Ford Union Members Reject New Contract

This news is a month old and it's bothered us the whole time. At some level, how can this possibly surprise us?

Ford union members reject a contract that would have put their compensation inline with GM and Chrysler. The article begins with the following:

Autoworkers in Missouri and Michigan overwhelmingly rejected a new contract with Ford Motor Co., a sign that the automaker and the United Auto Workers union are having trouble convincing some workers to accept changes that would lower Ford's labor costs.

Think about this from the UAW's perspective: if you agree to Ford's demands, you end up with lower wages but Ford stays viable and value accrues to equity and debt holders. Instead, if you reject Ford's demands, one of the two following scenarios plays out:

1) You maintain higher wages yet somehow Ford remains solvent. This is better for you than agreeing to Ford's demands;

2) Ford goes bankrupt. You observe that in the Chrysler Traveschammockery the UAW ended up taking the lower pay but also owning 55% of the post-reorg equity and in GM's case the UAW ended up taking the lower wages and owning at least 17.5% of post-reorg equity. You easily assume that if Ford goes bankrupt, you'll then take lower wages and own 20% - 55% of post-reorg Ford equity. This is better for you than agreeing to Ford's demands today.

So Ford's reward for being the best managed of the Big Three? Emasculation. Ford's entire cost structure has been co-opted by the reality of the UAW's preferred position in The Administration. The unintended consequences of the government's disgusting actions continue to compound...

September Auto Sales A "Disaster" Per Chrysler's New Chief

Looks like we're headed back below 10 mm SAAR rate.

The good news apparently is that the automakers have decided this plunge is not from lack of demand post Cash For Clunkers but from lack of available inventory. So, let's turn those machines back on, boys and girls.

That's good news, because some of us cling to the apparently mistaken belief that Cash For Clunkers did nothing except shift demand around from one period (the future) to another period (the cash for clunkers era). Oh, and it created all sorts of bad market signals in a broad swath of industries.

“We are going to see harsh reality in September," Sergio Marchionne, the chief executive officer of Fiat and Chrysler, said at the Frankfurt Motor Show. He described the U.S. industry results as a “disaster."

Anyway, here's the article with Chrysler's chief quoted.

Steven Rattner Gets His Very Own Expose By New York Magazine

NY Mag's in-depth view into Steven Rattner's professional life is excellent, albeit perhaps not the way S-Ratt, as our hat tipped friend CM refers to him, would have penned about himself. After a career as journalist, BSD i-banker, private equity fund manager, and Car Czar with a disdain for contract law, S-Ratt seems caught in a pay to play scandal surrounding his days as head of Quadrangle (his PE Fund). These paragraphs from the NY Magazine article lay the groundwork for the rest of the story. Enjoy:

Six months after taking the job, Rattner (who declined to comment for this story) had helped to perform a seeming magic trick, rewriting the understanding between the car companies and the unions while bending the companies’ financiers—his friends and peers—to his will. With what seemed a cool, almost arrogant confidence—his casual dismissal of GM CEO Rick Wagoner reflected this quality—he had played a large role in restructuring the American car industry, accomplishing what few had thought possible a few months earlier, and in record time.

Then, on July 13, Rattner announced that he was stepping down. His resignation took most of Washington and New York by surprise. Though the work of the task force was winding down, Rattner had let friends know that he’d planned to stay in Washington, a financial samurai ready to attack the next problem the president set before him. The announcement was accompanied by praise for his performance, but the applause was almost drowned out by a scandal Rattner had left behind in New York. He hasn’t been accused of anything, yet Rattner had become ensnared in a “web of corruption,” as it was sometimes called, in order to get state pension money for his private-equity firm to manage.

In Rattner’s conception, money was necessary but not sufficient. He wanted to be useful, to give back—noblesse oblige, after all. But Rattner’s previous life pulled him back, and faced with the reality of politics, where appearances matter, Geithner and Summers didn’t push for him to stay. “If this thing gets worse, and it sounds like it might, if they jam him,” explains a Treasury source, reflecting the view at the top, “and [New York attorney general Andrew] Cuomo makes things hotter, it’s untenable. Everyone decided it was better for him to go.”

