05 May 2009

Chrysler's Woes And The Fed Solution

I just don't feel the bubbly tingles over this Fiat / Chrysler deal that President Obama was so happy to shove through a 30-day window. It was only four years ago the Fiat was on the verge of their own financial collapse, and while they have forged some stability they still have virtually no cash and a vehicle lineup that includes, what, one platform and two engines. We're not exactly talking Mercedes here and we know how that "merger" ended up (a Euro rape and pillage expedition through the Chrysler vaults).

No only that, this whole deal reeks of politics -- the ever-putrid odor of cash passing hands covered with bullsh . . . can you smell what the Prez is cooking? The administration turned over 55% of the company to their UAW backers, then asked the banks to take a loss, which the banks seemed happy to do as the proud new recipients of government tarp funds complete with federal yokes. In fact, the only people who cried foul were those pesky hedge fund sources. That's right, those people Obama vilified because after they went out to find investors to carry Chrysler's debt they didn't want to accept Obama's offer of 20 cents on the dollar and facing their own bankruptcy.

As reported by the The Detroit News:

Those objecting creditors hold 10 percent of Chrysler's $6.9 billion in secured debt. The other debtors, led by four major banks, have agreed to swap the debt for $2 billion in cash.

"The proposed sale is structured to achieve political, not economic, goals," wrote Gerald Uzzi, a lawyer for the dissident creditors. Chrysler "would require bids (amounting in the billions of dollars) to be made without the protection of any due diligence, financing contingencies, or other bid protections."

Chrysler also would "require bidders to agree to certain collective bargaining agreements, without any showing that such agreements benefit the estates or are critical to maximizing value for the estates."

They label the auction "an illegal sale" and say provisions such as requiring a 10 percent good faith cash deposit are onerous and designed to ensure that only the government can win the auction.

What's that? The government may be "fixing" the bids? This whole fiat deal may have political skulduggery behind it? You betcha. The last time any government spent money sans political motive was . . . um . . . well, . . .