Thursday, April 30, 2009

Chrysler, New Home Teardowns and more...

Chrysler's bankruptcy seemed to change the tone of things today. I think there are two big questions for the future of Chrysler:

1) What contribution will Fiat make to Chrysler that will enable them to be more competitive in the car market? Few brands have consumer appeal that Mercedes-Benz, but the Daimler/Chrysler combo was clearly not successful. I'm not sure how small European cars will play in a US market with $2 gas.

2) Even if Chrysler repairs it's value proposition, the question of the speed of the bankruptcy proceeding sounds optimistic. Even "quickie" bankruptcies tend to drag on. Lawyers, bankers, accountants all see bankruptcies as the gift that keeps on giving. Also, Chrysler's creditors are likely to be better served by a long bankruptcy proceeding, so I think the administration's plans for a 1 month bankruptcy might be met with some resistance.

This is a pretty shocking video of a sub-division of new homes in California being razed. As the story goes, a builder went bust, the bank was being fined daily because there were a number of partially finished homes. The bank figured that it was just cheaper to knock down the homes rather than continue paying the fines and hoping for a buyer to come along.

Finally, this might be the quote of the week "Apparently, one of the symptoms of swine flu up here in the States is it makes you buy stocks for no good reason."


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