The Truth about Chrysler's Nationalization Comes Out

If it weren't already clear that President Teleprompter wanted to run Chrysler into the arms of the UAW and Fiat, the "Wall Street Journal" ran a front page piece on June 6, 2009 that clearly spells it all out.

The article, titled "U.S. Pushed Fiat Deal on Chrysler" discusses emails that show Chrysler and its advisers were very concerned about off-balance sheet joint ventures Fiat was involved with, as well as a lack of financial disclosure on the part of Fiat. Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com

The emails, which you can read for yourself, demonstrate beyond a shadow of a doubt the level of personal involvement of President Teleprompter. Here is just a taste:

"Its over. The President doesn't negotiate second rounds."

Absolutely breathtaking. These emails came to light in discovery as the Indiana pension funds sought to stop the nationalization plan. As of June 8, 2009, the federal Appeals Court has allowed the nationalization to continue, though it is delayed to allow Indiana's lawyer, Tom Lauria, who Treasury refers to as a "terrorist," to file with the Supreme Court. Gift Cards - Jeep Parts & Accessories

In the end, the issue is whether bankruptcy law in the United States will be followed or if the President to exercise extra-constitutional duties. As is clearly the case, the rule of absolute priority is not being followed in Chrysler's case. The failure to abide by the rule of law is destroying trust in the economic system of the United States.

Did Bondholders Learn from Chrysler?

The Wall Street Journal ran a front page story on their May 27, 2009 edition titled "GM-Union Deal Raises U.S. Stake."

Although the piece deals largely with the U.S. government getting a 70% share of GM, with the UAW taking a reduced, 17.5%, it mentioned that bondholders could reject a debt-for-equity swap ($27 billion in unsecured debt for 10% of the company).

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It turns out that the bondholders did reject the swap and now GM is highly likely to enter bankruptcy on or around June 1, the government deadline for restructuring.

Although I have written about evils of the nationalization of auto industry here, here, and here, the GM bankruptcy process has been somewhat different.

In the now-failed deal, the senior creditors were to be made whole with $6 billion. Sounds good so far. The union, according to the Wall Street Journal, reduced their stake because they "...were concerned about GM's prospects..." also sounds pretty sane. However, GM's bankruptcy is more complicated because it is so large and has no single buyer in the wings. People who switched to Allstate saved an average of $396 per year. Quote Now!

These conditions will make for a good court fight. Why is this a good thing when the consequences are so bad for so many? It is good because it serves as a reminder to the current Legislative and Executive branches that government has no business trying to run the auto business. A good court fight will allow the stake holders to duke it out and have the market best decide the fate of a failing company. Try RingCentral Fax FREE for 30 days

Further, this bankruptcy will show all future lenders to U.S. companies that the business climate of the U.S. is transparent and operates under the rule of law. This concept has been put in grave doubt by President Teleprompter's interference with Chrysler and GMAC.

Finally, a long bankruptcy will put the brakes on the socialism express this country has been on since January, 2009. If free markets are to succeed, no company can be sacred, and no industry too important.

Buy Your People's Car with a Loan from the People's Bank!

When you thought it couldn't any worse, President Teleprompter is going to take over GMAC, thus vertically integrating the manufacture, sale, and financing of cars in the United States. It is hard to believe this is actually happening.

In previous posts, "Killing Chrysler," "The Rule of Law is an Absolute Priority," and "Goodbye GM, Hello People's Car," I wrote about the gross aggregation of financial power by President Teleprompter, and his control over a large portion of the U.S. economy. By the way, nationalizing health care is next (socialized medicine), but I digress. Executives & Professionals: Changing Jobs?

The Wall Street Journal reports in the May 21 edition:

"The Treasury Department is poised to inject more than $7 billion into GMAC LLC, the first installment of a new government aid package that could reach $14 billion,... The GM plan being devised by President Barack Obama's auto task force calls for the government to emerge with a majority stake."

This move vertically integrates the production, marketing, sales, and financing of cars in the United States. This is a frightening thought. The government is using a large portion of industrial productive capacity to promote a political agenda, pay back union backers, and hope to modify consumer behavior. Guard against ID Theft with 15 Points of Protection from TrustedID, including our $1,000,000 Warranty. Click Here!

What makes this behavior worse is:

"Many of the loans to GM and Chrysler are likely to be written off, administration officials say. Other programs, such as the government aid to auto suppliers, are essentially a revolving credit line that is meant to be replenished."