TILB already doesn't miss you Steve. Thanks for helping to destroy America.

SHOCKER! U.S. Treasury (I Mean "God") Forced Chrysler Into Fiat's Hands

The WSJ is on fire today (see TILB's recent post on the slap fest between The Sheila Bear and The Panda Bear).

They are now reporting internal emails that disclose a juicy back and forth between The Administration and Chrysler. Perhaps not surprisingly, this is perfectly consistent with our Grand Unified Conspiracy Theory.

Click here to read some of the source document emails.

So, let's see:

• Chrysler has unanswered worries about Fiat's health;


• Fiat basically would not cooperate with Chrysler's efforts at due diligence. In fact, a mere "eight days before President Barack Obama announced his support for the alliance in an April 30 speech, Chrysler officials were still bristling over what they considered Fiat's unwillingness to provide even basic information about its finances";


• Chrysler executives referred to The U.S. Treasury as "God" in email (perhaps TILB's Borg references are more accurate than many people think);


• The appeals process, which has been railroaded, still ended with this great CYA quote from one of the appellate court judges, "[the Supreme Court should have] a swing at this ball."


• Government lawyers are now referring to dissident lawyer Tom Lauria as a "terrorist"


• Nardelli confirmed Fiat's role as playing a core piece in our Grand Unified Conspiracy Theory when he worried "that the introduction of Fiat in the U.S. 'may have a negative impact' on General Motors and Ford." [shocker]


• Chrysler advisory team members openly worried that "'Treasury/Chrysler' was 'in bed with a shady partner [Fiat].'"


• And, finally, we learn that Chrysler's advisor from Capstone struggles to master even the very basics of English. This gem says it all, "These washington guys want to show the market (gm, delphi....) that they can be tuff. We are the gueni pigs unfortunately."

This is all very sad. Further proof that the entire Chrysler "process" was nothing but a traveshammockery.

The Grand Unified Conspiracy Theory - Part I

We here at TILB have been referring to our Grand Unified Conspiracy Theory for well over a month now. What follows is the first in a two part series on The Grand Unified Conspiracy Theory. Part I outlines The Theory. Part II will show its applicability to nearly every government intervention to date.

As previously discussed on TILB, many of the governmental actions to date have the strange feeling of a coordinated effort to disembowel corporate America while burking free will into its perverted death throes.

Some may say it seems harsh to label this ugly trend a "conspiracy," yet it has many of the classic hallmarks. As Kurt Cobain said, sometime before hollowing out his head, "just because you're paranoid doesn't mean they aren't after you." While conspiratorial path began under President Bush, it has accelerated at a sickening pace under President Obama.

As with all conspiracies, the ability to decipher the actions begins with understanding the end goal.

We believe the goal is simple: control cash flows and direct them as desired to gain political ends. Whether or not it's a full fledged conspiracy, that goal seems obviously applicable and deceitful enough to create discomfort.

Working from the end forward, if we were conspiring to accomplish the aforementioned goal, we would want to do it in the least overt manner possible so as to maintain plausible deniability.

So the Chavez/Venezuela model, despite its appeal to ill-minded politicians, fails the basic sniff test of the average American and would be difficult to employ in The States. While that overt model meets the end goal, it does not fly in America, so we have to look for a path with lower resistance.

What if, rather than simply taking assets from owners against their will, we actually set up a structure that caused those owners to willfully surrender to our control?

That would seem to be the ideal.

