the bonds have a recovery in bankruptcy.

In other words you could conceivably get more than 100 cents if you hold those bonds - so long as you also hold a CDS as a hedge.

Read on. I hope he's wrong.