In a power play executed by the feds, free enterprise was unceremoniously driven from the field of play and out of bounds today.
I didn't have a good vantage point, but this is what I have pieced together from eyewitness accounts.
Chrysler today declared Chapter 11 - finally. Even Obama said it was a good thing. This coming from one of the companies deemed too big to fail, but it isn't a real bankruptcy because the feds and not the courts are going to sort this out. After all, they are a major stockholder now.
Earlier today Chrysler sold one-fifth (20%) of their bankrupt company to Fiat with the possibility that Fiat may eventually get over one-third of it at 35%. How can you sell your company if you are in Chapter 11? Must be part of the fed's behind the scenes deal.
The UAW is now set to own more than half of Chrysler - who are they going to blame when the cars still don't sell and the company still loses money?
Obama fired Chrysler CEO and now has told the company that they need to cut their dealerships by more than half (from 3200 to 1500) - and GM, too? The government is telling private enterprise to cut locations? Since when can they do this? Oh, since now. This is a new game with rules being made up along the way. I'm not sure free enterprise is going to be reentering the game. It looks pretty battered.
And then GMAC, the financial subsidiary of soon-to be-formally-declared bankrupt GM, is guaranteeing funding to Chrysler for 4 years. A company with no money is guaranteeing to fund another bankrupt company? Wow! Should be interesting, but must be something the feds already know is going to work as the set about keeping GMAC afloat for at least those 4 years.
Then I hear that the feds are going to guarantee the new car warranties for all Chrysler cars. Look for government garages and mechanics to be coming to a location near you, Hey, maybe they'll use those dealer locations they just threw under the bus.
One thing is sure, Chrysler is going to be running on fiat money.
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Steve,
The whole country is running on fiat~ fake money..... When the gold and silver left so did the financial stability of the country...
So sad,
Ann
Steve, it isn't a good sign, and it's only one of the smaller steps the government is taking.
Ann,
Agreed. That was a long time ago, and we likely will never return to it. :)
Steve
John,
It's getting harder and harder to keep up with them. :)
Steve
Steve,
This was predictable. I've done sevral blogs on this very subject.
Terry,
Thanks and keep it up. We have to keep reminding people - or they might forget what this country is about. :)
Steve
Steve, I wonder if Nancy Pelosi knows how to do a set of brakes
I m so confused...the capitalism I grew up with is disappearing...so is my capital!
side note - i having been watching car dealership around me close left and right - Dodge is one.
Hugh,
Would you really trust her to work on your car? Hold onto your wallet. :)
Steve
Gary,
This country has lost its way as it has gone from the number one superpower to just one of the boys. :)
Steve
Linda,
If car dealerships are closing because they can't make sales and can't stay in business, I have no problem with that. If they're closing because they were told to, I have a serious problem with that. :)
Steve
And. . . don't forget that today is "May Day". Worker's unite! Socialism will set us free. I can't wait to see what happens next.
Tom,
I know. Solidarity Day - although here we used to call it Loyalty Day. :)
Steve
Steve - actually we are guarenteeing that funding to Chrysler. GMAC has now been declared a bank and is getting TARP funds, so guess who is paying for it!
This should be very entertaining Steve.
Looks like the new company name should be Fiasco!
Mike,
How convenient that now GMAC is a bank and that this deal was arranged before the stress tests were made public - and that GMAC is now too big to fail and a giant hole down which to pour endless amounrts of US money forver and ever. What a deal! :)
Steve
Paul,
Oh that's a good one. Question what do you get with a company that can't make cars that people will buy that has a guaranteed capital supply and won't go away? Sounds a lot like the government model, doesn't it? :)
Steve
Hi Steve
Obama is way over the line on this; there are laws in the country that are being bypassed.
Good luck and success
Lou Ludwig
Lou,
It's such a mess now. Chrysler gets money from Congress and Bush and Paulson (not counting the precedent set by Iaccoca earlier), then they get more money, then Obama fires the CEO, then they partner with the UAW, then Obama decides that he wants to sit on the board of directors, then we invite Fiat to the party, now they declare Chapter 11, then the CEO of Fiat is likely to become the new head of Chysler. This is insane. :)
Steve
Steve - I haven't followed this story as closely as I would normally. However, my question is: How did the unions end up owning such a large percentage? It would seem that Chrysler's secured lenders should end up with a larger interest in the company.
Ryan,
I think from a legal standpoint you're right. I think there were some deals worked out. :)
Steve