Quote:
Originally Posted by Big Dave
In the first quarter of 2009 Chrysler will go into Chapter 7. GM couldn’t swing the deal and Carlos Ghosn only offers fifteen cents on the dollar of its liquidation value.
Ford and GM will have burned through their remaining cash and will go into Chapter 11.
Obama could find himself presioding over the end of the US auto industry. One out of every fourteen people in the US are associated with this industry.
What does he do?
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As strange as this may sound, it will be GMAC and Ford that will pull us out of this recession. Those two will never go out of business. This is what I predict will happen.
GMAC and Ford will convert their financing entities into banks. By doing so they can go to the Fed window and ask for assistance through the $700 billion dollar bail out. By borrowing money @ 1% they can essentially begin to offer interest loans as low as 1.9% for lets say 60 month, making it easier for consumers to buy new vehicles.
That type of move will kick start car sales which will eventually begin the slow crawl out from this recession.
The auto industries liquidity for loans comes from bonds, which is a tanked market currently. Thats why they will convert themselves to banks and seek assistance to infuse cash into the economy.
But what do I know .. LOL