We are now witnessing one of the most outlandish violations of business ethics in history, compliments of your U.S. government on the road to Socialism. Can you believe that our President has proclaimed that Chrysler now has a new lease on life because it’s going to be managed by Fiat? A company that makes some of the worst cars on the planet! In addition, the largest shareholder in this new company (55%) is going to be the United Auto Workers, who have single handedly caused this bankruptcy.
Fiat would actually take a 20% stake, plus warrant options, for nothing but an exchange of “know-how” – no cash, not one dollar! Fiat’s warrants will give it the opportunity to increase its ownership (equity) by up to 15 more percentage points, if it introduces efficient engines in the U.S. and rolls out a car that gets 40 miles to the gallon. The irony is that Chrysler already has this “know-how” today, but nobody wants to buy the car.
Here’s another joke. To make this deal happen, the U.S. Treasury (you and me) will contribute $3.3 billion to the plan: $2.0 billion to pay off Chrysler’s senior secured lenders at 33 cents on the dollar (wonder why they’re hacked off), and the rest of the money will be used to pay the company’s bills during the bankruptcy. The government also says that it is willing to “pitch-in” another $4.76 billion more in order to keep Chrysler running for several years. That’s on top of the $4.0 billion that the government lent Chrysler previously, a debt that will now be forgiven as part of this arrangement. With a deal like this, why do we need Fiat? Britney Spears could run this company pretty easily and continue her singing career as well!
Oh yes, what did the UAW give up to make this all happen? Well, they gave up part of their retiree health care fund which was owed $10.6 billion by Chrysler; instead they will only get $4.6 billion paid back with interest. Someone should tell them that most of us get Medicare when we retire, but of course the UAW can’t settle for that. Also, they gave up a cost-of living allowance, a Christmas bonus, two paid holidays, and they will forego vision and dental care benefits. What a pity; such a sacrifice. Maybe someone should also tell them that many workers are taking pay cuts today, but I guess that would be too much to ask. So, since the UAW has given up so much, let’s give them 55% of the company! Who negotiated this deal for the government, Barney Frank or Chris Dodd?
To top off this travesty, President Obama had a press conference to criticize the secured lenders who, according to bankruptcy law, have the contractual right to be paid off first on the $6.9 billion of secured debt they hold, but I guess Mr. Obama just rewrites the law as he goes along. Those “greedy vultures” who lent that money to Chrysler in good faith should be happy with 33 cents on the dollar. He ought to know, he won the election.
Fiat would actually take a 20% stake, plus warrant options, for nothing but an exchange of “know-how” – no cash, not one dollar! Fiat’s warrants will give it the opportunity to increase its ownership (equity) by up to 15 more percentage points, if it introduces efficient engines in the U.S. and rolls out a car that gets 40 miles to the gallon. The irony is that Chrysler already has this “know-how” today, but nobody wants to buy the car.
Here’s another joke. To make this deal happen, the U.S. Treasury (you and me) will contribute $3.3 billion to the plan: $2.0 billion to pay off Chrysler’s senior secured lenders at 33 cents on the dollar (wonder why they’re hacked off), and the rest of the money will be used to pay the company’s bills during the bankruptcy. The government also says that it is willing to “pitch-in” another $4.76 billion more in order to keep Chrysler running for several years. That’s on top of the $4.0 billion that the government lent Chrysler previously, a debt that will now be forgiven as part of this arrangement. With a deal like this, why do we need Fiat? Britney Spears could run this company pretty easily and continue her singing career as well!
Oh yes, what did the UAW give up to make this all happen? Well, they gave up part of their retiree health care fund which was owed $10.6 billion by Chrysler; instead they will only get $4.6 billion paid back with interest. Someone should tell them that most of us get Medicare when we retire, but of course the UAW can’t settle for that. Also, they gave up a cost-of living allowance, a Christmas bonus, two paid holidays, and they will forego vision and dental care benefits. What a pity; such a sacrifice. Maybe someone should also tell them that many workers are taking pay cuts today, but I guess that would be too much to ask. So, since the UAW has given up so much, let’s give them 55% of the company! Who negotiated this deal for the government, Barney Frank or Chris Dodd?
To top off this travesty, President Obama had a press conference to criticize the secured lenders who, according to bankruptcy law, have the contractual right to be paid off first on the $6.9 billion of secured debt they hold, but I guess Mr. Obama just rewrites the law as he goes along. Those “greedy vultures” who lent that money to Chrysler in good faith should be happy with 33 cents on the dollar. He ought to know, he won the election.
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