GM, Chrysler were a mess: Car czar

As they often say, the workers cannot fix a management problem.
http://www.theglobeandmail.com/report-on-business/gm-chrysler-were-a-mess -car-czar/article1331827/
We were shocked, even beyond our low expectations, by the poor state of both GM and Chrysler. Looking just at the condition of GM's finances and Chrysler's new-car pipeline, the case for a bailout was weak.
GM's board of directors was utterly docile in the face of mounting evidence of a looming disaster and former GM chairman and chief executive Rick Wagoner set a tone of friendly arrogance that permeated the company, Mr. Rattner wrote.
Chrysler was poorly run during its alignment with Daimler AG, and larded up with debt, hollowed out by years of mismanagement, Chrysler under (private equity firm) Cerberus never had a chance.
Chrysler was poorly run during its alignment with Daimler AG, and larded up with debt, hollowed out by years of mismanagement, Chrysler under (private equity firm) Cerberus never had a chance.
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A reader comment:
> Not only did you and I pay for the car we did buy, now we pay for the car we
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Some O wrote:

"alignment" ?!
Alignment ??
Is that the politically-correct translation for take-over / rape?

Ford is also larded up with debt

While the management decisions made by Cerberus were nothing to be proud of, it was the credit-crisis that knocked Chrysler on it's back and forced it into bankruptcy. The reality might very well have been that Cerberus could have done nothing during it's few years of owning Chrysler that would have prepared Chrysler to weather the financial storm that started in Q3 of 2008.
Why was there a credit-crisis in the first place?
Because of an artificially low interest rate policy from the Fed that was needed to prevent the US federal debt from spiraling out of control because of the mounting costs of the invasion of Iraq, as well as a push by the Bush administration to increase the rate of home ownership in the US among the lower-class ethnic demographic, mainly in the south and west, by enacting rules that forced banks to sign risky mortgages along the lines of a quota system as never before.
Investment dollars flowed away from low-interest gov't T-bills and into risky mortgages and derivative products and fueled a bubble that couldn't be sustained.
The Bush gov't thought it could have two things at once: High gov't borrowing at absurdly low rates, and a healthy economy based on investment flows into real estate driven by insolvent borrowers. If you want to prosecute a foreign "war", you need a healthy economy back home. That's been the rule for thousands of years. The Bush whitehouse thought it could cut a few corners and distort a few fundaments and pull it off - they failed miserably, and left the US a destroyed, smouldering heap of rubble. 10 years of economic stagnation and an unemployed society bordering on anarchy is the legacy of George W Bush. And just wait until 150,000 mentally dammaged (if not physically dammaged) adult men come home from their foreign "war" and try to cope with life at home, in the economically and socially wrecked and scared landscape that is the USA today.
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Could be, but that cherry has not yet been popped, while GM and Chrysler lie moaning.
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hls wrote:

GM today only exists as a funnel to consume taxpayers debt funded wealth. A venue for Obama to pay off very rich and powerful insiders who held a lot of GM & Chrysler debt.
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GM and Chrysler debt was pretty much wiped out by bankruptcy.
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snipped-for-privacy@gmail.com wrote:

Possibly, but then the governmetn isn't coming clean on how much of our money they pumped into GM. GM on on of their last public financial statements stated a gross liabilities of $177 billion. Now I know they wrote off a lot. People who lent GM money and creditors sure took one hell of a bath.
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short term money out of them regardless of the consequences to the company. Cerberus did nothing for Chrysler except leave with what they could take.
Also during that time Chrysler's mid sized cars were (still are) undesirable to many, including me. Chrysler realizes that and here they are only advertising their trucks, which are still desirable.
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Josh S wrote:

I believe that Cerberus lost a ton of money on their Chrysler investment when all was said and done.
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I keep reading that claim, but Cerberus owns several manufacturing companies (Blue Bird, NABI, and several aerospace firms), and so far as I can see from the moves those companies have made since Cerberus got them, they seem to be trying for long-term viability.
Putting Nardelli in charge of Chrysler still seems like a major aberration to me; does he have any manufacturing experience at all?

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He did have some manufacturing experience with GE. He had a degree in business, and took an MBA afterward ( not that that is any positive recommendation)
He was a total washout with The Home Depot.
He was voted one of the "Worst American CEOs of All Time" one one occasion.
'Good ol' boys dont need to know nothing...they just run the biness'
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Ah, OK -- somehow I'd completely spaced GE. So he did have something relevant on his resume.

After his HD fiasco, I would have thought he'd be permanently blackballed...

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Josh S wrote:

them because they DON'T look like the Japanese/Korean crapmobiles. BTW, I have a 2007 Caliber and a 1941 Windsor. Both very good cars, though I do prefer the Fluid Drive!
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MoPar Man wrote:

Because people, businesses and governemnts are broke. That is the short answer.
The longer answer is that the government encouraged banks to leverage up, giving the government the latitude to set interest rates lower than market rates.
Market rates are:
inflation + risk + costs + taxes + profit
About 3+ years ago to lend money had a negative return, tell tale sign of a recession/depression. Debtor denial ruled. So money started drying up. I would have to be one stupid person to lend you money if my return was only 1%. Because inflation at the time, real inflation was closer to 3%. And I have to pay income tax on the 1% and have costs. Then I am assuming risk in that you will not pay me back and welch on the debt. So if I lend you some of my money, I actually incure a value loss. So people stopped lending money.
Then the liberal ponzi house of cards burse. As people refused to lend money at rediculas rates, leverage went to obscene levels and just a few bankruptcies caused the banks to crash. Careless management by government and bankers.
But government being so far in debt to a point of dysfunction, about $12 trillion, low rates mean cheaper debt and more money to spend on ocrruption. 1% interest on $12T is a whole lot less than 9% on $12T. But it also comes with unemployment, tighter credit, pay as you go.
Yes, governemtn caused it, the biggest denialist debtor of them all.
Yet I am sure many a stupid will vote for the same representatives that went for the quick ponzi scheme. Predominantly Lib-Democrats in congress and the senate didn't do anything to stop it.
Smart companies made sure their debt was reduced going in, and are doing quite well. But neither GM nor Chrysler were smart. Just pigs at the trough, including the unions.
There is a credit crisis as with bad credit the USA is trying to artificially keep interest rates below market value. At some point either the government will go bankrupt of the currency will fail. Take California IOUs. Prime example. But the fed can create inflationary which they have done since at least Sept 2008 when even DC couldn't borrow money any more.
In Canada, BC, Ontario and Quebec can't fulfill old bond issues, Ontario has one perpetually open since Sept 2008 and can't borrow.
All because the risk-reward is far out of whack. Denialist largest debtor number one, government, thought its statism was more important than your job and wealth.
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A very good summary, except that "poorly" is an astonishingly mild term.
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Joe Pfeiffer wrote:

I would agree. incompetantly and corrupt with a heavy does of dilbert dysfunction and denial.
It kind of amazes me that the much smaller Enron fiasco sparked off SOX, yet not one executive or board member of GM or Chrysler is being charged. Yet GM, like Enron has had convictions on misrepresentation of financials just like Enron.
Stinks of consiracy and corruption for sure.
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