Word: chrysler
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...fascination that Americans have about this drama is more about Chrysler as a memory than what it is today. Forty years ago, the company was the fifth largest in America, almost as big as GE (GE), and larger than IBM (IBM) and AT&T. The car firm trio held three of the top five slots in terms of annual sales in the U.S. They were a significant part of national GDP and employed almost over 1.3 million people. (See the 50 worst cars of all time...
...Administration may have alleviated some people's concerns about the auto industry by saying that Chrysler will be okay. Customers won't be able to tell that Chrysler is in bankruptcy. The government will steer it through the Chapter 11 process in a matter of weeks. Not everyone agrees with this. Skeptics about the Administration's plan may outnumber believers. (See Chrysler's Top 10 Moments...
...Bondholders who would not settle with the government and Chrysler are appropriately greedy. The money that they put into Chrysler debt came from pension funds and individual investors in many cases. It is not as if Citigroup (C) is the debtor left holding the check. Citigroup could, at least, petition the Fed to get back any money it lost on its Chrysler investment...
...stock market had absolutely no reaction to the Chrysler news. Shares in GM actually rose on the announcement by the President. It may be that Wall St. believes that GM's creditors will give in, now that they have watched the Administration steam-roll the Chrysler debt holders. That is not likely. If the bankruptcy court gives Chrysler creditors even a brief hearing, GM's creditors will see it as a sign that it is worth holding out for a better deal which may only require them to send attorneys to the federal bankruptcy court in New York City...
...There is still a small chance that Chrysler could be forced into liquidation. Creditors may be able to convince a judge that all parties involved would do better if Jeep could be sold to Toyota (TM) and Dodge to VW. If that were to happen, it would not necessarily mean many lost jobs. Any firm that buys a car company's assets still needs people to operate the assembly plants and design the cars. The jobs lost in liquidation might actually be fairly small...