Via Joe Sherlock, an excerpt from Robert Farago:
Chrysler will be the first to file for Chapter 11. Ironically, the ailing automaker's also the least likely to receive government assistance. Yes, the feds bailed out Bear Stearns. Yes, the U.S. government provided Chrysler with hundreds of millions in loan guarantees the last time ChryCo was up against the wall– and received handsome rewards for Lee Iaccoca's rescue. But that was then. This is now.
Chrysler owners Cerberus don't want an auto company-shaped millstone around their neck. Any pretense that the private equity firm bought Chrysler to run as a going concern will disappear the day they file. Cerberus will use C11 to break-up the company, sell what it can, sue Daimler, settle out of court and run in the opposite direction. You want federal subsidies/guarantees/loans/whatever to keep this sucker afloat? YOU get ‘em.
No doubt Chrysler's new new owners will receive some kind of public assistance. But the idea that the entire company can be saved will be jettisoned by everyone except the unions– who'll take what they can get.
Even if the Chrysler's dissolution gives GM and Ford a dead cat bounce– and frankly, who could tell in this market?– GM will crank-up its lobbying efforts for government assistance. Massive hybrid tax credit for the electric - gas Chevrolet Volt? It's a given. Credits for "resurrecting" old factories will also reappear. In fact, all the creativity that should have gone into GM's cars will flow into shaping a massive, green-tinged begging bowl.
And then, catastrophe. All these bail-out band aids cannot staunch GM's wounds. The company will have to file. At that point, the tax-funded pity party will REALLY start.
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