Italian idea of a car
Older readers may remember the FIAT, which was run out of this country in 1978 or so because even Americans used to Detroit junk wouldn’t buy the horrible things. Poor quality was legendary – FIAT’s parting gift to these shores was the Yugo and the technology was so dated it made Renault look like a modern car company. renault, too, had to quit town, after running full page ads apologizing for bringing their cars here but explaining that, in France, people “like tinkering with their cars on weekends” and they thought Americans would too.
So now we have a failed Italian company coming to the rescue of a failed American one, all subsidized by us taxpayers and run by the auto union. This is change, all right, but I see little hope.
As this WSJ blogger points out, Chrysler is bankrupt for the very good reason that they build awful cars
Did you watch the president’s press conference on Chrysler? It had an unhappy, foreboding air. No standing American president should be opining that the Chrysler-Fiat alliance has a “strong chance of success” or urging Americans to buy Dodge minivans.
These promises are beneath the president’s office. And they set Obama up to throw good money after bad.
It’s not like the president and the taxpayers are backing a business that’s on the cusp of greatness. Chrysler is bankrupt for a reason — in fact, lots of reasons from sub-scale production to a dependence on poor credit customers to a lousy product line-up.
Last night, after being accused by several Mean Street readers of not knowing enough about Chrysler’s line-up, I did more research in Consumer Reports. It was even worse than I thought.
Here was CR: “Many Chrysler vehicles rank at the bottom of our ratings in their categories and none currently meet our requirements for being recommended. Even most newer models have been mediocre in our tests.”
How will the president compel Americans to buy these cars? Especially in the two years it takes for Chrysler to churn out any Fiat originated product?
Just $11.5 million. I always recommend to buyers that we do a little digging on a seller to find out if, say, they’re under any pressure to sell. That would probably pay dividends in this case.
Three hedge funds owed money by Chrysler rejected the government’s effort to force them to accept the Chrysler bailout deal. Obama’s furious.
A person at a hedge-fund firm that owns Chrysler loans, speaking anonymously, told Dow Jones Newswires that the difference between what loanholders would get in bankruptcy and out of bankruptcy wasn’t that much, meaning the non-TARP lenders are making a political statement more than anything.
“Are they taking reputational risk for pennies?” asked the person. “Do the math on the recovery levels. It doesn’t make sense for them to have held out for purely economic value.”
Good for them.
The bill, which passed the House by a huge majority, would have given bankruptcy judges the power to reset mortgage rates and principle amounts. The Senate will no doubt be accused of caving in to the banking interests but the argument against was that it would add uncertainty to mortgages and where there’s uncertainty, there’s risk, which means higher interest rates for everyone. Makes sense to me, but we all know I’m a tool of Wall Street.