And then there was one... the end of Detroit?

http://www.nytimes.com/2009/03/31/business/31auto.html
No, the Big Three aren't getting broken apart just yet. But this might be a headline at the end of next month. Today, President Obama announced that he would give more money to major auto companies GM and Chrysler, but only for a month. Then, unless changes are made at the companies, they will no longer get bailout money from the government.

Most of the focus has been on GM, who must undergo a massive reorganization to cut costs in their company. This will involve negotiating with the UAW (United Auto Workers) to cut health care and other worker benefits. GM has 60 days to do this. Until then, they will be kept afloat by money and tax cuts. Some of this reconstruction has already happened, as GM President Rick Wagoner "retired" (was fired) on the orders of the government. Of course, he got a $20 million bonus... AIG anyone? (On a side note, GM has already announced that in 2010, it will close its doors on three brands of cars, Pontiac, Hummer, and Saturn, to cut costs. Also, it spun off another car brand, Saab, which then declared bankruptcy in its native country of sweden.)

What's more interesting to me is that Chrysler, which is much smaller but still important to our economy, must find a company to merge with/get bought by in 30 days... or they will get cut off from government aid and likely go bankrupt. This is because, according to the US government, Chrysler cannot survive on its own. Chrysler has been in talks with FIAT in Italy to merge, but it's "not a done deal" yet. The government did not force GM to do this because it feels they can still survive and also help produce eco-friendly cars.

I applaud the tough stance Obama is taking against the car companies. It would be disastrous if either of them failed, but we don't want them to make the same mistakes they made in the past. Forcing them to fix their problems or fail is a good ultimatum (to paraphrase the article). I just hope there are no nasty surprises, such as millions in bonuses that are secretly paid to the executives who made the bad decisions (such as with AIG and Merril Lynch). That's why I'm a little concerned about Mr. Wagoner's bonus, although I'm a little more accepting of it because he was basically scapegoated so the company could receive more money. Obama is finally beginning to put into use the reforms he promised during last year's campaign season.