By on April 29, 2011

Now, our strategy continues to be to exit these investments, and just today Chrysler announced that it intends to raise the money it needs to repay the government. Two years ago, no one would have expected us to be in this position today, and it shows the success of the strategy the President implemented and the skill and dedication of Chrysler’s employees. We are looking forward to the full repayment of our loan to the company.

Treasury Secretary Tim Geithner, speaking in Detroit, makes strategic use of the singular tense in order to use the phrase “full repayment” without actually revealing the losses taxpayers have already taken. After all, the $1.9b Debtor-in-Posession loan made to “Old Chrysler” in May 2009 isn’t the loan Geithner is referring to (that one was “extinguished” in liquidation). Nor is the $4b “bridge loan” from January 2009 the loan Geithner is referring to, as a mere $2.1b repayment was counted as “satisfaction in full of the remaining debt obligations associated with the original loan.” Geithner may be “looking forward to full repayment” of the one loan he considers “ours” (as are we), but that’s not the whole story. Once again, a slickly-phrased “payback” claim trumps any sense of responsibility at Treasury to be transparent with taxpayers. And a quick survey of the media indicates that Geithner’s use of the singular has worked quite effectively.

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28 Comments on “Quote Of The Day: Parsing Chrysler’s Payback Edition...”


  • avatar
    Educator(of teachers)Dan

    I’ve simply reached the point of, “Whooooooo! They gave us SOME money!” I never expected to be paid back.

    • 0 avatar

      I really still absolutely do not understand how it can be at any point still considered “our” money.

      Whether the government spends it in the public’s interest does not make it any closer to being “our money”.

      Although I’m sure the government is glad you believe it.

      • 0 avatar
        MikeAR

        Uh, it is our money. It may not be yours because you don’t pay taxes but it came from those of us who do pay taxes. So yeah, it is our money.

        If for some reason you don’t get it, send me the money in your bank account, after all it isn’t yours.

    • 0 avatar
      highdesertcat

      Actually, I would like to see Fiatsler pay back the US Treasury. Hopefully, it will be all of the money and maybe with some interest too. I’m with those who say “good riddance”. And I also agree with others who have said that we should quit referring to Chrysler as if it is some American company, because it is not. If and when Sergio pays back the US Treasury Chrysler will be relegated to the dust bin of history as just another foreign-owned company doing business in America, like Toyondasan and Hyundai/Kia, Subaru or Mercedes and BMW.

      • 0 avatar
        Educator(of teachers)Dan

        @highdesertcat: yeah so would I (and GM) but I figure that’s roughly equal to the chance of me becoming Pope. I have received the Catholic sacraments, I am male, and my local priest does like me… but that’s about as close as I’m going to get.

      • 0 avatar
        highdesertcat

        LOL Dan! I have to confess that I would like the US government to give GM away. As it is, it is what it is, and we’re still stuck with this lemon tree. Unless we see a drastic change in the US economy and consistent continued growth in China where GM is making some money, I simply do not see how GM is ever going to pay back the money that the tax payers rained down on them. Some GM-fans keep telling me that I’ve got it all wrong and that we’re not on the hook to bail out GM, the UAW and their parts infrastructure. I believe it when I see it. I hope to be proven wrong because that means that we, the people, got paid back our bail out money.

        I understand that we live in a dynamic society, but the US economy just barely grew in spite of the nearly 2Trillion dollars that was pumped into it. And people just aren’t buying GM products like they did in the sixties and seventies, no matter how much they’ve improved today. Hence, I don’t see GM meeting the sales numbers required for them to remain solvent without tax payer bucks, and an even smaller chance of getting GM to pay back ALL of the money bestowed on them in bail outs. If GM was such a great risk they would be able to find other sources of borrowed money, like Fiatsler, to pay back the US government.

    • 0 avatar

      But it’s not your money because you gave it away? Whose money is it when you’ve paid for your services?

      It’s the government’s money, when you pay your taxes.

