Detriot's game of chicken is officially on

I watch the spectacle of Detroit alternating between a spanked child and a past-his-prime quarterback with some amusement. The last installment before Congress saw the CEOs of the Big 3 sent home with their tail between their legs for demanding 25 billion when riding corporate jets with their hat not exactly in their hand begging for some cash from the Federal trough.

After regrouping, the "atmospherics" (such a great term) of the demands changed. The CEOs did a road trip in a hybrid and then demanded a total of 9 billion more bucks. Geez, what would the total have been had they ridden a bike to DC?

To bring this charade into perspective, it is interesting to parse some of the talking points.

1. GM and Chrysler are now saying that they will be insolvent by New Years Day without a cash infusion from the Federal Government. Interesting development given that they were giving timelines in Quarter 1 or 2 next year just a few weeks back. False urgency? I think we are starting to see the makings of full disclosure this time around.
2. GM and Chrysler have drawn a very clear line in the sand this week. Bankruptcy is "not an option". More succinctly, one CEO stated that Plan A is for a cash infusion and there is no plan B. Interesting how the CEOs have decided to play offense vis a vis bankruptcy. They hold, at this moment, no trump cards but are playing as if they have a full house. Bluffs only work when no one really knows what the table is holding - but in this case (point 1) everyone knows that GM and Chrysler are not viable.
3. Fun fact seen on the Lehrer Hour tonight - if any of the Big 3 go under, the recession will morph into a full on depression. This little nugget goes to the GM CEO.
4. Ford, "healthiest" of the three, is asking only for a line of credit that need not be accessed immediately. Well, I'd imagine they are still churning through the $26 billion they got for mortgaging the entire business in 2006 - right down to the inherent value of the blue oval.
5. None of the Big 3 can seem to sell a car in Quarter 3. Sales which started their descent in 2007 are nearing a fatal nadir as 2008 winds down.
6. There is lots of talk about fuel economy and hybrids and re-engineering platforms for the small chassis platform. Umm, you guys kind of missed the boat there. Gas is now $1.54 per gallon in Des Moines. People currently are not buying in response to the economy, not gas prices. You could have put fuel efficient cars on the platform years ago - but, oops, SUVs and trucks were the cash cow.

There is alot more here to divine from the tea leaves - but what it boils down to is just this. The Big 3 have no real desire to change anything. This is the metaphorical drunk wanting one more swig of hooch, and then he'll quit.

The car companies (by Ford's own admission today) have lots of fuel efficient models that sell quite well in overseas markets. And, now, they are moving quickly to adapt their platforms to build these cars. Interesting - CAFE was always blamed for the car companies woes but oddly enough, these very companies can make fuel efficient cars that people buy in the rest of the world. Just not here.

These are just theatrics before the final showdown. The game of chicken has started - but the end is many miles down the road. Are hybrids the key - not if anyone hates the car. The Prius by Toyota is hideous but they sell. Are electric cars the key? Well if you make it look like the EV1, only the most hardened of liberals can stomach that gravy boat of a car. Is ethanol the key? Well, now that they are all going under because of the precipitous drop in gas prices - don't look for domestic improvements here (let's just ignore that Brazil has a thriving car market where drivers can titrate between ethanol and gas depending upon the price - either works in their flex fuel cars).

The point of the showdown is that these companies need focus - bankruptcy can bring this. Government money will not. The most interesting thing I have read on the topic recently came from the WSJ - just slice and dice the factories up to Honda, Toyota, BMW or whomever else. We already have a domestic car market that works and those companies can use the existing facilities much more efficiently than the Detroit dinosaurs. Politically, it will never happen. But it is intersting to think about.

The politicians, and this is now outside of Obama's hands (he is breathing a temporary sigh of relief until Jan 20th, no doubt), are going to have to sort out the fate of Detroit in December. If the companies won't make it past New Year's - well, someone has to blink.