Fiat & Chrysler: Serious concerns
Even the most positive, true-believer spin about the Obama administration's politicized, taxpayer-funded Chrysler bailout comes to a crashing halt when Europe's fiscal crisis and Fiat's home-market woes in Italy are factored in. Now, the question is how long Chrysler's profits — up 80 percent in the third quarter — can prop up Fiat.
Its credit rating below “junk” status, its 63,000-worker payroll at home protected by Italian labor law and its European sales lagging along with Europe's economy, Fiat faces “labor and productivity issues worse than those that drove Chrysler to near-liquidation,” John Berlau of the Competitive Enterprise Institute and Mark Beatty of Case Western Reserve University write for The Daily Caller.
They say the administration gave Chrysler away to Fiat, which exchanged only some intellectual property — no cash — for its initial 20-percent stake. And while Fiat has since paid $2.2 billion to hold 58.5 percent of Chrysler, U.S. taxpayers have contributed $12 billion-plus.
The administration's “managed” bailout gave pension funds and other secured creditors smaller stakes in the new Chrysler than normal bankruptcy proceedings would have. And Fiat's woes mean little, if any, Fiat investment in or new U.S. jobs at cash-cow Chrysler — and existing U.S. workers “are now hostages to the woes of Fiat and the Italian economy.”
The Chrysler bailout is another failed government attempt to pick an economic winner — at the expense of U.S. taxpayers, workers and creditors.