At least the UAW members vote. I'm having a very hard time figuring out what Fiat has done to deserve this largesse:
Debt holders have expressed agitation about Fiat, itself weakened by the global recession. As designed, the Turin company would get 20% of the auto maker without putting a dollar of its own capital at risk. Fiat's main commitment to Chrysler would be to provide some technology and to share the guts, or "platforms," of certain models.
The U.S. government has already agreed to forgive the $4 billion it lent Chrysler and to inject another $6 billion into the auto maker to finance its possible bankruptcy and operations.
Most important to Chrysler's health, the government has negotiated a deal with the United Auto Workers union that should reduce the company's pension and health-care costs, lifting a burden off the company.
For the lenders, the fear is that Fiat doesn't have enough at stake in the negotiations, given it will likely assume day-to-day control of the company without putting up its own money.
Several lenders said their concern is Fiat will overcharge Chrysler for new technologies or parts, effectively stripping money out of Chrysler over time via technology-transfer agreements. It could also make in-kind equity contributions over time to build up its equity stake if it does decide Chrysler has a future.
The idea seems to be to keep Chrysler operating at all costs--at least until the current administration is safely out of office.
Meanwhile, the folks at Ford have to be awfully glad they didn't take government money. They've apparently gotten quite a brand boost out of it, with a large number of their current customers trading in Chrysler or GM cars for a piece of the company that isn't teetering on the edge of receivership. It's not that Ford's future is necessarily that bright--but taking billions from the government sends a strong signal that there might be a problem with your cars in the future.
I think the tax payers "get" to keep a few hundred thousand jobs. I love how you mention that they "get nothing" here, but the only articles you write about huge bailouts of the banking industry are about how their exorbitant pay for the service of wrecking our economy is a mere "annoyance."
Seriously, why are you so biased? Was your father killed by a blue collar worker, or do you really think paper pushers are the model of production but people who physically make things should be thrown out on the street? Why does saving the banking industry have value worth your tax dollars but the car industry doesn't? You've said things like "the banking sector is crucial" but so is ANY large sector. If that many people lose their jobs THE REST OF THE ECONOMY WILL SUFFER. You know, cause people need other people to buy the crap they sell.
Once again in small words. If people don't want to buy the product at a price that the company can afford to produce it these are not useful jobs. They are a wast of people and money that could be used to do something useful -- like make Toyotas. It would make more sense if the government HAD to step in to just pay the employees to retire, at least you wouldn't be spending money running zombie factories too.
Saving the banking industry was nominally about saving the banking industry, not saving every job in it. Tens of thousands of jobs were lost, and not withstanding the media-driven faux outrage over a few bonus cases, many of the high ups are now seeing wages reduced or outright capped under government bailout terms.
The idea that the car industry is worth saving without the UAW taking a similar haircut on its end is well below the sniff test threshold. Simply handing them money and saying "continue as usual" when there is not a market for the product is not job-saving, it is a highly inefficient form of welfare distribution.
The taxpayers "get" something in the same sense that the American people would "get" something if the U.S. just paid the UAW members and bond holders directly or that they get from any welfare/redistribution program. Some people are probably bitter that their tax money is going to subsidize union wages and bond holders, but I think a bigger frustration is that we're delaying the inevitable and paying people to do work that's not wanted.
Why not just pay the UAW members directly while they get retraining or have them do something useful (pick up litter? landscape?) until they can find a new job that is appropriate for their skill level?
Is there some sort of multiplier effect that we get from funneling the money through the car companies instead of sending it directly to the UAW members, supplier workers, and bond holders?
Is it okay to call this whole auto bailout thingy fascism now that there's an Italian connection?
Nut,
They have saved nothing for the taxpayers in this case either. They might have saved some jobs for a select few for a while, but only for a while. The rump end of Chrysler that is left is still going to be back at a bankruptcy even if it comes out this time, or the government will just have to ship them a few billion dollars every quarter from here going forward.
One might argue that saving "some jobs" (which in this case is actually a great deal of jobs, considering the inevitable domino effect of a failure) might be very beneficial while in a recession. Whereas once said recession is over the company and its jobs can be safely lost without significant danger to the economy. In which case saving them for "only a while" is actually the plan.
Though I know you would not possibly subscribe to such an argument given your views. Just be aware that there is such an argument.
Except that I do not believe for a second that there a political will to close the door at anytime, regardless of what is going on with the economy.
I have heard nothing about any wage cuts for current UAW workiers at Chrysler, so I have to assume there are none. Ms. McArdle, do you think the Obama administration cares what you think? Do you think you're a constituent? You get to *feel* *good* about voting for, and supporting, Obama, and being a good and decent human being unlike the evil Republicans. Just get back to enjoying that and don't ask any questions.
Fiat has been here before. I drove an X 1\9 for a while, had a flat top you could take off, nice design, underpowered. I think the European market is protected from Japanese competition. So unless 'Buy Italian' catches on more than whatever the song is now it's going to be 'Japan, here's lunch!' That said, Fiat has managed to lose only $48 million in the last quarter, with the car market falling like a rock, by 'cutting costs.'
Found on road, dead
Fix it again, Tony
They've apparently gotten quite a brand boost out of it, with a large number of their current customers trading in Chrysler or GM cars for a piece of the company that isn't teetering on the edge of receivership.
I think part of it is vindictiveness. Along the lines that "GM and Chrysler has already gotten my money, and I'll be d*mned if they get another cent."
That works just as well. These companies need a good kicking, and the reason customers choose to give it to them is less relevant.
Bought a Ford last night.
No problems yet!
Which makes it more reliable than my BMW. (Back for More Work)