As the legendary algebrist Jacobi is famed for saying, the secret to problem solving is to "invert, always invert." So, with our understanding of the end desires and a method that would work in America (get them to willfully give you their assets) well in mind, we can begin to imagine a means of accomplishing the goal:

1) Identify a big industry that is suffering from weakness, ideally a cyclical or temporary weakness. A lot of debt would be helpful as well. One final condition is key: many industry players need to be suffering from some weakness, not just one particularly poor player;

2) Identify the weakest sizeable player;

3) Deem that player "too important to fail" due to traits that are easily deliverable by the media and easily consumed by Joe Sixpack (e.g., "huge employer", statements of "systemic importance" such as "its collapse would cause the collapse of others", etc.);

4) Once we reach the brink of that important-but-weak company's collapse, step in as a funding provider of last resort in exchange for dominating control;

5) Prop up the failed company (FailedCo), disallowing its failure in a traditional sense thus preventing its competitors from absorbing the marketshare that would have been forfeit by FailedCo. This marketshare grab would have improved the health of all the remaining players but instead the opposite happens because...

6) ...the government, lacking a natural profit motive and supported by a theoretically infinite funding supply (a printing press and taxing authority), will operate FailedCo without a particularly profit driven motive. These non-economic behaviors harm competitors. Running the business in this manner will be easily justified with statements such as, "we need to ensure that FailedCo continues to operate at scale so that when we sell it back to private hands it generates enough proceeds to payback tax payers" or "we are not in the business of laying people off. We want to maintain the corpus of FailedCo until we find a permanent home for it." Countervailing voices can easily be surpressed with the mantra that they are greedy capitalists trying to benefit from the pain of the Average American.

7) In a world without interference in the markets when FailedCo actually failed, the competitors would have been strengthened in two ways: 1) marketshare grab from the disappearance or absorption of FailedCo; and 2) improved pricing as the surviving companies all endeavor to rebuild their balance sheets. However, in the conspiracy world, these participants continue to weaken as they compete with an overwhelmingly funded, non-economic competitor. This leads to the failure of the next weakest competitor (NextCo);

8) NextCo voluntarily comes to the government for its own bailout.

9) Rinse and repeat.

The process of having the government compete with private capital without a classic return-driven framework means that it will pound already weakened competitors into capitulation and these competitors will actually come to the government of their own volition for bailout, helping to further consolidate the government's power and control over cash flows.

This is elegant because most people will not be able to understand or simply will not believe the cause and effect.

While it has the exact same end game as simply nationalizing companies against their will (ala Chavez), it accomplishes that outcome in an obfuscated and seemingly voluntary manner.

Some people may say, "hey, TTB, that's ridiculous. Get off the Crazy Train."

In Part II of The Grand Unified Conspiracy Threory, we will address our sanity by walking through virtually every governmental interference in private companies and show its applicability.

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Let us know what you think? Are we crazy? If so, like a fox, or like a crazy person? If the latter, like John Nash or Kurt Cobain? If Kurt Cobain, like him before or after he off'd himself?

Chrysler Losing $100 Million Per Day

Chrysler is losing $100 million per DAY? How is that even possible? Doesn't that annualize to $30+ billion
per year? Wow.

Click here for a Bloomberg article on the subject.

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Update: We've received feedback from one of TILB's gearhead friends. Fantastic retrospective on Chrysler's green shoots from just two years (at the peak):

I would say losses are directly tied to circumstance that current capacity utilization is at 40% but budgets were baked at 90%.

Which is not what executives were planning on...

Link to story below:

Chrysler sees 100 pct capacity utilization in '08
Wed Feb 14, 2007 11:36am EST

AUBURN HILLS, Mich, Feb 14 (Reuters) - Chrysler Group's DCXGn.DE Chief Executive Officer Tom LaSorda said on Wednesday he expects the company to have 100 percent production capacity utilization going in to 2008. The money-losing U.S. unit of DaimlerChrysler announced a restructuring plan earlier on Wednesday that targets a 400,000 unit reduction in production capacity and slashing of 13,000 jobs by 2009.

Chrysler Re-redux

After posting this reflection on the Chrysler creditor railroading Sunday, we received a follow-up email from our outsourced restructuring specialist - we'll call him Starting Tackle for giggles.

