Cerberus (Chrysler/GMAC) has set the hook and the fish is loving it

The size of the bailout that the money boys at Cerberus Capital are seeking (and getting) from the U.S. Government is growing at a faster rate than the market share of Chrysler LLC is shrinking. According to this story --

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in the same month as Chrysler reported a 53% decline in sales(December 2007 vs. December 2008), Chrysler is seeking to ensnare us,the taxpayers, ever more tightly, correctly concluding that the morethe we sink into its putrid corpse the less our ability ever to letgo.

The total so far:

$4 billion in TARP "loan" funds paid out to Chrysler on January 2. $3 billion in additional TARP "lending," announced today in a deal to be finalized by Friday. $6 billion that Chrysler previously announced as its intended share of Congress's separate $25 billion CAFE amelioration loan program. $6 billion in TARP funds already paid out to GMAC, 51% of which is owned by Cerberus Capital. An undisclosed additional amount -- but less than $6 billion -- requested by Chrysler Financial LLC (100% owned by Cerberus), to be paid out before Pres. Bush leaves office on January 20.

Assuming a total market of 14 million vehicles per year over the next five years (70 million vehicles), and assuming a 10% market share for Chrysler (7 million vehicles) (both these assumptions are generous), each $7 billion that Chrysler manages to finagle from the Government works out to $1,000 per vehicle over five years. Chrysler's indebtedness is already headed toward two times $7 billion, or $2,000 per vehicle per five years. Continued declines in sales during that period will only make it worse. Also, Chrysler remains liable for multiple billions to its suppliers and to its retired workforce.

In other words, there is no way this works. Oh well, at least Chrysler management has found something it's good at.

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-- in the same month as Chrysler reported a 53% decline in sales> (December 2007 vs. December 2008), Chrysler is seeking to ensnare us,> the taxpayers, ever more tightly, correctly concluding that the more> the we sink into its putrid corpse the less our ability ever to let> go.

Just an hour or two after I posted this up, the White House announced that the Obama team had said that it would be OK with The Chosen One if Pres. Bush would go ahead and "ask" Congress for that additional $350 billion in TARP money that Congress had held back from the $700 billion total authorization. The Treasury Secretary needs this second installment in order to fund the already-authorized $6 billion for GMAC and this new $3 billion that's coming Chrysler's way on Friday (as well as the as-yet undisclosed payout to Chrysler Financial, and let's not forget the additional $4 billion committed to GM for a March

2009 payout (in addition to the $5.4 billion GM is getting later this month and the $4 billion it already got).

So as you can see, the fix is in with respect to Chrysler's new $3 billion "loan."

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