Chrysler to File for Bankruptcy

[The Minsky Moment]

Both Automakers are doomed and we are tossing money to keep alive a corpse before it goes into rigor mortis.

We should allow both GM and Chrysler to die and let their remaining competitors buy up whatever assets they had worth saving.

That is what is happening to Chrysler.  the company is dying and the assets that remain are being assumed by a new company which will basically be run by Fiat.  Fiat is even actively considering abandoning the Chrysler brand (but keeping dodge and Jeep).  The big wrinkle is that Fiat effectively is agreeing to take on a modified UAW contract for its new US operation in return for a fat government bribe.

As for GM - there is no competitor out there that can swallow it whole or come close, and not all the lines and brands can be shed off easily.  There are selling off those lines that can be sold to stand-alone buyers, and stripping down the rest of the business.  If it is properly run going forward, I see no reason why it cannot survive.

[The Minsky Moment]

A blogger named Verum Serum rases some interesting questions:

About his ability to think clearly, yes.

The idea that the Bush DOJ conspired with the incoming Obama admin to accomplish some nefarious end is a little too  for me.  It might help a little if he could point to a single piece of evidence that supports his incredible claim that pressure was put on DOJ to agree to the non-proc deal in an unrelated case, but of course, he does not.

He is also mistaken as to his first premise notwithstanding the Marchionne statement - because as explained in the papers Fiat filed with the Supreme Court, under the terms of the contract, the deal *automatically* expires June 15, and can only be extended if additional time was needed to get government approval.  Fiat also points out that while in theory a new deal could be structured, there would be no assurance that they could secure the needed DIP financing.

[Neil]

Detroit's major advantages as a hub of both rail and water traffic were eliminated with the creation of the highway system,

And that's the terrible irony of it.  The crowning achievement of the auto industry was the death-knell of Detroit.

[Berkut]

As for GM - there is no competitor out there that can swallow it whole or come close, and not all the lines and brands can be shed off easily.  There are selling off those lines that can be sold to stand-alone buyers, and stripping down the rest of the business.  If it is properly run going forward, I see no reason why it cannot survive.

Do you see any reason to believe a corporation owned and run by the UAWand the US government would be run "properly" going forward?

[KRonn]

As for GM - there is no competitor out there that can swallow it whole or come close, and not all the lines and brands can be shed off easily.  There are selling off those lines that can be sold to stand-alone buyers, and stripping down the rest of the business.  If it is properly run going forward, I see no reason why it cannot survive.

Do you see any reason to believe a corporation owned and run by the UAWand the US government would be run "properly" going forward?

Mr negativity! I mean, what can possibly go wrong!? It's not like the government can't just keep printing money to pay for any cash shortfalls, right? Right?   

[jimmy olsen]

The Court's gonna let the deal go through.

http://www.msnbc.msn.com/id/31185911/

[Scipio]

The Court's gonna let the deal go through.

http://www.msnbc.msn.com/id/31185911/

Talk about your foregone conclusion.

[KRonn]

The Court's gonna let the deal go through.

http://www.msnbc.msn.com/id/31185911/

Ah well, that's too bad....   

[Neil]

The government led by a black man, a union and Italians.  Now there's a bad omen.

Hell, Chrysler was awful when white plutocrats were running it.

[The Minsky Moment]

Do you see any reason to believe a corporation owned and run by the UAWand the US government would be run "properly" going forward?

The new CEO the feds put in place seems to have his head screwed on straight.  the real question going forward will be if the UAW uses their equity stake to muck around with management decisions.  If that happens I agree it doesn't look good.

[Berkut]

No, I could not imagine they would use their equity stake to muck around with management decisions like pay and benefits.

I am sure if the new CEO comes along and tells them he is going to cut their salaries they will be all "OK, yous the boss Mr. CEO!"

[I Killed Kenny]

YUROPE OWNS THE USA!

[Barrister]

No, I could not imagine they would use their equity stake to muck around with management decisions like pay and benefits.

I am sure if the new CEO comes along and tells them he is going to cut their salaries they will be all "OK, yous the boss Mr. CEO!"

And how exactly are they going to "muck around with management decisions" with a minority stake?  They'll get to nominate a minority of the board of directors, but otherwise they'll have no say over the operation of the company.

[Savonarola]

YUROPE OWNS THE USA!

Not the first time, but I can understand your excitement since it worked so well the last time a European company owned Chrysler.

[Zanza]

And how exactly are they going to "muck around with management decisions" with a minority stake?  They'll get to nominate a minority of the board of directors, but otherwise they'll have no say over the operation of the company.

They have a 55% stake. That suggests they may appoint half the board including a tie breaker (if there is such a person in American boards).