Detroit Automakers Did Not Learn The Lesson Of The 1979 Chrysler Bailout
Two weeks after the “Big Three” automakers were told by Congress to submit business plans to justify their $25 billion request for government assistance, the chief executives have returned to Washington with three sales pitches requesting $34 billion.
This is not the first time a U.S. automaker has appeared before Congress requesting government money to save their company. On September 7, 1979, Chrysler asked for a $1.5 billion loan guarantee to avoid bankruptcy. Saturn was in Virgo then, reflecting severely constrained economic conditions. Wages were stagnant, credit was tight, and consumer costs for food and necessities were rapidly climbing along with the unemployment rate.
One Saturn cycle later*, Ford (F) and General Motors (GM) have joined Chrysler asking Congress for financial assistance. President Carter signed the Chrysler Loan Guarantee Act of 1979 on January 7, 1980. Saturn in Virgo was in a challenging alignment to Neptune in Sagittarius at the time the Act was signed. Saturn was retrograde** in Virgo at the time President Carter signed the legislation, raising the potential it would probably not be the last time the government would be asked to provide financial aid to an automaker. Saturn in Virgo is challenging the Act’s natal Neptune in Sagittarius exactly at the December 5 First Quarter Moon, leading up to a crisis level situation at the December 12, 2008 Full Moon. These energies suggest that current economic conditions and any government intervention will dissolve the automakers current corporate structure, as Saturn shrinks and Neptune dissolves.
A major restructuring (Saturn retrograde in Virgo) requires a transformational overhaul (Pluto in Capricorn) that is only possible if certain burdens and obligations can be dissolved (Neptune). Neptune represents interconnectedness and the sacrifices that will have to be made by the automakers and everyone (management, debt and equity holders, UAW and their retirees, parts suppliers) connected to them in order to make any government (Saturn) assistance viable. A prepackaged bankruptcy with the government providing debtor-in-possession financing is about the only way the Big Three can remain a practically viable component of the American economy. A prepackaged bankruptcy would provide more certainty to prospective auto buyers than a multiyear restructuring program being sold to Congress by the Big Three as it would have a pre-defined timeframe and outcome.
In early October 2009, Saturn in Virgo will return for the first time to where it was when the Act was signed in 1980. All three automakers charts face challenging conditions that appear to climax at that time. This cycle of Saturn in Virgo is more challenging than the cycle nearly 30 years ago. Uranus in Neptune-ruled Pisces is opposing Saturn in Virgo now through mid 2010. The winds of radical and rapid change are here to wake up and shake up the established structures of the status quo; what worked in the past cannot work now. As the ruler of death, debt and bankruptcy, Pluto highlights conditions that are decaying and no longer viable in their current form. Pluto in Capricorn (2008-2024) will force all kinds of structures from corporations to governments to transform in order to be viable in this new economic environment. The past is over and cannot be recreated again. As I was preparing to post this, Mark Zandi, chief economist and co-founder of Moody’s Economy.com, testified at the Senate Banking Committee hearing that by his estimation, the Big Three will need a total of between $75 to $125 billion to avoid bankruptcy. He recommends Congress give them the $34 billion ($17 billion of that immediately) to keep Chrysler and GM going through March 31, 2009. Zandi added that by giving them $34 billion, the Big Three will still likely face bankruptcy in fall 2009 which corresponds to the crunch time I see in their charts. Zandi emphasized that now would not be a good time for the automakers to go through a prepackaged bankruptcy. Saturn rules time and life’s lessons. The automakers (especially Chrysler), had almost three decades of time to learn from their mistakes in the last Saturn cycle of the 1970s. They didn’t learn, and now their time to continue doing business as usual has run out.
In my previous post “Detroit Automakers Return to Washington with New Rhetoric But No Real Changes”, I described the planetary cycles that lead to the current conditions the U.S. automakers are experiencing. My next post will focus on each of the Big Three’s plans.
*Saturn takes around 29.5 years to make a complete cycle around the Sun.
**Planets do not really move backwards, but appear to from Earth’s vantage point.
USA: July 4, 1776 5:10 PM LMT Philadelphia, Pennsylvania
Posted 12/04/2008 03:27:00 PM