Chrysler pays back loans

From the BBC (http://www.bbc.co.uk/news/business-13529338).

US car giant Chrysler has repaid $7.6bn (£4.7bn) in US and Canadian government loans that helped it stay afloat in 2009, six years ahead of schedule.

The repayments include $5.9bn to the US and $1.7bn to Canada.

Plummeting sales forced Chrysler, alongside its Detroit rival General Motors, to turn for help during the global downturn.


How's that for a great result?
The car manufacturs getting bailed out when the economy collapsed drew a lot of flack from anti-(Obama) government groups but quite simply, I believe that it would've been worse if they had been left to simply die and take the thousands of jobs with it. Instead, here they are, still operating because of the loans and now able to pay back ahead of schedule.
Good job all round I think.

Also on the BBCnews site, it had an article saying that US new home sales are up in April (http://www.bbc.co.uk/news/business-13527043), 7.3% higher than recorded in March.

The government loans are only a part of their newfound success. The most significant component of this payback was the results of the act of bankruptcy itself. Both GM and Chrysler were relieved of many financial obligations not directly related to developing and manufacturing cars.

For example, many millions (billions) of dollars of GM bonds and stocks became worthless. Essentially, GM does not have to pay back some or all the money it borrowed years ago using these financial instruments. Also, many company obligations to retired union workers have disappeared. So... relieved of these burdens, both GM and Chrysler have a somewhat easier task to make money.

So.... the feds get their money. But many private and institutional lenders do not.

Personally, I agree with the decision to spot them the money and keep them alive. But I regret decades of rich union contracts and company mismanagement resulted in this (entirely avoidable) situation.

I regret decades of rich union contracts and company mismanagement resulted in this (entirely avoidable) situation.

Ding ding ding ding ding! We have a winner!

Remember kids, if you make poor, very arrogant, finical decisions the government will bail you out instead of letting you learn from your mistakes.

Too bad we never bailed out the dot-coms, RCA, TWA, AMC, Blockbuster, or these guys...

http://www.areaofdesign.com/americanicons/rand/enron.jpg

I read an article yesterday which stated the story about Chrysler paying back it's government loans was a little misleading . It stated that the company had simply found loans at a lower interest rate than what they were paying with the government loans and had used this money to satisfy their debt with the government . That is they still owe the money , just not to the government anymore ! Don't know if this is true , just relaying the story as it was written ?

I read an article yesterday which stated the story about Chrysler paying back it's government loans was a little misleading . It stated that the company had simply found loans at a lower interest rate than what they were paying with the government loans and had used this money to satisfy their debt with the government . That is they still owe the money , just not to the government anymore ! Don't know if this is true , just relaying the story as it was written ?

This may well be true. But I don't think its anything sinister or underhanded. FWIW, technically speaking, all "publicly-traded" companies owe money. Hundreds of thousands of companies worldwide sell bonds and/or issue shares, as a means of raising capital. Each share or bond represents a claim against assets and is a loan, so to speak.

For example, the new GM firm recently issued their first IPO (initial public offering) of shares. They raised $23 billion (!!) which will be used to pay the government's loans. GM still owes the money, but now it to investors.

http://www.kerryonworld.com/auto/general-motors-ipo-results-in-sell-off