Was It Worth It?

First, the good news: The U.S. Federal Government no longer owns any portion of Chrysler LLC. This one small part of the Bush/Obama Bailout Bonanza is now over. As of right now, Chrysler is 53.5 percent owned by Italian automaker Fiat, 45.7 percent by the United Auto Workers (UAW) union, and 1.7 percent by the government of Canada (a lingering holdover from the bailouts). You and I are no-longer reluctant shareholders in this once-venerable American icon.

But, as has been the case all throughout the Bush/Obama Bailout Bonanza, the bad news far outweighs the good.

This once-venerable American icon is now majority-owned by a foreign automaker, so now it is no better or different from Honda, Toyota, Subaru, Hyundai, or Kia—all of which produce many of their models for U.S. sale at U.S. factories, but neither received or needed an ‘investment’ of your tax dollars to stay afloat (mostly because they were making a decent, desirable product at a reasonable price). But surely, despite all this unconstitutional redirection of TARP money, unconstitutional short-circuiting of the federal bankruptcy laws, unconstitutional government ownership of an auto manufacturer, and unconstitutional investment of U.S. tax dollars in bolstering an Italian car company . . . well, we at least got our money back, right? Well, no. The U.S. Treasury did get about 90 percent of its money back from Chrysler, which is admittedly a lot more than I expected, but that still means that we lost $1.3 billion on the deal.

Not only did we lose over $1,300,000,000.00 we desperately needed for other, more important things, but we still left Chrysler in roughly the same untenable position we found it—saddled with destructive UAW contracts, bereft of quality products, and unlikely to ever recover its former glory. Fiat apparently intends to make Chrysler an American proxy for its Italian products; in other words, Chrysler is effectively dead as a truly American automaker. If this is what Presidents George W. Bush (R) and Barack Obama (D) call a successful government intervention into the free market economy, I would hate to see what an unsuccessful intervention looks like.

And what of ‘old’ Chrysler, the company once known as Chrysler LLC but now known as Old Carco LLC? You may recall that the company now known as Chrysler was fabricated out of thin-air by a short-circuited, government-orchestrated, unconstitutional bankruptcy process. It then purchased (with your tax dollars) the ‘good’ assets from the old company and left the ‘bad’ assets behind. Old Carco LLC is still in the bankruptcy process, and the vast majority of its creditors stand to receive far less than the 90 percent return that the U.S. Treasury got out of its ‘investment.’ I have little sympathy for those who willingly ‘invested’ in a mess like Chrysler; they deserved to lose much of their investment. I do, however, object to the government placing itself in the position of ‘investor #1′ in order to provide the political cover of a 90 percent return while screwing everybody else Old Carco LLC and Chrysler LLC owes money to.

Of course, in the age of the Bailout Bonanza, some investors are more equal than others.