thku4grace

Chrysler: Held Hostage by Cerberus

On Feb 18 01:05 PM Bob Lunn wrote:

> Cerberus is playing poker using Chrysler jobs as the stakes. I don't
> think Chrysler should have received access to public funding in the
> first place given that it’s a private company. I also don't think
> providing no risk, low interest loans to Chrysler is going to save
> that many jobs because I suspect the market for Chrysler products
> in 2009 is going to be so low that Chrysler is going to have to lay
> off major numbers of workers anyway.

I agree that Chrysler shouldn't have received access to public funding, but then I don't believe either should Ford or GM for the simple fact that these companies have been poorly managed for a long time and the current financial crisis was all that was needed to shake up the subpar performers from the market. Free capitalism is the best avenue.

> If Cerberus wants to save their investment, let them kick in the
> necessary funds and take the risk. If not, let Chrysler go bankrupt.
> If the Government still wants to try to save jobs, let the Government
> buy the assets for next to nothing, and provide the necessary funding
> to take them out of bankruptcy. This effectively nationalizes Chrysler.
> If it does become economically feasible, at some point in the future,
> sell shares and make the company public again. Using the Poker metaphor…
> CALL… show me what you got.

What I disagree with is that there should be special significance given to publicly traded firms over privately held firms. If you ask Congress they will tell you that for both companies its about jobs for the working class. I don't doubt Chrysler will likely need to lay off many workers...but so will GM and Ford. Car sales figures make it quite clear for all.
The problem I have with your post is you have colored Cerberus as a fat cat company looking for welfare from the government and thus are undeserving. That may be true but what about GM and Ford? Don't institutions and rich people own these companies too? Kirk Kerkorian had a large ownership position before he gave up and sold out. Was he the only one? I think not.
What about asking GM management to put more of their personal assets into GM? Don't they believe in their own company? Or do they only believe in it as far as government money will take them?
I mean who needs diversification? What about the UAW pension making a big investment? They have a lot to lose and yet not only will they not invest, they are even unwilling to offer much of any concessions. Why is it somehow different? Using a poker metaphor, perhaps we ought not deal off the bottom of the deck to some firms that we attach some misguided working class company mentality and deal fairly. Frankly, I would rather the Congress took the deck and went home for all 3 firms. No loans till after renegotiation through Chapter 11. But enough of the class warfare crapola.