$73 an Hour

This will no doubt shock you George - and I'll be shocked that you are shocked again - but these trades actually make sense for the buyers. Hedge funds have been closing their books for the year and, in an attempt to clean up their books, they've been ceaming the discount window. The rate at the window, when inflation is considered, is -200 basis points and they get to put up their worst crap. Some of what they are getting face value for is really just worthless paper but most of it is trading ( or not ) in the neighborhood of $0.60. The quality is so low that they aren't even useful to meet margin requirements.

The funds clean up their balance sheets and have locked in a profit of about

100 basis points for between 30 and 90 days at our expense. That's one heck of a return when you consider that even the best run of the funds are down ten percent.

JC

LOL

I hope you can keep yours Ed. All of us in fact will be well served by our senses of humor. I've a feeling we'll be needing it.

JC

Chrysler vendor demand for COD has spread north of the border. Includes a major oil company and a utility.

As the posting from one of our Canadian readers reminds us, the problems of the Detroit 3 affect large areas of Canada also.

==============

Suppliers demand cash from troubled Chrysler

BARRIE MCKENNA AND GREG KEENAN

From Saturday's Globe and Mail

December 12, 2008 at 8:39 PM EST

WASHINGTON/TORONTO ? A major oil company and a utility are demanding cash up front from ailing Chrysler LLC, offering a glimpse of the threat posed by a collapse of the North American auto supply chain.

Executives at Chrysler, which is considered the most vulnerable of the Detroit Three, refused yesterday to identify the two suppliers.

?The biggest risk we have is our suppliers coming and saying ?I want to be paid on delivery,'? Chrysler chief financial officer Ron Kolka explained.

?We can't do that. The math just doesn't work.?

----------------------

If Detroint is losing money every day, how does the math work any better with a 45 days same as cash payment plan?

Unka' George [George McDuffee]

------------------------------------------- He that will not apply new remedies, must expect new evils: for Time is the greatest innovator: and if Time, of course, alter things to the worse, and wisdom and counsel shall not alter them to the better, what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman. Essays, "Of Innovations" (1597-1625).

Sure. When I was at Wasino we sold a lot of production machines to car-parts manufacturers. More were in Canada than in the US. One tier-one Canadian vendor had 24 plants in Canada and one in the US.

-- Ed Huntress

And if a vendor is very hard nosed, demands payment to get a tool or other product delivered to GM/Ford/Chrysler near near when they go into Chapter 11, the courts can reach out and snatch back the money the vendor recieved.

Wes

courts can reach

On what grounds? I thought it was normal practice to not extend credit terms to customers that were bad payers or poor credit risks. Certainly had that happen to my employer in the past.

Mark Rand RTFM

Preferential treatment of creditors and the federal courts can go back as far as 180 days.

It if you extend credit as part of the process it isn't a COD deal at all. Changing the terms is only recognized if the PO has the proper language regarding creditworthyness at the time the stuff is shipped. The Uniform Commercial Code and contract law are pretty clear.

JC

On Tue, 16 Dec 2008 00:11:00 +0000, Mark Rand wrote:

courts can reach

Hey Mark,

I'm not a lawyer, or even much of a business man, but I can see why "(On what grounds?)" the courts would do so.

If you were in a failing business, then you would want to "get out" with as much as you could. Just human nature.

So, still having the power to do so prior to filing Chapter??, pay all the liquidity you can gather to some sort of "preferred customer" invoice(s). How about a LOVING wife, although I bet that's a hard one to find while the hubby has now "fuggedup my whole fugginlife with this stupid fugginbusiness!!" Or maybe a trusted brother (but NEVER the B-I-L!!), or even another company in which the business owner has some real or future interest ("Hi Jack!! I'm considering retiring and I'm cashing out...how about letting me put an investment in your company by selling me part of YOUR business Jack? I'll make you a great special deal!!", Or maybe allow the employees to steal the company blind until the day the doors close (ever go to a tool & die shop bankruptcy auction??----rarely ever any "decent" small stuff left in the building..if it was portable and working, it's gone!!). Or how about making an "on-account" purchase from the local job-shop supplier for say nice Gerstner tool boxes full of good stuff for all the guys on the shop floor, and then "sell them" to the guys on a "pay-weekly deductions" from pay-roll, so you pocket the payroll and never pay the creditor 'cause you know you're going out. Or maybe asking a creditor "If I can arrange to get YOU paid right now, can I get a job there today?".....don't think that's not happening a lot right now, only I bet everybody is scared that the company they might leap to won't fare any better very soon.

Lots and lots of reasons, and none of them complicated. Just simple understandable dishonesty. If you were a creditor, you'd be asking "Where did it all go, and can we get any of it back??". And that's what the courts ask too.

Take care. Merry Christmas from here, as the radio news this morning announces another 400 jobs are lost today, bringing a three year total to about 3500 from the community of 5000 next-door.

Brian Lawson, Bothwell, Ontario.

In that case, it is not worth any suppliers time selling anything to the big three on any terms at all right now. None of them can be assumed to be good for 30 days payment, let alone 60 days. So if a supplier can't insist on cash with order or at least cash on delivery and expect to keep their money, they're better of not doing the business.

Mark Rand RTFM

Correct. Another factor that must be considered, however, is the $250K per month in overhead that has to be funded. Sort of creates a little wishful thinking.

JC

Is the first requirement for a successful GM reorganization a firing squad?

These two articles tend to indicate that even with a taxpayer funded "rescue package" or "bridge loan," GM intends to close their manufacturing operations in the US, thus the US taxpayers will still see the GM manufacturing employees and vendors on the streets.

----------------- GM Mexican Plants Expand as Carmaker Seeks Funds for Rescue

By Thomas Black

Dec. 17 (Bloomberg) -- General Motors Corp., the biggest automaker in the U.S. and Mexico, increased production of $12,625 Chevrolet Aveos south of the border while seeking a bailout to keep domestic plants from closing.

The Detroit-based company and competitors such as Ford Motor Co. shifted more manufacturing to Mexico this year to capitalize on wages less than an eighth of those in the U.S. and ==>factories that make fuel-efficient models.

Thanks for the back up John. I've been through this once too many.

Btw, Merry Christmas if that is a holiday you enjoy.

Wes

Back attcha' Wes. You and yours be blessed. I'll be fine but it's cold as hell here ( 50F) and I haven't enjoyed a holiday since Tet.

JC

Another thing I did when I flew into the Islands was to get one of the limo drivers and hire him for the days I was there. With four of us it was easier than renting a car and driving half drunk on the wrong side of the road, and he knew all the good local places to go. Much later in life I did maintance work throughout the Bahamas over there quite often.

John

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