      I don’t think you can debate whose money it is when it’s the government’s money, that bailed out Chrysler. If they can make it back we will probably see a gain, somewhere, but that doesn’t mean you’re getting anything back when Chrysler does better.

    • 0 avatar
      SVX pearlie

      In Chrysler’s case, that’s never gonna happen. They’re still trumpeting “operating profit” in lieu of *actual*, honest-to-goodness real NET profit. Profit that can they can take to the bank and repay the taxpayers.

      OTOH, at least GM is making some real NET profit, which can go back into paying back the Feds and us taxpayers.

      • 0 avatar
        highdesertcat

        I don’t think either one (GM or Fiatsler) can make it on their own if they had to pay their own bills and repay the loans or bail outs that they received. And we’re not even talking UAW contributions or full taxes here. Right now, both are pretty well isolated from the real capitalist process and sheltered in the arms of the US government. And the bottom line remains that in order for GM and Fiatsler to become profitable they must sell a lot more product than they sell now. And I just cannot see that happening in today’s real world car market. We’ll know more by the 2014/2015 time frame after the whole industry has shaken itself out. Shaken or stirred, there are still a lot of changes ahead.

  • avatar
    indi500fan

    I’m not sure Sergio and company can sell enough Fiats at enough profit to weather the storm of $5 gas. And in an election year (2012) another round of Chryco bailout probably doesn’t wash with the masses.

    • 0 avatar

      Here’s the latest on the future profitability of Chrysler, via the NYT

      Mr. Marchionne has said repeatedly that the interest payments to the two governments were the sole reason that Chrysler was in the red. But he stopped short of saying that Chrysler would be profitable after repaying the $7.5 billion in loans to the American and Canadian governments later this quarter. The company lost $652 million last year and paid $1.23 billion in interest on the bailout loans.

    • 0 avatar
      Robert Schwartz

      I would think that $5 gas may be the thing that would make Fiat work in the US.

  • avatar
    Zackman

    All water under the bridge. It really doesn’t matter what anyone thinks, whether the bailouts were right or not, it’s what was done. If all, most, some or any of the money is paid back, it was obviously in the government’s interest that this happened. One can argue the point ’til the cows come home, but it really doesn’t make any difference. Me? Of course I do hope that the money is paid back, but I’m not optimistic – but always hopeful!

  • avatar
    getacargetacheck

    I can understand the point of view that Chrysler and GM and any other poorly-run company should be left to fail under our “capitalist” system. However, there are two sides to every ledger and a price for every decision. If we had let GM and Chrysler (and many of their suppliers) fail then we “taxpayers” would have been making unemployment, food stamp, and Medicaid payments to the projected 1 million unemployed. Possibly for a full 99 weeks in the case of unemployment insurance. Also, don’t forget lost property and income tax revenue which would have led to even more layoffs in the public sector. Even if the true unemployed number was half of that, government payments would have exceeded any losses we’ll realize from the sale of GM and Chrysler stock. By the way, because of Obama’s action we also have a larger industrial base than we would have had otherwise.

    • 0 avatar
      SP

      Sure, there is a cost to every decision. However, one could follow that train of thought down many different sidings.

      Consider that, if Chrysler stopped selling cars, almost all of the purchasers would have bought different cars. They wouldn’t have just stopped buying cars because one provider went out of business. So the jobs “saved” at Chrysler and its suppliers are offset by the jobs “lost” at every other car maker and their suppliers.

      Another thing to consider is that “a larger industrial base,” which is generally a good thing, can become “overcapacity” under certain conditions. And that is why GM and Chrysler still fired thousands of workers after they got “bailed out”.

      Lastly, neither of the two companies is really doing great yet. There’s no telling when you, me, and the rest of the taxpayers might have to cough up more cash to keep these companies afloat.

    • 0 avatar
      wsn

      getacargetacheck, obviously you are not good at math.

