Saturday, 13 December 2008

US Auto Bailout

Congress is playing hide & seek with the TARP money. They don't want to give it to Detroit. Not yet.

Treasury's TARP money is down to 15bn left. The big 3 auto makers need more. Approval for more money needs to go through congress.

Catch a pattern?

It'll take more than 18 months for GM to start producing real cars, instead of battle tanks and they are hemorrhaging at a rapid rate. Add a serious deflationary spiral on top of that, coming crash in auto-loans and almost complete stop of auto exports.

No amount of pumping will save the US car makers in their current form or with minor tweaks.

At best they'll start recovering in 2 - 2.5 years time, just in time for the next oil price break out and worsening availability crunch.

The future of US automakers? As the brits said about theirs: good riddance.