Is Mulally Playing Good Poker?

Time to revisit a June call I made - short oil and go long Ford. Obviously the first call was brilliant, the second one, not so much. But I wouldn't give up on Ford just yet. Did you notice that when the momentum for a government bailout of Detroit was at its greatest, Ford was at the table begging away. Then as the momentum subsided it shifted its stance to 'we may not necessarily need the money'. After the bailout crashed and burned in the Sausage Factory, we only seem to be hearing about the plight of GM and Chrysler. Now we are stuck in a holding pattern; the administration "stands ready" to do something, we just don't know what. Yet the clock ticks supposedly precious minutes away. So what is happening? I think the Bush administration is letting things play out to the bitter end before it ponies up the dough as the DIP financing in a prepackaged bankruptcy. It's calling GM's bluff - will it really be out of cash by the end of the year? - and the UAW's bluff - will they really give up nothing as the company sails into a formal Chapter 11 bankruptcy? By playing this string out, the White House will get the best of both worlds - getting to hand the Detroiters some money and averting a massive dislocation in the economy but also making the UAW to take a haircut. Remember, each of the Detroit 3 essentially get the same deal out of the UAW. Once the first UAW contract gets ripped up in a prepack, the other two will be right in line to renegotiate. So, Ford can get the new UAW deal, whatever it is, without having to take the government money and a bankruptcy. Ford could be playing this hand pretty well and is still a reasonable speculation at these levels.

BREAKING: Chrysler is done.