Seth Godin has the BEST solution for Detroit.
Shatter it so that tons of innovation can take place: http://sethgodin.typepad.com/seths_blog/2008/11/what-to-do-abou.html

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Nothing was blocking that innovation before. If a new auto company had any feasibility the Big 3 would have been easily displaced by upstarts.

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Couldn't have said it better myself. +1

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Shock therapy? Let's hope if they do go to Chapter 11 they will really be able to emerge as the "lean industrial giant" people talk about. (well, when I say they...)

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amen! well said.

Of course the money isn't going to Brazil. It's going straight back to the jets leasing companies.

I'm sorry. I know how important it is to our economy and all. But it's about time we as a country move on. We stopped building cars many years ago when companies like GM and Ford moved productions to Mexico and Brazil. We need to admit we cannot compete against cheap labors and move on. Re-educate ourselves and do something new.

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IF GM goes into chapter 7 than shortly after we will see Honda and Toyota and most other car companies in big trouble too. hundreds of suppliers make not only parts for GM, Ford and Chrysler they also make parts for most other brands. They'll have to go into chapter 7 as well. With no parts available to build cars the whole industry will collapse like a card house.
If we don't keep the Detroit 3 on live support we will be witnessing one of the biggest depression in history.

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SK the Great Depression of the 30's was caused by government intervention like the New Deal. If the government let the markets take care of themselves there would have been no "Great Depression." We will move into another great depression if the government thinks it can plan it's way out of it. It is not good for the economy when they choose which companies to give favors to, and which to not.

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Eric Bandholz, no one wants to give them free money. We are talking about a low interest credit.

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Kind of amazing how the great depression was caused by an economic policy that came after the depression was in full effect.

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Sorry Eric but you have your history a bit messed up. The New Deal came around after the depression hit and it helped put people back to work. As to what ended the depression all together. Well that was government too. Europe had this little thing called WW2 start and all of the sudden everyone had a job from shooting guns to building planes. Even before the USA entered the war the plants were busy building munitions to sell. Pretty much all of it was based on government contracts. So it was the government that put everyone back to work.

Hopefully this time we can pull the world economy of out the can without blowing each other up.

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The new deal caused the depression....







HAHAHAHAHAHAHAHAHAHAHAHAHAH!!!!

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Ok, so let's get our time lines straight.

Late 1929 - Stock Market Crashed (built on a bubble from the fed - government program)
Hoover (1929 - 1933) - Tried implementing several government programs to "fix" the economy, none of them worked. He increased taxes like mad
FDR 1933 - Implemented first "New Deal"
FDR 1936 - Second "New Deal"
1940's - Depression ends w/ soldiers lives.

If you want wars to fix the economy that is bad news. They implemented government programs for 10 years and they did nothing to make the economy better. Don't believe everything they teach you in high school. The New Deal did not help the economy, it made it worse.

http://www.mises.org for more info.

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Oh and Judy, jv2k, Happy if you read my post it says that government intervention caused the depression. Here is a quote from the current Fed Chairperson Ben Bernanke in 2002.

"Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."

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It will happen anyway - unless they make gross changes. Chapter 11 allows the manus to make the changes they need - like canceling the ridiculous contracts the Big 3 signed with the UAW. They also need to cut payroll, shutter more plants and overhaul how they approach things.

In a sign of the Big 3 not getting it still, the new Fusion ford showed off is priced at 26k with a V6. That's the same price as an Accord V6! The Hyundai Sonata is 22k with a V6. Ford needs to get pricing in line with its real competition - not fantasy competitors. No sane person would drop 26k on a Fusion when they can get an Accord V6 for the same price. Or get a better Sonata for thousands less.

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I think you have a point there. I recently saw something that was billed as an 'independent survey' that said 80% of people would never consider buying a car from a company in bankruptcy. If this is anywhere near true, doesn't that mean chap 11 leads very directly to chap 7? It didn't ask if you would buy a Chevy from GM in ch11, it asked if you would buy any car from any company in ch11.

I know I would definitely NOT buy a ch11 car.

This crisis absolutely needs to be seen as the last opportunity to take extrodinary steps to turn this thing around. But using bankruptcy to cure the disease while killing the patient seems more than a bit wacky.

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Actually, Ford does get it. The 26k V6 price you refer to is the decked out sport model with the 3.5L engine. Ford also offers a V6 (3.0L) option in their 20k models. Not sure what that option costs, but assuming it is under 2k that puts it less than a Sonata. If you verify thngs before you blabber false statements, you won't sound as retarded as the new Honda Accord looks.

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Smegley, The Sonata has a 249 HP 3.3 liter V6 and the Accord has a 271 HP 3.5 liter V6. The Fusion Sport with V6 runs 26k and it too has a 3.5L engine.

To compete with the Accord V6, the Fusion model would need to have the 3.5. The 3.0 is not an option that's realistic. To price the Fusion Sport the same way as the segment leader is foolhardy. No Ford car is worth equal money to a Japanese/European car. Like the rest of the Big 3, Ford needs to put its pricing in line with reality - which is 15-20% lower than a comparable leader in any car segment the Americans choose to do battle.

So, if Ford wants to move their Fusion Sport 3.5 they need to look at the Accord's 26k and deduct 4-5k from the MSRP. Now at 21-22k, the Fusion is a viable candidate to do battle with an Accord, just as the Sonata is viable at 22k.

There's a reason cars like the Zephyr and MKZ fail - Ford overprices their cars. Yes, with all the inevitable discounts the Fusion will end up selling for much less than an Accord (and probably a Sonata) but this only serves to hurt resale.

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