Sometimes it appears to me that Washington creates a controversial issue that takes our eyes off of other events occurring in American and in Washington.
While the eye of country has been concentrated on GM and Gitmo, Chrysler ‘s problems have somewhat been ignored.
The deal with Fiat has is off , when the government did not agree to writing off about 35% of the $7 billion owed to the government in exchange for equity. Chrysler had about $7 billion in first-lien loans that stem from its breakaway from Daimler AG in 2007.
Daimler still holds a stake of nearly 20% in Chrysler, has lost hopes of recovering their investment and has written down their investment to zero.
Chrysler, which is now 80% owned by Cerberus, lost $8 billion in 2008 and has warned that it could be forced to liquidate in bankruptcy without new funding.
Liquidation would split off stronger assets like Jeep and Chrysler's minivans while shutting factories and dealerships and eliminating thousands of jobs. And it appears Fiat may purchase these assets.
Moody’s said creditors could look to recover 20 cents on the dollar in a default, down from an earlier estimate of 50 cents, because of the decline in the U.S. auto industry. This statement was quiet about if the estimate included American taxpayers.
The federal government deadline for Chrysler is only 5 days away. Who knows, this may be the next issue in news to take our eye off of the budget, cap-and-trade and increase in the power of the federal government.
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