Friday, December 19, 2008 0 comments ++[ CLICK TO COMMENT ]++

US government saves automakers... for a few months

The Bush administration has decided to save the American automakers after all.

The bailout is contingent on further compromise from other parties but I am still doubtful that this will save them. It will avoid imminent collapse and buy a few months but, if auto sales don't pick up--there is no sign of it picking up--then these companies will still face big problems in 3 or 4 months. To see how bad the situation is, consider the fact that Toyota, generally considered to be the best-run and strongest automaker, is expected to post its first loss on operations in its history. Toyota has big problems with the Yen but even then, if Toyota it getting whacked then the Big Three are in a far worse shape.

Having said that, is is possible for sales to pick up at the Big Three as oil prices keep sliding. But this is no long term solution...


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