Odds Are Against Big Three Surviving!
August 6th 2008 02:16
Mioke Shedlock has some startling information about the Big Three auto companies on his blog, MISH'S Global Economic Trend Analysis.
"The costs imply there is close to 100 percent probability that one of the big three will file for Chapter 11 bankruptcy."
Detroit's three automakers are urging Congress to make as much as $35 billion to $40 billion in low-cost loans available during the next two to three years to assure that the companies survive long enough to retool and build a new generation of fuel-efficient vehicles.
The reason: these companies are burning cash fast and no one wants to lend them money. They need the money to retool to sell smaller cars. Seems to me that the horse has left the barn. Toyota and Honda, to name two, are well down the road to smaller, fuel efficient cars, like the Prius and the Yaris.
Mish says,
Keeping weak institutions alive at taxpayer expense cheapens the dollar and deprives other more legitimate businesses the capital they need. This is one of the things that prolonged the Japanese deflation for what is now known as "The Lost Decade".
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