My Suggested Chrysler Ad

Click on the ad for a larger version.

The Copy Reads:

Mediocrity Reborn

Why bother to buy our cars?
You already bought the company.

Make no mistake.
We express sincere gratitude to the American taxpayer.

Your largess, with a little arm twisting by the President,
means it’s business as usual from one of Detroit’s Big Three.

Ditching our securitized debt, dropping Republican dealers
and generally blowing off any obligation we didn’t want to honor,
we are now free to return to the same bad habits
that got us into this mess to begin with.

Our factories are reopening, anxious to slap together
the poorly built cars and trucks that puts us at the bottom
of every quality survey ever conducted.

The same tired models that you wouldn't buy before,
will start languishing again on your local Chrysler dealer lots.

But there’s a difference this time.
With the UAW covering our back, Uncle Sam will continue
to fund our losses for years to come. Or someone else gets elected.

You may choose not to purchase a Chrysler product in the future.
But you’ll have no choice paying for it again and again.

Chrysler Group
Driving American Debt

Here We Go Again

At the start of 2008, gasoline prices were on their steady climb to $4.00 a gallon. Car buyers were clamoring for fuel efficient automobiles. The mad dash for 30 mpg or more was the mantra shoppers embraced. Hybrids sold like hotcakes. Toyota couldn't keep a Prius on the lot. Most people thought the era of cheap petrol was over.

It is.

Although we may witness a temporary decline in barrel prices now and again, the price of gasoline will return to the $4 gallon because oil producing nations in the Middle East, Russia, Mexico and Venezuela, to name a few, need the higher prices to fund their countries. And Washington will do nothing to boost domestic production.

You need look no further than the pump for evidence. In the last few months, crude oil prices have more than doubled — to $72 a barrel from $33.55. Gasoline prices have surged 62 percent to $2.62 a gallon from $1.62. After just a few months of relief at the pump, cheap gasoline is disappearing.

But what did people do when prices went down by January of 2009? They bought big. The mad dash became a major retreat. And the response? General Motors Corp. pulled the plug the hybrid-electric version of the Chevrolet Malibu sedan for the 2010 model year due to slow sales that led to a backlog of inventory of the vehicles on dealer lots. May 2009 sales of the Toyota Prius were off 30.2 percent from a year ago, to 10,091.

Where is the sense to it all? As a car buyer in June of 2009, do you really expect gasoline prices to remain low for the next ten years - the average age most Americans keep their automobiles before trading? If you aren't willing to educate yourself to the oil commodity market, than at least exert some old-fashioned common sense. Gas won't be cheap in the future. How could it be?

Investor's Business Daily had this to say (June 11, 2009) about current rising prices and what Washington is doing about it: "In a classic case of the doubletalk we've all become familiar with, the administration is moving in exactly the opposite direction. Its cap-and-trade plan punishes those who produce and use domestic energy. It has proposed eliminating all tax incentives to produce oil and gas, and has slapped a 13% excise tax on all energy coming from the Gulf of Mexico."

"Interior Secretary Ken Salazar has canceled 77 oil and gas leases that were assigned to Utah. He stopped plans to lease oil shale rights in five Western states estimated to hold between 1 trillion and 2 trillion (with a "t") barrels of recoverable oil. The Obama administration has decided not to issue leases for gas well drilling on the Roan Plateau in Colorado."

Ok, so not surprisingly, Washington will do the wrong thing. Where are we headed?

"I wouldn't be surprised if we're testing $80 in a week or two," said one oil analyst, while BP's chief executive, Tony Hayward, questioned whether $90 could be the "right" value.

Kuwait's oil minister, Sheikh Ahmad al-Abdullah al-Sabah, put some of the rise to signs of recovery in Asia, but warned that Opec would not raise supply at current oil prices unless "it reached $100", he said.

Alexei Miller, chairman of the Russian energy group Gazprom, raised the stakes further when he reiterated last year's estimates of $250 a barrel. "This forecast has not become reality yet, given that the [credit] crisis gained momentum and exerted a powerful impact on the global energy market. But does this mean that our forecast was unrealistic? Not at all."

So there you have it folks. While those about you continue to exercise bad decisions, you needn't. Just imagine $4 a gallon gas if you are shopping for a new car in the next few months. It won't take your imagination in the near future.

Supreme Court to Drive Decisions

It was bound to happen. A secured bond holder in Chrysler is contesting the sale of "good" assets to Fiat and aims to block the transaction. Indiana pension funds, which contains retirement savings for the state's teachers (among others), filed papers Saturday (June 6) seeking a Supreme Court review allowing the sale. The funds have asked Justice Ruth Bader Ginsburg, who handles emergency requests, for an order blocking the scheduled transfer of assets on Monday, June 8 to the Italian automaker until the high court decides whether to hear the funds’ appeal.

Ginsburg's decision could seriously complicate the "fast track" bankruptcies of Chrysler and GM. If she deems the claim worthy of consideration, it will derail the reorganization process and could potentially throw both car companies into liquidation instead. We may well know the outcome before the end of today.

Let's analyze the suit. Indiana pension funds lent Chrysler $42.5 million. They want their money back! They will get nothing if the deal with Fiat goes through. They may not get much more in liquidation. The funds suit, however, is hedging on a technicality in the law that may not pass muster: Indiana pension funds contend the Fiat deal is a misuse of the Troubled Asset Relief Program (TARP), which they say was intended for financial institutions, not car makers.

What does TARP allow? It provides United States Department of the Treasury to purchase or insure up to $700 billion of "troubled" assets. "Troubled assets" are defined as "(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress." No mention of car makers there!

That would appear to favor the funds. But here's the fly in the ointment. On December 19, 2008, President Bush used his executive authority to declare that TARP funds may be spent on any program he personally deems necessary to avert a financial crisis, and declared Section 102 to be nonbinding. This allowed Bush to extend the use of TARP funds to support the auto industry, a move applauded by the United Auto Workers.

That the Act’s criteria for participation remains very unclear has been recognized from the outset of TARP. Yet, there is a provision for a judicial review of Treasury activity. Specifically, Treasury actions may be held unlawful if they involve an abuse of discretion, or are found to be “arbitrary, capricious . . . or not in accordance with law.”

My prediction? Indiana pension funds will lose. The political momentum for both Chrysler and GM's fast track bankruptcy will not be hindered by any one force: judicial, legislative or executive. The cards have already been dealt by a corrupt dealer: the U.S Government. The rule of law was trounced way before this suit when the bondholder's rights were thrown under the bus at the outset of the Chrysler, and later GM, bankruptcy. Strong-armed by the thugs in the Fed, those sweet little old retired teachers in the mid-west understood math and science, but didn't bother to learn the history of Washington politics. Their loss.