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Quick Hits: Chrysler Plants Take One Month "Holiday"

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Brief scrutiny of today's headlines.

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Chrysler plans to shut down its manufacturing operations for at least a month.

The plant closures, scheduled to begin this week, are in response to a weakening economy and tight credit.

Shutting down production is almost certain to rattle prospective buyers, but it will cut inventory costs. Unsold cars are piling up in showrooms, and the shutdown may allow dealers to avoid additional price cuts to close a deal with cautious buyers - if there are any buyers.

Chrysler's sales dropped 47% in November from a year earlier, and are down about 28% for the first 11 months of 2008.

The planned shutdown will hit plants in the United States, Canada and Mexico producing Chrysler, Dodge and Jeep vehicles.

General Motors (GM) announced last week that it will cut first quarter production by 60% compared with year-ago levels.

Chrysler's production shutdown sparked a new round of chatter than it has restarted merger talks with General Motors, but GM says the report is untrue.

The Wall Street Journal reported that discussions of a possible combination were restarted after Cerberus Capital Management, the majority owner of Chrysler, said it's willing to sell some of its stake in the automaker.

Reorganization under the direction of a bankruptcy court may be the best move for the ailing carmakers. Detroit needs to get its costs in order and a government handout is unlikely to force the needed decisions.

White House Press Secretary Dana Perino told reporters, "The president is not going to allow a disorderly collapse of the companies. A disorderly collapse would be something very chaotic that is a shock to the system."

Is that a backhanded way of saying Uncle Sam now seeks to manage the collapse of the auto industry so it doesn't scare us peasants, or has the president's spokesman come down with a case of Bush Language Disorder?
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No positions in stocks mentioned.
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