At the beginning of Sunday's reflection, TILB included a preamble that tried to put up the only possible argument we could conceive of in defense of The U.S. Treasury's sodomy of secured creditors:

I will offer the one counterpoint that I've heard to all of this that at least gives me pause. The counterpoint is that, in the end, all of the creditors accepted the re-org voluntarily (defining "voluntary" in the broadest possible sense). Further, while there has been outrage about the UAW receiving 55% of the re-org'd company as a junior creditor, they in fact did not receive 55% as a junior creditor; in essence, the U.S. Treasury received it and chose to give it to the UAW which is completely within their rights.

Starting Tackle responded to my Devil's Advocate argument with the below. It is fairly clear Starting Tackle knows more about this than we at TILB, so you should read and respect his voice.

A couple of points for [TILB] on the counterarguments that give [them] pause (I wouldn't lose sleep over them):

Not all the creditors accepted this voluntarily.

Chrysler is not a reorg, but technically a sale. As such, one must separate the interests that Treasury has/had in the Chrysler estate from the interest it will have in New Chrysler. Same goes for the UAW. The Chrysler estate and New Chrysler are separate and distinct entities. UAW doesn't get 4.6B note and 55% of the company because they were a junior creditor, or because Treasury gave the UAW a portion of their recovery from the Chrysler estate, (which as [TILB] points out, would be within their right to do). UAW gets this value because that's how "whoever" decided that New Chrysler should be capitalized. (This is the whole problem with this case - the fact that this is a "sale" and not a reorg allows for the manipulation of absolute priority because the "buyer" can capitalize itself however it chooses. The practical reality, of course, is that at these values there really is no "buyer" and so this is a sub-rosa plan that violates absolute priority.)

Under absolute priority Treasury is entitled to nothing for their third lien claim because the first lien isn't being paid out in full, to say nothing for the second lien held by Cerberus and Daimler. So Treasury can't be transferring value to the UAW based on their existing claim in the Chrysler estate - based on the purchase price being paid Treasury is an out-of-the-money creditor. That is why I said "I fail to see a contribution from the UAW that justifies receipt of a $4.6 billion note and 55% of the stock issued by New Chrysler". As far as I can tell, the UAW isn't paying dollars into New Chrysler for the note or the equity they are receiving in this deal - they just get it.

If this was a plan of reorganization, this wouldn't be allowed. Under a plan, the value of NewCo would have to follow absolute priority, or at least resemble it (since more senior creditors can take less than owed under absolute priority to buy off junior creditors and get a plan confirmed). If this was a real sale (or at least anything approaching fair value for the assets was paid), how Treasury chose to capitalize New Chrysler wouldn't be nearly as big an issue because New Chrysler would be putting fair value into the Chrysler estate in the transfer/sale of assets. That fair value would be distributed among Chrysler's creditors according to absolute priority. But because Treasury is paying so much less than FMV for the assets, the sale is really a sham and the value is just being handed to the UAW.

We will make two brief Devil's Advocate statements (everyone knows where TILB stands on this matter):

1) sure, not "all" creditors accepted this voluntarily ("voluntarily" defined in the broadest possible sense), but over 90% of secured creditors did and that is as close to "all" as can be practically hoped for; and

2) we would argue from a practical non-legal perspective, part of Starting Tackle's point is a distinction without a difference - whether The U.S. Treasury gets its shares then gives them to the UAW or simply proposes a plan that bypasses that intermediate step and simply grants the UAW its ownership without touching Treasury hands doesn't particularly matter in the end. Of course, the legal ramifications are another story as the path matters to The Law.

Now I must excuse myself; your humble author needs to go home and draw a hot bath. TILB must cleanse itself of its festering, soul destroying defense of public interference in private endeavors, even as a Devil's Advocate.

Wish me health.

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Let us know your view on Starting Tackle's take on the abrogation of contract law and its ramifications on the cost and availability of future lending!

