matthutch

Chrysler: Held Hostage by Cerberus

"The plan is a Hail Mary strategy that might work, but the chances of it working aren’t good enough to put in their own money; but if they can get free money from the government (free in the sense that if Chrysler collapses, Cerberus won’t have to repay the government), they might as well give it a shot."

this is the important line from this article. cerberus didn't invest in chrysler to see it fail -- it planned to make money by making and selling cars. well, that didn't happen. because they do see the company for what it (likely) is, they see an additional investment as a waste of money and contrary to their obligations to their investors.

the only way they see a possibility to make a profit on their investment is to turn to rent-seeking. there's nothing surprising here. companies do this all the time. i think it's disgusting. not that they seek rents (after all, that's a human survival technique to desperately look for help from whomever might give it to you), but that politicians play along. the pols, it seems, seem to buy your analogy of the personification of chrysler as a faultless hostage with a gun to her head. not so. chrysler, like any other business, is a collection of (hopefully) productive assets and the people hired to operate them. if those assets have value, and i presume they do to one degree or another, they will be used to close to their best use, if not in the short run, then in the long run. that might be by chrysler or another company. for government to step in to interfere with this process, in effect allowing the "profit" but not the "loss" if they believe it's too great, is not capitalism. and government officials who give out favors when companies seek a handout or some other kind of political favoritism only perpetuates the problem by indicating that lobbying can pay off.