CAW says no deal, what are they thinking about ?

President Obama, who announced the plans Monday with Treasury Secretary Geithner, said the U.S. would not let the auto industry "simply vanish." WSJ photo

Beware the ides of March: phony stock market bubble ended today with the realization Chrysler and GM have to sharpen their pencils more. President Obama is toying with a bankruptcy cleansing to wipe out the old debt, bondholders and retiree pension liabilities from GM and Chrysler.  The Wall Street Journal reports

President Barack Obama’s task force has told both companies that the administration prefers this route as a way to reorganize the two auto makers, rather than the prolonged out-of-court process that has thus far frustrated administration officials.

The DOW dropped 254 points to 7,552 and will continue south since their is no good news in this story. The TSX slipped only 224. More to come.

CTV reported,

Industry Minister Tony Clement said he believes “in the long-term viability of these companies” but the companies must make deeper cuts in order to receive billions in taxpayer funding. “I’m here today to say the plans submitted by General Motors and Chrysler to the government of Canada do not go far enough to ensure the long-term viability of these companies. Therefore we have not certified their restructuring plans,” said Clement.

When I first saw the CAW response last month I thought they were kidding. They’re giving nothing. The offer was so small I didn’t write up the story assuming we’de be back negotiating in real time.

The CAW likes to play chicken but this is one game that can be all losers for Canada. Stubborn insistence on maintaining a semblance of the status quo in Canada will see Chrysler gone and GM reduced to a rump in Canada.

The CAW has no bargaining position. Lose their pensions, lose their jobs, and learn to live on 40+ weeks of EI. Try that in Ontario with high mortgages and high costs of living. The consequences of failure here are Canada falls into a depression and recovery is not even on the calendar.

Prime Minister Stephen Harper’s Stimulus Plan is a waste of money. Harper is a eunuch in this game.