Reflections on Chrysler and the Adjustment of Creditors' Rights

In honor of GM's pending doom, what follows is an email forwarded to me from a friend of my older brother. He's an experienced restructuring expert. It takes a lot of the discussion surrounding the Chrysler "issue" and condensces it quite nicely.

Before we get to that, I will offer the one counterpoint that I've heard to all of this that at least gives me pause. The counterpoint is that, in the end, all of the creditors accepted the re-org voluntarily (defining "voluntary" in the broadest possible sense). Further, while there has been outrage about the UAW receiving 55% of the re-org'd company as a junior creditor, they in fact did not receive 55% as a junior creditor; in essence, the U.S. Treasury received it and chose to give it to the UAW which is completely within their rights.

Anyway, here's the excellent email I was referencing:

Friends,

I’m not sure if many of you have been closely following the developments in the Chrysler bankruptcy. As a restructuring professional, this is of tremendous interest to me and many others in my general line of work. Much has been made of one of the highest profile bankruptcies in history, especially the recent negative press surrounding a group of hedge funds and other lenders (collectively the Non-TARP lenders) that initially refused to accept the proposed pre-bankruptcy restructuring plan promulgated by Chrysler and the United States Treasury. Despite all the coverage, I fear very few people actually have a reasonable understanding of what is transpiring in the case. To a large degree I think the media is focused on the wrong aspects of this case. In light of that, I felt it was appropriate to share with you my views on this situation. Please keep in mind that these are solely my opinions and not those of my employer.

I believe the outcome in the Chrysler case is a national embarrassment and a major blow to creditor rights in this country. And while I’m sure the topic of “creditor rights” is not something near and dear to your hearts, creditor rights are incredibly important to the everyday mechanics of our economy. Anybody who borrows money to purchase a house or car, or uses a credit card, is impacted by creditor rights. The rights that creditors have against borrowers who cannot pay their debts are the underpinning of lending, and credit is the fuel of our economy.

I cannot understate my personal disappointment with what has happened in this case. While the proposed transaction is presented as a sale of Chrysler’s assets pursuant to Section 363 of the Bankruptcy Code, it is clear to me that this “sale” of Chrysler to “New Chrysler” is no sale at all but instead a sub-rosa plan of reorganization that violates the rule of absolute priority by providing a far lower recovery to secured creditors than they are entitled to under applicable law. Simply put, I believe the law is being subverted.

In terms of distributions of cash from the Chrysler estate, first lien creditors stand to get $2 billion in cash, or approximately a 29% recovery on their claim, while second lien creditors and third lien creditors (most notably the United States Treasury) receive zero recovery. It should be noted that Treasury injected $4 billion of TARP money into Chrysler on January 2, 2009 for that third lien claim. Within five short months, Treasury took a complete loss on that investment in terms of the recovery it will receive from the Chrysler estate.

It should also be noted that while secured creditors are significantly impaired, the Chrysler estate will be making significant levels of payments to a host of unsecured creditors such as vendors and dealerships that rank behind all secured creditors in terms of priority.

In order to consummate the purchase of the Chrysler assets and operate thereafter, New Chrysler will receive $6 billion in funded debt from Treasury in new senior secured debt. Aside from this debt, New Chrysler will also issue a note in an amount of nearly $4.6 billion to a Voluntary Employee Benefit Association (VEBA) of the United Auto Workers. The VEBA will also receive 55% of New Chrysler’s equity. Treasury and the Canadian government will receive 8% and 2% respectively.

