obama is clearly protecting the UAW and other political interests. he ripped in the hedge funds who refused to accept the govt offer of 29 cents on the dollar. so they released a statement defending themselves (the non-tarp lenders) to chrysler saying they were "systematically procluded" from being involved in any direct discussion with the government. Forced to communicate through a conflicted mediary. Clearly, the fix was in. Non-tarp means they received zero bailout money therefore were not allowed to be involved with the face-to-face negotiations. Moreover, those that did--the government banks with a clear conflict of interest-- would represent said clearing houses and banks. what a truly disturbing sight this is. and on top of it, the junior creditors are not entitled to ANYTHING until sr creditors are paid IN-FULL. But obama wanted to push the UAW and TARP banks (govt) ahead of the non-tarp investment entities (ie, non-government). however, the press isnt even aware what is going on because they are too stupid/smitten to see it. hopefully, people open their eyes to what is going on eventually.
While he may be paying off his backers its a politically correct thing to do. Its easy to spit out the lines about "saving the auto industry" and "keep american made cars and american jobs in Michigan" because thats what everyone wants to hear. Unfortunately its all a sham. You can not correct the US auto industry without addressing the ridiculous cost of funding the retired workers benefits. Almost half the cost of every new car built by the big 3 goes directly to retired UAW members. They enjoy a great deal of protection from the economy that is disproportionate to their contributions. Lets see a politician tackle that bomb like they should. The UAW is no longer needed in America. The UAW was needed back in the day to secure safe working conditions, fair wages and protect against unfair labor practices. Today there are many labor laws on the books that duplicate what the UAW bargained for and OSHA to oversee safety. The UAW leveraged their power to the detriment of the US auto industry and are no longer a viable entity in our society. The sooner politicians come to grips about the realities of the big 3's cost of production the better off we will be.
i should have clarified; its political all right but being politically correct has nothing to do with the motive here. its about more centralized government of key industries. examples- banks/financial institutions chrysler/gm next target: healthcare just 100 days in boys. the federal government has no place here.
A Road Map to a Chrysler Bankruptcy - DealBook Blog - NYTimes.com This puts the situation in a different light. Sometimes you have to reserve judgment until you collect the information. So, these scum sucking hedge fund managers bought sr. secured bonds on the cheap and are trying to maximize their gain. Now they think they can make more money taking Chrysler bankrupt and selling the machines that are collateral against their bonds (and to hell with all the workers who will be without jobs), than accepting less money and allowing the merger to go through with Fiat and saving the jobs of some of the workers. I can see why the govt. is mad at the hedge fund managers. This is probably a negotiating plow by the hedge fund to get another nickel or more per dollar of bond, since they know the govt. does not want to see the jobs go away. Plus the govt. will have to put up another billion to keep Chrysler in business for 30-60 days till the deal can be done. The govt. will probably offer a settlement, hedge fund approves the merger quick, the govt. will give them part of the billion it would have cost to keep Chrysler's business running for 60 days. Or the hedge fund may hold shake the govt. (us) down for more. What is at stake is a going concern at Chrysler vs. a liquidation of Chrysler and attendant job loss at Chrysler and the parts suppliers. As stated, the govt. may be able to do the deal in bankruptcy without approval of the holdout secured bondholders if they get approval of enough of the dollar value of bondholders and a majority of the bondholders. We'll see, but I an less sympathetic to the secured creditors now than originally. It seems saving part of Chrysler as a going concern is better for the workers and our economy, than forcing them into liquidation. But again, it appears to me the hedge funds are shaking down the govt., and this is just how you negotiate in business.
That's from a blog and over a week old. We still dont know the exact amount they paid even with it discounted. They still bought senior debt and are entitled to senior debt consideration. Regardless, it doesnt matter what happens to Chrysler as long as they are stuck with the UAW and their ridiculous retirement funding. Forget about the debt for a minute and look at the costs to produce a vehicle and ask yourself if its marketable. When half your cost is entrenched in paying for retired worker benefits you are limited.
