Question Of The Day: Why Would We Give Money To Cerberus?
Chris Kelly at the Huffington Post brings up a good point this morning. Chrysler is just one of more than fifty companies in the corporate Hades that is Cerberus Capital Management, L.P. They don’t have to bark publicly about their holdings, but have admitted to $25 billion under management in funds and accounts, with investments generating more than $60 billion in annual revenues worldwide. So why can’t one head of the beast help out another? Why can’t the dog ditch their Japanese bank, Aozora; their German bank, Handel und Kredit Bankhaus; a reinsurance company, Scottish Re, some of their seven TV stations or slice of their 65,000 apartments in Berlin? If their 250 Burger Kings were going under would Congress be rushing to save them? Why is Cerberus begging the Feds for scraps like some underweight cocker spaniel, when they’ve got so many bones buried out back?
On second thought, that’s a silly question. Why are we allowing it? Now that’s a question.
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At the risk of sounding like a broken record. Type Cerberus, Snow, Paulsen, Goldman Sachs in the google search line and hit return. Your questions will at least be partially answered. Also I would imagine (but don't know for sure) that the principles at Cerberus have very little of their own money tied up in Chrysler. If Chrysler goes under they will however have some very unhappy (and well connected) clients.
If Congress is going to do all this, now would be the time. After all, the massive run on every single currency on Earth with the exception of the USD and JPY won't last forever.
Apparently, I'm on the other side of the fence on this one. First, let me say I've been arguing all along for a CH11 as a PREREQUISITE for any help. And GM's CEO and Board MUST GO. But as for the argument that Cerberus doesn't deserve any help, CERBERUS ISN'T GETTING ANY HELP... CHRYSLER WOULD GET THE HELP. I don't hear anyone bitching about the major banks and holding companies that hold, umm, how much? GM debt andor stock getting bailed out. Why not? How much of the bailout billions given to GM would go straight to the banks they owe money to? Likewise with Ford. For some reason, while it's popular to bash (rightly so for the most part) the Begging 2.8, it seems to be UBERCOOL to crap all over Chrylser-Cerberus at every possible opportunity. I don't get that one. If Cerberus had any sense (or balls) Chrysler COULD come out of this as the best American auto company left standing. In a Chrysler CH11, wouldn't Cerberus be treated more or less like any other debtorstockholder? I really don't know on that one. But it's clear that Cerberus and Chrysler are NOT the same entity. Any more than GM and J.P. Morgan are.
But Wolven, here's the thing....Chrysler is a dead company with OR without a bailout. They have almost no market left, few current products, and no new products forthcoming. Chryco R&D is non-existent. There have no turnaround plans, no modernization forthcoming, nothing but more layoffs and closures on the drawingboard. Given money, they will STILL be carved up and sold off come this time next year (or the year after), just as soon as someone can be found to pay more for 'em than Cerberus has invested. It's just pump and dump, or strip and flip (depending on the current economic environment).