An Orderly …

The Bush Administration is considering a orderly bankruptcy for GM and Chrysler. By the end of this they may need an orderly to wheel them out of the room.

The auto industry is sick. The car-makers have made extravagant promises to their unions regarding pay, pensions, and health-care. Even in the best of times, those promises made it hard for the Big Three to sell cars profitably. With the economy in recession, those contracts almost guarantee that the companies will lose money.

But this is old news. GM, Ford, and Chrysler have been unprofitable for over a decade. Differing ownership hasn’t helped. New and better car-models haven’t done it. Even an economic expansion and consumer spending boom didn’t get them going. Now the tonic of choice is “reorganization.” But if the auto companies don’t want to leave the room feet-first, they need to get their costs down.

Whether it’s a judge, Congress, or the unions, someone has to help these firms stop the bleeding. Because every day lost is another day’s worth of losses. And at the end of the road is a place where no one wants to go.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By |2014-09-04T17:05:04+00:00December 19th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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