When the merger goes through, and I believe it will because it makes the most sense (all else is just negotiating), the UAW will be the majority owner of the new Chrysler! It will be interesting to see what they pay themselves in hourly wages and benefits! If they are not competitive, they lose. I wonder if the UAW can go on strike against itself??? I wonder if the workers could vote to be represented by the United Mine Workers, against the UAW management??? Whole new entertaining scenarios present themselves in this one. I know, I'm a little weird. Who else is so entertained by a big bankruptcy in the middle of a banking, real estate crisis in the Great Recession! But you can learn a lot watching a train wreck... There was an airline a few years back that sold itself to the employees. They put in their CEO, then got mad at him when he wouldn't give them good raises. It gets interesting when the employees are the owners.
what? clearly tries to gloss the truth of whats really going down. its not arguable even though it hurts for some to face it I suppose. some of these same investors include the everyday private citizen with a 401k that lose everything while UAW constituencies are given precedent from Obama in spite of Federal Law. this doesnt bother you, really? we have private investors with secured investments absolutely getting robbed due to complete abuse of power. the federal govt has no business here. completely irrelevant to the argument here. this says exactly what i wanted to say before i read it: http://blogs.knoxnews.com/knx/johns...m6iHBw&usg=AFQjCNGkh4I0rLyj_XanObLqzCjpyOnQLQ
Say bubba, who started this thread, looking for what is really going on? Me. I don't think you can read one article and find the answer. Have you held bonds in a bankruptcy and watched the maneuvering for a year? I have several times. I bought some Southland Corp debt years ago at .10, held for a year through bankruptcy and stood in line with the folks who paid 1.00 for theirs. When we go .20, they cried and I was happy to double my money in a year and have some warrants on shares in the new company. Both sides in this will try to spin the news, and the anti Obama forces will also, as always. Follow the money. Some investors may be mom and pop, but mom and pop don't usually go in and buy distressed debt at discounts in companies that are in trouble but have not entered bankruptcy yet. It requires a degree of skill that mom and pop don't have. The hedge managers did it, and now they're negotiating for a better deal. But if they get too much, Fiat may pull out. We don't know how big a discount the hedgies got on the bonds. Suppose they bought them for .10 on the dollar and are being offered .33. That could be a quick 230% profit. Are they hurting, or do they need more? I don't know, and right now, nobody else does either. Is it worth liquidating Chrysler so they could get .50? I don't think it will come to that, as I say, I think this is just negotiating and Chrysler goes to Fiat. The secured debtors will probably wrangle a concession out of the govt. to agree to the deal. A Chrysler liquidation is bad for Detroit, bad for the Chrysler employees, bad for the unemployment rate, and bad for the investor psychology in the country right now. Seeing Chrysler survive as a going concern under new management addresses all those issues. I think govt. involvement is appropriate, provided they don't overstep the bounds of their legal power. I would like to know when the hedgies bought the bonds and what price they paid. If they bought the bonds at full face value, I may feel sorry for them. If they bought them at 90% discount and are already up by a double or a triple, then saving Chrysler is more important than them getting another double on top of the one they have already gotten. There is a lot we don't know right now.
You dont have many, if any, private citizens 401(k) in a hedge fund. Hedge funds are made for the big time investor's and large businesses. I bet you can count on one hand how many moms and pops are invested in hedge fund lending to Chrysler. I still dont see how Fiat is going to make Chrysler profitable when the Germans couldnt do it. Whatever plan they have should be reviewed with a microscope before another penny of tax dollars goes into that company.
Fiat failed in the US a long time ago, quality problems. We will probably not see a Fiat branded car in the US any time soon. They probably want to reenter the US market. Do it with a Fiat car with a Chrysler name on it. Fiat gets a running dealership network and a brand name. Chrysler gets fuel efficient cars. Fiat could also see the Alfa Romeo brand in the US, which is the Italian competitor to BMW (maybe a lower price?).