In other words, this becomes a state-run, money-losing, union payback, with little hope of returning to private hands. While this may sound hyperbolic, I can't help but coming to the conclusion, based on the evidence.

Good Bye GM, Hello People's Car!

**Be sure to read the follow up articles here and here.**

"Let me be clear. The United States government has no interest in running GM. We have no intention of running GM" - President Teleprompter, March 30, 2009.

Nobody ever accused President Teleprompter of truthfulness, or accuracy. However, his fits of reverse psychology are beginning to create a pattern. Whether the issue is nationalizing Chrysler and GM, or so-called "torture photos," the President says the opposite of what he truly means. Executives & Professionals: Changing Jobs?

Reuters reports on 19 May 2009 the following:

"NEW YORK, May 19 (Reuters) - General Motors Corp's (GM.N) plan for a bankruptcy filing involves a quick sale of the company's healthy assets to a new company initially owned by the U.S. government, a source familiar with the situation said on Tuesday."

Huh, not wanting to run GM, right... So, President Teleprompter has made it clear for months that Americans should drive the cars that he wants us to drive, not what we want. To realize his dream of econobox hybrids for everyone, he has nationalized GM with over $15.4 billion of U.S. taxpayer money! Includes 300 FREE Fax Pages per month

To add insult to injury, Reuters continues:

"The government's plans include giving stakes in the new company to GM's union and bondholders, although the ownership structure of the company is still being negotiated, said the source who is familiar with the company's plans."

Great, another union give away, just like Chrysler. Americans, are you starting to see a trend?? The rule of law is being destroyed before our very eyes! President Teleprompter has created the largest patronage system in modern history, all using taxpayer money. Protect your Medical Identity with TrustedID. $1,000,000 Warranty & Great Customer Service

If you are a GM bond holder, you better be screaming louder than you have ever screamed to stop this madness. Bankruptcy laws in this country, especially the principal of absolute priority, make large-scale commercial lending possible. I warned you about this in "Killing Chrysler."

Americans, open your eyes to the trend! Whether banks, health care, or cars, President Teleprompter and his cronies in Congress want there hands on everything. This country can not continue to exist unless this madness stops. Exercise your legal rights in bankruptcy courts, voting booths, and writing your Senators and Representatives. American capitalism is truly on the verge of collapse.

Killing Chrysler

Make sure to read the follow up article, "He Who Has the Gold Makes the Rules, or So He Thinks."

While it is clear to everyone that Chrysler, owned by Cerberus Capital Management and Daimler is heading head long into financial ruin, its future isn't as clear.

In an article in the Wall Street Journal (April 29, 2009) titled "Key Lenders Agree to Chrysler Debt Swap," if the proposed debt swap goes through, the UAW will end up owning 55% of Chrysler. This assumes that bank-debt holders, due $6.9 billion will take $2 billion in cash.

If the deal goes through, Fiat will then "...finalize an alliance that would meet U.S. requirements to release $6 billion in new bailout loans." Oh, and this all has to be done by 30 April or Chrysler goes into bankruptcy. Shop DriveTime First! Bad credit, no credit, no problem. Apply on-line.


On the surface, this looks like a bad deal for bank-debt holders. Why should they just take $.27 on the dollar? Why not fight it out in bankruptcy court, as they and secured bond holders are the first to be paid? Also, the large lenders who have agreed thus far, J.P. Morgan Chase and Citigroup, just need the cash, and fast.

Perhaps the bond and debt holders recognize that company majority-owned by a union is a disaster waiting to happen, and they just want to cut their losses. People who switched to Allstate saved an average of $396 per year. Quote Now!

Further, with interference from President Teleprompter and his "czar", Ron Bloom, who knows what Chrysler will look like?

Personally, I think Chrysler is on the verge of becoming another British Leyland. There is one benefit though, watching the UAW strike against itself. The irony would just be too much. Free Shipping on orders over $100

Another reason bank-debt and bond holders should take this to bankruptcy court is that citizens of the U.S., through its elected (poorly) representatives, are going to provide additional billions to Chrysler. You think union corruption at the local level is bad, give them $6 billion of your hard earned dollars and see what happens!

Although I am not in a position to know all of the risk analysis of the various bank-debt holders, it does seem to be quite a quandary. Do you accept $.27 on the dollar now, in cash, or do you risk it, hoping that you will get your monthly or quarterly bond payments?

Finally, what will a union, majority-owned company mean for the rest of the U.S. auto industry? Its end? Or will it mean, at least under President Teleprompter, an endless supply of tax payer money to the UAW. Hmmm, what do you think?? GM, you know you are next!