While I am not advocating that Chrysler be liquidated, it certainly could be liquidated for more than $2 billion even under the worst assumptions, and generate a higher recovery for the first lien secured lenders. And if for some reason that wasn’t the case and the Chrysler assets are worth something less than $2 billion, then all of the following must also be true:

(i) It makes no economic sense for Treasury loan $6 billion to New Chrysler

(ii) Depending on the priority of the note in New Chrysler’s capital structure, the $4.6 billion note to the UAW’s VEBA may be worthless

(iii) At present, the equity to be held by Treasury and the UAW VEBA in New Chrysler following the sale must also be worthless

But the reality is that Chrysler is worth far more than $2 billion. Unfortunately, because of the way this transaction is being structured, the value of Chrysler that exceeds $2 billion is not being subjected to the typical waterfall of priority, where secured creditors are paid in full (beginning with the first lien lenders) before any significant recovery is provided to unsecured creditors. Instead, the assets of Chrysler are being stripped from the Chrysler estate for a price of only $2 billion, with a significant portion of that excess value flowing to unsecured creditors (most notably the UAW).

The Non-TARP lenders who hold first lien debt objected to this treatment, and in my opinion, rightfully so. In response to their protests, they have been repudiated by various members of the press and several politicians, including, most notably, our President. Rumors are rampant concerning a variety of threats that were levied at the Non-TARP lenders. Meanwhile, the other holders of Chrysler’s first lien debt, many of which received taxpayer money under TARP, have been lauded for consenting to this transaction. It strikes me as backwards to vilify those parties that are standing up for their rights under the law while other financial institutions, buttressed by taxpayer dollars, are so willing to consent to a far worse deal than they are entitled to under the law.

And try as I might, it is impossible for me to ignore the potential political ramifications of this transaction:
- Treasury is a multi-billion dollar secured creditor of Chrysler that will take a complete loss on the capital infusion it made into Chrysler earlier this year.
- Treasury has recently provided a multi-billion debtor-in-possession line of credit to Chrysler.
- Treasury was in the middle of all of the negotiations between Chrysler and the proposed “purchaser”, New Chrysler, and it would appear that Treasury had a significant role in arriving at the $2 billion purchase price paid to the Chrysler estate in return for Chrysler’s assets.
- Treasury is providing several billion in financing to New Chrysler.
- Treasury will have an 8% ownership stake in New Chrysler.

But the UAW, a huge political supporter of the current administration (and an unsecured creditor of Chrysler), somehow gets 55% of New Chrysler. I fail to see a contribution from the UAW that justifies receipt of a $4.6 billion note and 55% of the stock issued by New Chrysler when compared to what Treasury is receiving. However, I do see Treasury on all sides of this transaction with massive potential for conflicts of interest. One would think that with all these potential conflicts that Treasury would be steadfast in ensuring adherence to the law. Unfortunately that does not appear to be the case.

Given the fact pattern, I am inexorably drawn to a few depressing conclusions:

1) Treasury is orchestrating a public taking of the Chrysler assets from the Chrysler bankruptcy estate for far less than those assets are worth and transferring them (and their value) to a new entity which has as a principal stakeholder a union that is politically aligned with those who control Treasury.

2) It is unclear what it means to be a secured creditor if this kind of treatment can occur in bankruptcy.

3) This entire problem could have been easily avoided if Treasury and “New Chrysler” had just decided to pay a fair price for the Chrysler assets from the Chrysler estate and allow those proceeds to follow the applicable waterfall of absolute priority. Relative to the amount of money that has been spent or committed to date by the administration, paying an additional $10-15 billion is essentially a rounding error. One has to be very concerned that the administration would go to this degree of public trouble over an amount that could easily be otherwise swept under the rug. Which means…

4) They will do it again.

The Chrysler Traveshammockery

It's been sold to America that Chrysler is of systemic importance. Countless articles have been written about the 40,000 direct job losses or the nearly 300,000 that would be lost systemwide due to job cuts that would occur as dealers, suppliers and suppliers' suppliers lay people off to adjust for lost business. These "facts" have been used as a justification for the Chrysler bailout; a sort of justification that has been used to mislead the public in virtually every bailout in government history (I make some minor exceptions during September of 2008). This is what is seen - the first order effect.

