Thursday, April 30, 2009

Chrysler Bankruptcy

We tax all the others and pass the revenue on to you

The prez and TimmyG told us the auto bailouts were loans that were going to be repaid because now we have a stake in the outcome. Really? Now Chrysler is bankrupt and we have whatever creditor status we (the US gummint) are allowed, probably not "secured creditor" status because there was nothing left to secure our loans or otherwise give us a priority over other lenders. Since we were likely the last major lender, our money is just gone. Gullible junior creditors lose big time in most bankruptcies.

The new spin is that the NEXT Chrysler loans must be repaid before Fiat completely takes over. Fiat? See my March 29 column. "New" taxpayer money will be repaid in that case, but not ALL taxpayer money. Fiat will get to keep the "old" money. It's a Ponzi scheme in reverse, paying off new investors with old investors' money. BernieM is smiling. We've been reverse-Madoffed. Hide the kids.

The prez and his auto committee are going to save Chrysler by giving it away. Destroying a village in order to save it comes to mind. Fiat gets 35% now in return for "billions in cutting-edge technology", the rest later. Think about that a moment. Chrysler is getting auto tech from ... Fiat!

Chrysler had real cutting edge auto tech help when Daimler inexplicably bought them. It didn't help a bit. Daimler gave up its residual claims as part of the proposed bankruptcy restructuring. You can bet that the surviving Daimler execs are toasting themselves for finally getting out of a mess they should never have gotten themselves into.

You heard it here first: Chrysler won't be getting any meaningful auto tech from Fiat. If Fiat had much significant cutting-edge auto tech, Toyota already would have bought it. Isn't it likely that Fiat will get more tech help than it is supposed to give, thereby further weakening Chrysler in support of Fiat? It is. This will be a parasitical relationship rather than one of mutual benefit.

The prez smiled when he boasted of how the Canadian gummint is helping with the restructuring. He didn't mention the USD $400 mil Canadian tax lien up there, probably because it pales in significance compared to the overall package. Canada will get paid before we do.

The prez says this bankruptcy is "not a sign of weakness" and that it is "for limited purposes". Well, sorry, that just ain't the way it works. Chrysler will either fail in bankruptcy or succeed by renegotiating or voiding its debt and contracts, including salaries, pensions and health insurance. A judge will decide and s/he won't prefer one group of same-class creditors over another.

Chrysler management would be in gross neglect of its duties to do otherwise. Pretending that the bankruptcy only targets a few recalcitrant creditors -- unnamed evil hedge funds and scurrilous investment companies -- doesn't mean that it's true. You mean hedge funds like the one Chelsea Clinton works at? But I digress. Even Dems want to get rich quick.

I don't make jokes. I just watch the government and report the facts. --
Will Rogers

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