The Black Informant | African American Commentary, News and Community Building

Remember That Lil’ Car Experiment? You should. Your tax dollars paid for a good portion of it.

During all the town hall debates, critics said that we should stop all the bickering and yelling and focus on the “real issues”.

Is losing $5.4 billion dollars a “real issue”?

Chrysler: Obama’s Automotive Guinea Pig
4/29/09
(Forbes.com) At a prime time news conference Wednesday, Obama said he was optimistic about Chrysler’s future. “I am actually very hopeful, more hopeful than I was 30 days ago, that we can see a resolution that retains a viable Chrysler.”

With unions and major banks in line to accept major concessions, the last major hurdle was getting other lenders, mainly hedge funds, to write down most of their secured Chrysler debt. The Obama administration was locked in last-minute negotiations with those creditors late Wednesday, but is prepared to push Chrysler into bankruptcy Thursday if a deal is not reached.

Obama said it was prudent for Chrysler to prepare a bankruptcy contingency plan, but since major banks have agreed to write off a majority of their debt, it’s not clear the automaker will have to use it. “Even if they ended up having to go through bankruptcy, it would be very quick, and they could continue operating and emerge on the other side as a stronger, viable company.

Such an expedited court process that would be a test run of its plan for General Motors ( GM – news – people ), which has until the end of May to try to avoid bankruptcy, industry analysts say.

The plan would be for Chrysler’s best assets to be sold to a new company that would emerge quickly from bankruptcy proceedings, perhaps in a matter of days or weeks. The new Chrysler would be owned 55% by a retiree health care trust fund and 20% initially by Fiat ( FIA – news – people ), with the remainder held by the government and creditors. Eventually, if Chrysler met certain performance objectives, Fiat would get 35%. Then, years from now, once the taxpayer loans are paid off, Fiat would be entitled to take a controlling interest. (more…)

In today’s news…

Chrysler May Not Make it Another Year!

(blogs.moparmusclemagazine.com) Chrysler sold a 62,197 cars in September, down 42% from the same month last year. The figure was down from 93,222 in August when traffic to dealers was pushed up by the ”cash for clunkers” program.

Chrysler’s problems may only be beginning and, if so, Fiat, the ”managing partner” among Chrysler’s owners may not be able to keep the American company intact.

[...]

The Congressional Oversight Panel has already said taxpayers will not see most of the $81 billion that they put into the American car industry. The $14.3 billion put into Chrysler is more and more likely to be lost completely. The biggest single loser if Chrysler cannot survive is the UAW which owns 55% of the company.

[...]

Even Chrysler’s traditional rivals are doing well despite a harsh market. Nissan sold 55,393 light vehicles last month, down only 7% from a year ago. Toyota sold 126,015, down12.7% and now has sales which are about double Chrysler’s. Honda’s sales for the month were 77,229 cars and light trucks. The number was down 20%, but it means Honda was still very likely to have picked up share in the American market.

Chrysler sales are now running at the rate of 750,000 a year. It probably does not have the capital to wait through another year of low US car sales with a market share that is almost certainly to stay below 8%. It does not have models tailored to the current market tastes. Chrysler is going out of business. The company just hasn’t made it official. (read the whole thing here)

This movie was played out before, yet nobody listened. Now we all have to stick around for the ugly ending.
“The Chrysler Bail-Out Bust” (1983)

Who got screwed on this one?

#The unions who placed a foolish bet using membership money. After years of sapping money out of that company, they finially got their wish to be king of the mountain with a 55% stake. Too bad Chrysler will not be around too much longer.

#Taxpayers who overwhelmingly did not want to bail out the auto industry in the first place.

GM will ultimately follow suit. It will just take them longer keel over and croak.

Next up, the passage of a health care bill that once again is not wanted by most Americans.

The circle is never broken in politics.