The White House had offered Chrysler’s lenders a deal to take roughly 33 cents on a dollar to write off the company’s debt. Most took the deal, but a few holdouts said it wasn’t good enough — and their refusal to go along pushed the company into bankruptcy.
So Obama is calling them out. “A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices and they would have to make none,” Obama said.
Some of the hedge funds, Obama said, demanded returns twice as high as other lenders were getting.
“I don't stand with them,” Obama said. “I stand with Chrysler's employees and their families and communities. I stand with Chrysler's management, its dealers and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars.”
It’s clear that the White House thinks the politics of battling unnamed “speculators” works in its favor.
I love this. Chrysler management steers the company into the swamp - again. The UAW, arguably a major reason any American automaker is in hot financial water, gets ownership. The feds screw over the investors at 33 cents on the dollar. A few investors balk and want to go to court because the arbitrators are all at the TARP trough. Surprise! They're to blame for it all! It's all so simple now!
DISCLOSURE: I used to work as a contractor in Detroit. I've done a lot of work for all of the American Big Three. I have opinions about the management of each company, or did back in the 'nineties. I used to get in trouble for expressing opinions (suicide for a contractor, but then I didn't become a hermit because of my great people skills) about management decisions in each company. Chrysler is not my dream corporate model by any tiniest stretch, and bankruptcy does not come as shocking news. They're a pack of %#@^ing idiots who deserve to sleep under park benches. At least, as I said, they were in the 'nineties. Evidence indicates that they haven't changed so very much since then.
That said, our story so far: Chrysler, unable to come to terms with its lenders, has filed for Chap 11 bankruptcy. In the restructuring, ownership goes 55% to the UAW, (HAH!)20% to fergodsake Fiat, because that's always worked so well in the past, and 25% to Uncle Sugar. Guess who's putting up the $6B in money to sweeten the pot? That's right. No, you don't get voting shares. But it's a free country, it says here, so you are permitted to bitch about it as long as you don't do anything annoying.
It has been pointed out that this is not new for Chrysler. In the early eighties, under Lee (that other messiah) Iaccoca, the fedgov kicked in $2B in loan guarantees and a whole raft of tax breaks. That actually didn't end badly; Chrysler never defaulted on its new loans so the guarantees never kicked in, Chrysler rebuilt its line-up to a bunch of things people actually wanted to buy, and life went on for a while. Then of course management led the company back into the crapper and Daimler Benz made arguably the biggest mistake of its corporate life bailing Chrysler out AGAIN. And now here we are. 55% UAW ownership, total fedgov control. What could go wrong?
No comments:
Post a Comment