      The total bailout cost about 50~100 billion, depending on who you ask.
      50B, at 6% long term national debt interest, would be 3B/year. If you pay a worker $15/hour * 8 hour * 200 days = $24k/year. Not high paying, but still OK.

      The 3B is able to pay for 125,000 workers doing nothing for one year. In other words, the 50B is able to pay for them forever.

      GM has 202,000 employees. And no, not everyone would be out of work when it files a C7. Many auto makers would be glad to buy the assets and rehire people, once the UAW is gone for good.

  • avatar
    tparkit

    Let’s parse “Chrysler announced that it intends to raise the money it needs to repay the government.”

    Translation: Not one dime is going to come out of Fiat’s pocket. Never has, never will. Remember, dimes go INTO Fiat’s pocket – that’s the quid pro quo for partnerning with Washington to provide a figleaf and an exit for the Democrats’ massive transfer of stolen assets and US taxpayer cash to its friends at the UAW.

    Again, keep your eye on the pea under the shell. Money will move hither and thither, by one means or another, all reported by Washington’s getaway drivers in the media. At the end of the day, Fiat will profit massively, the UAW will keep everything it got so far and then some, and the taxpayers will never actually get anything back.

    • 0 avatar
      highdesertcat

      As long as we get to dump Chrysler, I don’t care how Fiat goes about raising the money, even if they have to borrow it from the mafia.

      • 0 avatar
        tparkit

        Will you care when you discover that the money has been raised, via circuitous routes, guarantees, and subsidies, from your pocket?

      • 0 avatar
        highdesertcat

        tparkit, that thought had initially crossed my mind when I first read this story on another board. Let’s hope it doesn’t get to that because I would mind if this turns out to the just another sleight of hand trick.

      • 0 avatar
        windswords

        Except that it’s not. The government loaned Chrysler/Fiat at high interest rate (“schister” loans). Now that business prospects have improved they are refinancing with private banks at much lower interest rates. This is a win/win. Win for the government because it gets its money back and a win for Sergio because he doesn’t have to pay interest rates 3 times higher than the market. No different than when you refi your house. You still owe money but it’s a much better deal.

  • avatar
    jkross22

    What happened to hope and change?

    Oh, right. Tim “Turbo Tax” Geithner is running the Fed. It really only benefits the taxpayers when someone says the emperor is running around in his birthday suit. Shhh. We don’t want people to get mad.

  • avatar

    So.. Goldman Sachs is going to receive 0.25% interest loans from the Federal Reserve, loan the money to Chrysler, who will then hand the funds over to the Department of the Treasury? And in the process transfer the profit from these loans from the Treasury to a private bank.

    • 0 avatar
      pgcooldad

      Yup, just like Ford did before the economy tanked. They borrowed from the banks, who borrowed from the governement at the prime lending rate “And in the process transfer the profit from these loans from the Treasury to a private bank.”

    • 0 avatar
      Robert.Walter

      Yes. But the risk of a bad loan is then transferred from Treasury to the private bank.

      (That is as long as a maj. f/u doesn’t imperil the existance of said too-big-to-fail-private-bank, else the risk is likely to be socialized and transfered back to Treasury as we saw with the mortgage debacle.)

      • 0 avatar
        highdesertcat

        11 banks have failed so far in 2011 with lots more to follow. In most cases the FDIC picked up the amounts that were short in order to facilitate a quick sale or consolidation. If Fiatsler refinances with funds from American banks, the FDIC would cover losses if those banks were to go belly up. But if Fiatsler refinances with non-American banks, I would not care what would happen to them. If Fiatsler refinances with bailed out banks and investment houses we will have accomplished nothing since the money was the tax payers’ to begin with and to end with. Just a sleight of hand financial reshuffling of fungible assets. That’s why we need to wait and see how this all unwinds in the coming days, weeks, months. I’m hoping for the best but I anticipate the worst in financial shenanigans and chicanery and yet another pulling the wool over the eyes of the tax payers that our government is infamous for.


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