Like lambs to the slaughter, too numbed by all the horrifying governmental actions of the last year and the reasonable desire to believe in "hope" and "change", we have marched unquestioningly alongside our "leadership". However, common sense tells us that these job losses are an absolute sham. I honestly cannot believe that more folks haven't challenged this idiocy, though perhaps if the treatment of Chrysler's secured lenders is a guide, we are learning that challenging this Administration on the basis of legal rights or common sense put you on a fast train to publicity hell.

At The Investment Linebacker (TILB), we are willing to take the engineer's seat on that train: What is unseen are the jobs created and relative financial strength gained by Chrysler's competitors (esp. GM and Ford) if Chrysler had been allowed to perish naturally - the second order effect.

Chrysler, as an auto company, "creates" virtually no new demand. There are very few buyers that say to themselves, "gosh, I really don't need a new car, but I am so inspired by that Chrysler/Jeep/Dodge that I am going to go buy an extra car." As such, all Chrysler does is fulfill an existing demand for new cars. The evaporation of Chrysler would not at all eliminate that already existing demand nor would that demand lie fallow as some poor consumer demands a product that just cannot seem to be supplied. In fact, some other car company would certainly step into the breach and gladly fill that demand. This means that GM and Ford, two of Chrysler's most direct competitors would have been primary beneficiaries of a Chrysler liquidation. For those that don't know, GM and Chrysler themselves are struggling to remain solvent and would be strengthened by this market share opportunity - as would virtually all of Chrysler's competitors, making the entire industry more sound.

Jobs "lost" to Chrysler would have been jobs "created" (or retained that would otherwise go away) by other, stronger auto OEMs. GM, Ford and others would happily have purchased parts to make those incremental autos from suppliers, thus allowing those suppliers to "create" jobs that offset Chrysler suppliers' "losses". Those suppliers would have purchased inputs, materials, etc., etc. down the OEM foodchain. Back up the chain, GM, Ford and others would happily have employed people to assemble cars, trucks and SUVs for shipment to dealers. GM, Ford and other dealers would happily have sold those incremental cars on to end buyers at competitive prices, providing jobs at dealerships. The "loss" of jobs is quite clearly a sham as systemwide, there would not be jobs lost because there would not be a loss of aggregate demand or supply.

In fact, net, net jobs would have been retained and the employers providing those jobs would have been in a healthier position than they are today.

We can state with some certainty, the Chrysler bailout not only is a travesty to the perception of the soundness of contract law and the separation of private enterprise from unneeded public interference, it also weakens the overall automaker industry at precisely the moment they needed a boost. Conspiracy theorists might believe this is intentional as it increases the likelihood that the Administration (and the UAW) will control other domestic OEMs as well.

Since TILB is already engineering this train ride, we have nothing to lose: we will go ahead and note that in the long run, the OEMs that will suffer the most from this intervention are our higher cost-structure domestic OEMs - GM and Ford (see conspiracy theory above). At a moment when GM and Ford desperately need the breathing room afforded by absorbing some of Chrysler's 10% domestic market share, those already weak legends will in fact now be forced to compete with a government, UAW, and foreign (Fiat) owned competitor. A competitor with a questionable profit motive and a bankruptcy-assisted newly reduced cost structure. If AIG, FNM and FRE are any guide, Chrysler's prices will likely be so competitive that it will have the exact opposite impact on GM and Ford that would have occurred if nature had its way with Chrysler. Rather than gaining strength and breathing room, they will be increasingly impaired and short of financial oxygen. I suspect those two American Icons will find themselves stumbling hope-filled into the warm, loving, waiting, open embrace of the government.

Ironically (or perhaps not), this just finished playing out in the realm of life insurance as the government's ownership of AIG (and lack of profit motive in its insurance pricing) prevented a handful of already staggered competitors from raising prices and taking abandoned share in an effort to heal themselves. As such, they've just been welcomed into We The People's loving TARP program.

This whole affair absolutely and honestly saddens me.

The government's intervention makes a mockery of common sense and America.

It is a traveshammockery, but double the rage and minus the humor.