June 9, 2009
Why the Rush on Chrysler?
The Supreme Court, through the temporary act of one Justice, has delayed for a moment the rush to sell effective control of Chrysler to Fiat. The government is dismayed. We need to rush. Why? The need to rush in a purely finanical deal usually means someone is getting a sweetheart deal (at the expense of someone else) and wants to close fast to lock in the benefits. Only if market conditions are deteriorating very quickly, which is not the case here, is speed otherwise essential. In this sale it appears Fiat and the UAW are getting the sweet deal and secured and unsecured creditors are taking it on the chin. The argument to the Indiana pension fund in the paper is a riot -- "you are only losing $5 million, a pitance, on an investment of $17 m, take it for the good of the country" -- and is exactly why we should slow this down. $5 m is a substantial sum for a state pension fund and they should seek to save it -- good for them. The new administration is crying wolf on speed over and over and on many, many fronts. "We need [fill in the blankk] now to stop a crisis from turning into a disaster." Only much later do we see the results and wonder why the cry for urgency. Slowing down these bankruptcies, if so important and with such huge consequences, seems very, very prudent.
June 9, 2009 | Permalink
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I saw this information in France ! It's amazing. It seems we live in two different worlds!
Posted by: Julien | Jun 12, 2009 6:15:52 AM